Lufthansa Eyes airBaltic Stake

Lufthansa Group continues its rampaging plans to expand its overall reach by expressing considerable interest in the potential stake acquisition of airBaltic.

Bloomberg News initially reported that the group was plotting a prospective investment in the Latvian national carrier, which recently rejected concerns about its long-term viability and finances.

Lufthansa Group has been looking to invest in major airlines, most notably as it attempts to fend off other companies within the aviation industry that have been looking to consolidate, such as Air France-KLM and IAG.

The Latvian government owns some 98% of the total shares available in airBaltic. However, the German group could be looking to acquire part of the airline before capital is listed on the stock exchange.

airBaltic utilises a fleet of Airbus A220s and has clear ambitions to be the largest operator of this aircraft in the future. Its youthful fleet has allowed it to advance considerably in recent years, and future growth will continue.

No decision has formally been made on the part of Lufthansa Group concerning investing in airBaltic. However, this Latvian company is just one of many airlines the Group targets.

From a recent tie-up with ITA Airways to TAP Air Portugal, prospective talks with Air Europa and potentially more in the future, the Group is heavily focusing on consolidation.

airBaltic, however, appears to be an intriguing prospect for Lufthansa Group not just because of its geographical positioning and the potential to leverage that for its long-term success but also because the Latvian Government has agreed to bring in investors.

Consolidation is becoming increasingly common across the industry, and companies such as Lufthansa Group continue trying to one-up each other for the greater good of their long-term prospects.

Ultimately, however, consolidation will often be critiqued by watchdogs who will review the impact on consumers and even competitors if the transaction were to go through.