airBaltic must soon come with clear vision of how state can help it raise capital - Svinka

RIGA - Latvia's national airline airBaltic should soon come up with a clear vision on how the state can help it raise capital, Transport Minister Atis Svinka (Progressives) said in an interview with the Latvian Radio on Monday.

He pointed out that an initial public offering (IPO) is not the only way to raise capital, and the airline's management has been given the broadest possible mandate to seek ways to raise it through various financial instruments. The 2026 challenge for the airline is therefore not only to reduce costs, but also to raise capital.

At the same time, Svinka noted that the ongoing war in the Middle East is not making the situation any easier. "Therefore, we should come up with a clear vision in the near future on how we can help the company in one way or another to raise capital," the minister said.

He also noted that the European Union (EU) does not allow the state to directly support airlines. "We need to look creatively at how we can strengthen airBaltic, how we can ensure its operation, because the company's contribution to the economy and society is great," Svinka said.

He also pointed out that the IPO remains a challenge.

"Sooner or later airBaltic has to have private capital, it has to be an open joint stock company, listed on the stock exchange and this task should never be removed. This is the task we should be moving towards. At the same time, the balance sheet and financial indicators are challenging and we need to see what is realistic," said Svinka, adding that the near-term challenge is to find a way to put the airline's finances in a different shape.

"The IPO has not gone anywhere as a goal," Svinka stressed.

As reported, airBaltic has suspended a possible IPO in view of its 2025 financial results and the market situation, and does not consider it a potential source of capital in 2026.

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

Pending new funding, capital or otherwise, the airline plans to continue to operate in a cash-efficient mode in 2026. At the same time, with the support of airBaltic's largest shareholder, the Latvian government, airBaltic is looking to raise new capital from alternative sources, including through M&A.

To support this process, the group intends to engage and has started the process of selecting an international financial advisory firm with relevant experience in the aviation sector. The role of the financial advisor will be to identify and evaluate potential investors and structure an appropriate capital raising transaction.

In parallel, airBaltic has engaged a strategic industry advisory firm to undertake a comprehensive review of its commercial strategy and operations in order to develop and revise a business plan to accelerate its return to profitability.

However, if new external financing is not available in 2026, airBaltic's management will turn to existing shareholders for additional funding. The report states that the Latvian government, as airBaltic's largest shareholder, has historically demonstrated its support for the airline, but additional investment would only be possible if it complied with EU state aid rules.

If additional funding is not available from either new investors or shareholders, management will enter into negotiations with key suppliers, financial institutions and lessors to agree on extending or deferring payment terms in order to maintain sufficient liquidity for the airline's operations in the fourth quarter of 2026 and the first quarter of 2027, thus enabling it to seek additional funding in 2027.

airBaltic's group loss last year was 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.

The airline carried a total of 5.2 million passengers on its route network in 2025, 1 percent more than in 2024.

Last year, the total number of flights operated, including full-service aircraft leasing services or ACMI, was 78,400, an increase of 7 percent. Of these, 48,300 were on the airline's route network, up 3 percent on 2024, and 30,100 were ACMI flights, up 15 percent.

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, and 0.01 percent - by other shareholders. The company's share capital is EUR 41.819 million.

After the IPO of airBaltic, 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.