airBaltic needs a sustainable financing solution - Bank of Latvia governor

RIGA - Latvian national carrier airBaltic needs a sustainable financing solution that does not contravene European Union (EU) regulations, Bank of Latvia Governor Martins Kazaks told LETA.

The head of the central bank underlined that airBaltic is a strategically important company for Latvia.

In Kazaks' view, letting the airline go bankrupt would be the easiest, but also the worst, choice.

The current strategy, with regular requests for public money, has exhausted itself, and a sustainable financing solution that would not contravene EU regulations is needed, Kazaks said.

In his words, this would give Riga the opportunity to be the region's business center and to regain its status as a Baltic metropolis. Moreover, it is unlikely that Latvia will be able to establish its own airline with a hub in Riga a second time, Kazaks added.

As reported, Prime Minister Evika Silina (New Unity) has convened an extraordinary Cabinet meeting today to assess the current situation in the aviation sector and national airline airBaltic, according to a post by the prime minister on X.

Silina explains that she has called an extraordinary government meeting based on information provided by business organizations and ministries regarding the growing impact of the Middle East conflict on fuel prices, which is affecting the Latvian economy and the aviation sector in particular.

"The current geopolitical situation calls for swift action in order to ensure continuity of the industry," said Silina.

The meeting will start at 3 p.m.

As reported, the Transport Ministry has indicated that external factors such as the conflict in the Middle East, rising fuel prices and the suspension of certain routes have had a significant impact on airBaltic's costs, and the airline needs a EUR 30 million loan to ensure the company's stable operations until the implementation of its new business plan.

However, the Saeima Budget and Finance (Taxation) Committee did not approve the decision because of objections raised by the Union of Greens and Farmers. The Saeima committee will revisit the issue on April 14.

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.