airBaltic Will Fight To Survive

airBaltic will be in a fight for survival without fresh funding, according to the airline’s home country, Latvia, and its Prime Minister.

A blunt verdict on the future of the Latvian carrier was issued: in its current state, it cannot stand on its own two feet without fresh funding.

Speaking with LETA, the Latvian news agency, Andris Kulbergs said the airline will need continued financial injections to have any chance of sustaining operations in the long term. As a consequence, he argues that a full reassessment of the business plan is needed.

What’s Going On At airBaltic?

Regarding Kulberg’s comments, the recent history of airBaltic would support his views: financials have deteriorated, with a first‑quarter net loss that widened significantly year‑on‑year despite revenue growth.

While management points to factors such as negative currency movements and the high financing costs associated with its fleet, and broader economic pressures this year, none of these factors change the airline’s position.

The balance sheet is the focus, as external analysts have looked into negative equity and liabilities, with concerns about leases, loans, and a high-coupon bond at eye‑watering interest rates that are weighing on the airline. Evidence suggesting that repayments will struggle to be made by the time the loans mature is a red flag.

As a consequence of all of this, and to keep the engines running at airBaltic, bridge loans have continued to be put forward and are due for repayment. While providing the airline with the stability it needs to move forward with the short- to medium-term realignment of its strategy, this kind of support cannot continue indefinitely.

Fitch Ratings has flagged that without some private investment, which would be major or even an IPO, there would need to be continued state funding to get through not just over the coming months but for the next few years. The Government, however, is hesitant on this.

Given that the business plan aims to scale deliveries and continue to see more Airbus A220s join the fleet, it raises concerns because it’s not aligned with the airline’s current position. This is why the country’s Prime Minister is putting pressure on a revised business plan before any further funding is put in.

The Latvian Prime Minister Is Blunt

Against the backdrop of airBaltic’s recent history, Kulbergs’ comments are blunt but realistic, and his political patience appears to be wearing thin. That, however, doesn’t dispute the need for the airline, as it remains critical to connectivity to and from Latvia and also impacts the economy.

However, the argument is that, despite airBaltic’s status within its country, this cannot justify unlimited state support, and therefore airBaltic needs to prove that it can be financially sustainable over the long term without the Government dumping funds on a continued basis.

With this view, the Prime Minister has requested that the airline submit a new business plan to the cabinet, expected to be reviewed this month, with the help of an aviation consultancy, Seabury. That agency’s role is to drive a plan to restore profitability and stabilise the balance sheet.