Decision on on additional capital for airBaltic will have to be made this year - Aseradens

RIGA - A decision on additional capital needed for the Latvian national airline airBaltic will have to be made this year, Finance Minister Arvils Aseradens (New Unity) said during a debate in the Saeima on Thursday.

He said that the short-term loan granted to the airline has served as "bridge financing", allowing the company's new management to prepare a new business plan. The Transport Ministry could come up with proposals to the government in August or September.

Aseradens stressed that capital investments are necessary keep the company operational, but it will be difficult to secure them, as neither the law on the state budget nor the fiscal discipline regulation provides for such an option. Consequently, the government will have to look for additional sources of financing.

The minister acknowledged that financing airBaltic will be one of the biggest challenges for the state budget, given the already approved budget deficit of 3 percent of GDP. Such a commitment may limit the government's ability to finance other priorities this year.

The minister added that the situation also affects the government's ability to provide additional support to people, including to compensate for increased fuel prices, as any new measures will have to be implemented in line with fiscal discipline rules and available financial resources.

At the same time, Aseradens stressed that the government's priority is to provide support to critical services and vulnerable groups, while funding opportunities for other initiatives will be limited.

As reported, a majority of Saeima members in April voted to grant a short-term state loan of EUR 30 million to Latvia's national airline airBaltic.

airBaltic needs the loan because of a sharp rise in fuel prices. The government approved the loan on March 31, but because of objections and ultimatums from the Union of Greens and Farmers, the issue was stalled for several weeks, delaying the parliamentary vote.

The loan was approved by 49 MPs, 23 voted against, including coalition MP Uldis Augulis (Greens/Farmers), and one MP abstained. However, 15 MPs from the opposition United List and the National Alliance chose not to register for the vote.

LETA also reported, airBaltic's losses last year amounted to EUR 44.337 million, which is 2.7 times less than in 2024. Last year, airBaltic's turnover increased by 4.2 percent compared to 2024 and amounted to EUR 779.344 million.

In 2025, the airline carried a total of 5.2 million passengers on its route network, an increase of 1 percent compared to 2024.

At the end of August last year, German national airline Lufthansa became a shareholder in airBaltic. Currently, the Latvian state owns 88.37 percent of airBaltic shares, Lufthansa - 10 percent, financial investor Aircraft Leasing 1, owned by Danish businessman Lars Thuesen - 1.62 percent, and other shareholders - 0.01 percent. The company's share capital is EUR 41.819 million.

After the initial public offering (IPO) of airBaltic shares, the size of Lufthansa's stake will be determined by the potential IPO market price. The transaction also provides that Lufthansa will own at least 5 percent of airBaltic's capital after the potential IPO.

On August 30, 2024, the Latvian government agreed that the state should retain at least 25 percent plus one share in airBaltic's capital after the IPO. On August 19, 2025, the government decided that Latvia, like Germany's Lufthansa, would make a co-investment of EUR 14 million in airBaltic ahead of a potential IPO.

However, given the 2025 financial results and market conditions, airBaltic has suspended its planned IPO and does not currently view it as a potential source of capital for 2026, according to airBaltic’s annual report.

The report indicates that, despite the expected improvement in operational and commercial performance, the airline will operate with a negative free cash flow in 2026, and, based on current forecasts, management expects that an additional capital injection of EUR 100 to 150 million will be required to finance operations for the 2026/2027 winter season.

Transport Minister Atis Svinka (Progressives) has noted that an IPO is not the only way to raise capital, and the airline’s management has been given the broadest possible mandate to seek opportunities to raise capital using various financial instruments. Thus, the airline’s goal for 2026 is not only to reduce costs but also to raise capital.