Abāšins: airBaltic is valuable, but at what cost is it being kept afloat?

Jānis Abāšins, president of the Latvian Insurers Association and head of the Motor Insurers' Bureau of Latvia, commented on the current state and future of national carrier airBaltic during the TV24 programme "Preses klubs". According to him, active work is underway on the company's restructuring, including meetings and the involvement of industry consultants, as the government works toward a solution.

Abāšins stressed that the debate is not only about whether Latvia needs such an airline, but also about the price of keeping it running. He noted that one of the main problems is the company's heavy debt burden, which needs to be resolved. At the same time, he expressed hope that the restructuring succeeds, since airBaltic is the strongest and practically the only actively operating airline in the Baltics, and its loss would significantly affect the national economy.

New business plan

airBaltic's supervisory board has already approved a new business plan that includes raising 225 million euros in temporary financing using the existing collateral pool for its 2029 Senior Secured Notes, as well as reducing the planned fleet from 100 to around 40 aircraft by 2031. By the end of this year, the company will operate about 36 Airbus A220-300 aircraft, down from 54 currently.

In the long term, the company plans a recapitalization involving up to 225 million euros in new debt and 100 million euros in new equity, with part of the existing bonds converted into equity. Board chairman Andrejs Martinovs said the new equity is intended to come from potential strategic or financial investors, which will determine whether the state needs to make additional investments to retain its 25% plus one share stake.

Revenue is projected to grow to one billion euros by 2031, while the net debt-to-EBITDAR ratio is expected to fall from nearly 9 times to about 1.6 times. A repeat vote among bondholders on the required decisions is scheduled for August 17, after the August 3 meeting failed to reach quorum.