State Audit Office council member skeptical about possibility of an IPO of airBaltic in the near future

RIGA - Investors' assessment of the initial public offering (IPO) of shares in the Latvian national airline airBaltic has so far been rather cautious and there are probably good reasons for this, Martins Abolins, a member of the Council of the State Audit Office who previously worked as an economist at Citadele bank for several years, told members of the press on Thursday.

Abolins stressed that at the moment it is impossible to say what will happen in the financial markets in the future and what investors' assessments will be, but there is an opportunity to look back at what has happened so far - there were plans to implement the IPO process of airBaltic both last year and at the beginning of this year, but due to various factors it did not succeed. "I think we have to understand that if it has failed, then the market and investors' assessments have been cautious enough," Abolins said.

He did not rule out that "things could change" in six months or a year. "But there are probably good reasons why it [the IPO] has not succeeded so far and the process has moved on," said the member of the Council of the State Audit Office.

As reported, in 2024, the airBaltic Group made an audited loss of EUR 118.159 million, compared to a profit of EUR 747.572 million a year earlier, while the group's turnover increased by 11.9 percent year-on-year to EUR 747.572 million in 2023.

It is also reported that at the end of January 2025 an agreement was reached with German airline Lufthansa on investments in airBaltic of EUR 14 million. In exchange for the investment, Lufthansa Group will receive a convertible share giving it a 10 percent stake. This convertible share will be converted into ordinary shares at a later date, following the IPO of airBaltic.

After the IPO, the size of Lufthansa Group's holding will be determined by the potential IPO market price. The transaction also provides that Lufthansa Group will own at least 5 percent of the capital of airBaltic after the potential IPO.

The Latvian government also agreed in August 2024 that the state must retain at least 25 percent plus one share in the capital of airBaltic after the IPO.

The transaction is subject to clearance by the German Federal Cartel Office (Bundeskartellamt).

The Latvian state owns 97.97 percent of airBaltic's shares, while the financial investor, Danish businessman Lars Thuesen's Aircraft Leasing 1, owns 2.03 percent.

airBaltic carried 5.2 million passengers in 2024, which is an increase of 13 percent against a year before, while the number of the airline's flights rose 7 percent year-on-year to 47,000.