The Latvian Parliament gave its approval this Thursday, in an extraordinary session, to a bill that empowers the Government to purchase a new issuance of airBaltic bonds for a maximum of 30 million euros. The measure comes amid the full deployment of the airline's new roadmap, affected by the war in the Middle East, which seeks provisional financing of 225 million euros and to cut its fleet of Airbus aircraft by a third.
The approved regulation also establishes that the cap for converting state bond credits into capital is set at 50 million euros.
The legal text opens the door to extending the amortization period of a public loan granted to a company, converting into capital the credits linked to that loan and to state bonds, and, if necessary, allowing the State to participate in the temporary financing of the company.
The support of the Parliament represents new financial backing for the Latvian flag carrier — the State controls 88.37% of the capital, Lufthansa 10%, and the remaining 1.63% is in the hands of private investors —. This comes after the current bondholders have accepted their new plan and the extension until 2029 of the maturity of securities for 380 million euros, with a coupon of 14.50%.
The war in the Middle East, the slowdown in demand, and the availability problems of Pratt & Whitney engines have forced airBaltic to redefine its strategy. Among the central objectives are the reduction of the current fleet of 54 Airbus A220-300 and the concentration of its route network in Riga (Latvia).
In this context, the airline expects to operate around 36 Airbus A220-300 by the end of 2026, which represents a cut of a third compared to the current 54 aircraft. From there, it plans to gradually increase the number of planes to around 40 units by 2031.
"This business plan is based on making disciplined decisions that strengthen the long-term competitiveness of airBaltic, while preserving the most important thing: connectivity and reliable operations, along with financial sustainability," emphasized the president and CEO of the company, Erno Hildén, in a recent statement.
The previous plan, designed for a future stock market launch, bet on a continued growth of the number of passengers and ticket revenues both in the Baltic region and across Europe, which made it possible to project an expansion of the fleet to 100 aircraft.