airBaltic's contribution to Latvian economy is undisputable - New Unity

RIGA - The contribution of Latvia's national carrier airBaltic to the national economy and society is indisputable, New Unity claims, stating that the party firmly supports the allocation of a short-term loan to the airline to promptly tackle its financial difficulties caused by the steep rise in fuel prices because of the Mideast conflict.

As the party told LETA, each month of airBaltic's operations generates EUR 15-20 million in taxes for the state budget, but the company's contribution to the economy is not only measured in large tax payments and thousands of jobs. New Unity argues that the national airline is a strategic company that has an impact on the entire Latvian economy, including entrepreneurs and the tourism industry, as well as people traveling or working internationally.

The Bank of Latvia has calculated that if airBaltic were to be liquidated, the country's gross domestic product (GDP) would fall by between 1.1 percent and 1.5 percent, which would mean a loss of around EUR 250-400 million a year, New Unity said.

Edmunds Jurevics, chairman of the New Unity group in the Saeima, said that the decision on state aid to airBaltic should be considered from the standpoint of national interests and not someone's political interests. Jurevics stressed the need to ensure the national airline's uninterrupted operations. "At the same time, we expect a clear vision from the company's management on future plans and the restructuring process," said Jurevics.

New Unity believes that airBaltic is indispensable for Latvian business and tourism. This is also confirmed by the support expressed by a number of leading business organizations for the decision on the loan and calls not to hesitate - this decision is essential for the preservation of the country's overall competitiveness, the political party says.

According to New Unity, the airline is already actively responding to the changing market situation by reviewing the profitability and capacity of routes and flexibly redirecting the fleet to more economically viable directions. This, according to the party, demonstrates the company's ability to adapt to the crisis and work on improving efficiency to mitigate the negative impact of external factors on financial stability.

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.