Aviation is among the sectors that have been bruised by the world-wide COVID-19 pandemic the worst, yet Martin Gauss, the President and CEO of airBaltic, a Latvia-based premier Baltic airline, clearly sees a silver lining in the dark cloud. “Not even anticipating the pandemic, airBaltic has taken the necessary strategic steps and, now, we’re in a very good position – I’d say in a much better position than the others – to make a recovery,” Mr Gauss told The Baltic Times.
The words “COVID-19 pandemic” are on everyone’s lips now. Had you ever imagined such a dismal situation for the aviation industry and airBaltic? How bad has it been for your company so far?
As for the industry, the pandemic has been making the biggest impact on it since a hundred years ago, when it started. There are significantly fewer passengers, fewer flying aircrafts and so on.
With the significant decrease of passenger flow, the job losses and the economies going down, many airlines are in a position where they struggle, or would struggle, if left on their own. Therefore, assistance from local governments is crucial. Understanding that, governments all over the world are supporting the existing infrastructure of the aviation industry.
Currently (the interview was conducted on February 5 – TBT), in Europe at least, we are still seeing low passenger numbers – we are all waiting for the vaccination to reach a level (in the population, where herd immunity is formed – TBT) which would allow the flights to resume and pick up in volume. It is just a matter of time when the countries will start easing the travel restrictions put in place to combat the virus. But things won’t come simply, as the crisis is not only a public health crisis, but also a financial crisis.
It has certainly been the biggest crisis for airBaltic, too. But we’ll be getting out of it – slowly but assuredly – our industry will be going to higher passenger numbers in the foreseeable future. I believe we will see their increase as soon as this April by which all three Baltic countries, Latvia, Lithuania and Estonia, are likely to lift many of the travel restrictions.
But we will likely see a breakthrough with the vaccination efforts in autumn, by when the vaccination levels will be high.
We may still feel the impact of the pandemic in 2022 – and the aftermath of it could be seen even longer on long-haul routes, but there will certainly come a boom in travel afterwards. I have no doubt about that. airBaltic will certainly benefit from it, as we’ve made right decisions.
How many of the airBaltic staff have been furloughed? In downtime?
Unfortunately, we had to reduce our staff by 40 percent – from 1 700 to 1 000. Note, we had to do it in a year, when we planned to recruit up to 1 900 new employees to satisfy our growth.
We’ve also reduced our aircraft portfolio as a result of the pandemic – we’re now flying only 25 Airbus A220 planes, though we had 40 such aircrafts in our fleet in 2019.
With regards to the financial side, we were planning to have 600 million euros in revenues in 2020, but with the pandemic’s impact assessment, that will be around 145 million euros. The losses – of the operational nature or from the net loss – are very significant and we’re looking to March to see the precise numbers.
How much does the increase in the airBaltic cargo transportation sector make up the losses?
It is not making up losses, as we at airBaltic do not have a significant increase in the volume of cargo transportation per aircraft. A cargo is carried only on our passenger aircrafts on regular passenger flights. In 2019, we had more than 50 000 flights and, in 2020, only 22 000 flights.
Notably, at the very beginning of the pandemic, airBaltic was flying to China to pick up face-masks there. We did the job as other airlines of the kind – on our regular passenger aircrafts, with the cargo placed in the aircraft cargo compartments.
We did, however, attempt to receive the required certification for our Airbus A220 aircrafts to adjust them for cargo transportation amid the increase in demand, but our request was not satisfied – the aircraft in the foreseeable future is not at the stage for that kind of adaptation. Air cargo transportation operators are in a much better position to continue doing what they were always doing – hauling cargo.
How has airBaltic adjusted to the pandemic’s impact? To what extent will Baltics’ long-term goals be amended? Specifically, is airBaltic abandoning plans to acquire 80 new A220-300 aircrafts?
Not at all – we are not abandoning the plan. We still have our order in place – we’ve just changed the number of new aircrafts to come each year.
In April last year, air Baltic approved an updated business plan, which sees the order for a total of 50 A220 to be completed by the beginning of 2024. This would more than double the airline’s capacity within just three years and airBaltic would thus become, after the crisis, the most modern, sustainable and greenest airline around. Sustainability will be a very important issue after the crisis is over.
We are using the pandemic as an opportunity to accelerate the completion of our fleet renewal and move to an all-Airbus A220 fleet. airBaltic is retiring the remainder of its older, less-efficient fleet. This applies to its last three Boeing 737, a type of which it is still operating the ‘Classic’ variant, more specifically the 737-300, with an average age of 20 years.
The Boeing 737 aircraft have been sold. airBaltic on December 17, 2020 made a delivery flight of its last remaining Boeing 737 aircraft. Also, to simplify our fleet, we are set to phase out our 12 Bombardier Dash 8 Q400 aircrafts. The retirement of both the Boeing 737-300 and Bombardier Dash 8 Q400 fleets will leave airBaltic with only one aircraft type: the Airbus A220-300.
Moving to an all-A220 fleet has been our goal since at least 2018, when we increased our order from 20 to a total of 50 Airbus aircraft, with options for another 30 of the Canadian-made jet. So far, we have received 22 Airbus A220-300.
I’ve always said that, when a downturn comes, the 145-seat A220s are much easier to fill up than a 230-seater. This would allow airBaltic to fly to cities where the (flight) demand may not be very high and also on long-haul routes.
Not even anticipating the pandemic, airBaltic has taken the necessary strategic steps and we’re in a very good position – I’d say much better than the others – to make a recovery. When we fly now, we still manage to cover our costs, though we’re not making a profit, which is something some other airlines cannot say.
Even in the crisis, airBaltic is already a success story. Only Qatar airlines stand next to us in terms of a modern sustainable fleet.
Are you saying that a small airline like airBaltic is in a better position to handle the once-per-a-hundred- year crisis and come out as the winner from it?
I’d say “yes”. We took immediate measures after the virus broke out – I mean cutting our capacity significantly and changing our business model, at the core of which was the retirement of both the Boeing 737-300 and Bombardier Dash 8 Q400 aircrafts and leaving airBaltic with the Airbus A220-300 as the only aircraft type in the airBaltic fleet.
It helped us to save costs while the competitors were still flying. Now everyone is effectively in the same position – everyone has gone through the inevitable reduction. Yet we’re keeping sufficient staff on the payroll to be able to restart our pre-crisis operations fully or sufficiently enough as the right time comes.
If the demand grows quickly, we will be able to employ the aircraft quickly. So, yes, we’re ready to restart and we’re confident, especially since airBalic has been backed up by our main shareholder, the Latvian government; through raising the equity of airBaltic – the Latvian government has approved the investment of up to 250 million euro in order to help the company to overcome the economic crisis caused by COVID-19.
I do not rule out other equity may come along our way when things start getting better.
Is airBaltic cooperating with Latvian scientists and start-ups in developing and creating innovative and unique solutions preventing the contagious virus aboard the airBaltic aircrafts or when boarding?
airBaltic is known as one of the most innovative airlines in the industry. With the most modern aircrafts in our fleet and the state-of-the art software equipment installed on them, we have the most sophisticated air filter systems on our aircrafts – in fact, they are similar to those in hospitals.
Notably, we had no COVID-19 infection on board our aircrafts – at least not known to us – although we’ve carried 1.3 million passengers since the outbreak of the pandemic. The mandatory COVID-19 tests before the flight just makes every flight safer.
We are delighted that Skytrax, an international air transport rating organisation that launched the COVID-19 Safety Ratings program back in August 2020, covering airlines and airports across the world, has awarded airBaltic a five–star COVID-19 safety rating at the beginning of the year. After performing a thorough audit in December 2020, airBaltic has become the first airline to receive the highest COVID-19 Safety Rating. Only airBaltic and Qatar Airways have the 5-star rating. The audit focused solely on COVID-19 cleanliness, hygiene and safety procedures. So airBaltic is in a leading role in coping with COVID-19.
What would your message be to a guy or a girl graduating this year from a technical college with a degree in aircraft mechanisms technical maintenance and who is dreaming of joining the airBaltic family? Will you be hiring this year? How has the airBaltic demand for aircraft maintenance technicians, stewards, stewardesses and pilots, other staff changed due to the pandemic?
We need them. We’ll be hiring once we step back on the growth path. On the maintenance side, airBaltic is building the largest, 40 000 cubic meters, to be precise, aircraft (technical maintenance) hangar in the Baltics. The project is due for completion in 2023 and, once in place, we will be able to service seven airBaltic Airbus A220-300 aircrafts at a time. By the time it opens, it will be the most modern such hangar in Europe – with all the latest technologies.
So if anybody today sees their future with airBaltic, I am happy to hear that and let me assure everyone that airBaltic is a very good employer for all young people.
Good aircraft maintenance mechanics will also be highly needed to service our new Airbus A220 aircrafts a lot of which we will be receiving next year.
If someone considers becoming a pilot (airBaltic operates airBaltic Pilot Academy -TBT), I’d say this: “Start now, we will need more pilots with all the aircrafts coming soon.”
At airBaltic, we also have many other jobs available, including high-ranking jobs in our marketing, sales, social media departments and beyond.