Following previous discussions, discussions between airBaltic and a strategic pre-IPO investor are ongoing and at an ‘advanced stage’, according to the carrier.
Whilst the investors have not been made public, Lufthansa Group were rumored to be planning to invest as a minority partner in the airline, with some reports stating the deal could be concluded by the end of 2024.
However, the outlook is now more gloomy.
In 2024, airBaltic raised around €840 million in junk bonds priced at 14.6% with one of the main investors being the Latvian State who bought €340million in bonds. This is after the Latvian Government also invested €250million in the Airline in 2020, to save the company from insolvency during the Covid-19 Pandemic. A junk bond is a type of debt investment where there is a greater risk that the issuer will default on any investment.
In a statement to Travel Radar, airBaltic stated:
“Negotiations with the pre-IPO strategic investor in airBaltic are ongoing and at an advanced stage. Preparations for a potential IPO are also in progress with the earliest possible timing of the listing in 2025, and when the market conditions are right.”
Supply Chain Issues Start to Bite
In more worrying news, airBaltic has also announced that ongoing issues with Pratt & Whitney’s Pw10005 engines, used on their Airbus A220-300 planes, will lead to a 5% reduction in its 2025 schedule.
P&W’s Pw10005 has had its fair share of incidents since its introduction in 2016. Even on its first flight, the rotor axis within the engine was found to bend and bow due to temperature irregularities throughout its structure.
Despite the then head of Pratt and Whitney’s parent company, United Technologies, Gregory Hayes saying in an investment call that “On the technical stuff, I would tell you it is in the rearview mirror. The start time with the software drops have been pretty well addressed”, problems persisted over the next few years.
Indeed, Indian-based GoAir and IndiGo removed all PW10005 engines from their aircraft as a precaution due to concerns over the engine’s ability to operate in hot and humid environments.
More worryingly, between 2019 and 2024, there have been a series of serious engine failures whilst A220-300s have been airborne – notably when a Swiss Air cabin crew died after smoke filled the cockpit and cabin of an A220-300 late last year.
In fact, the recall has been so widespread, that around a third of all aircraft designed to fly with the PW10005 engines were grounded in 2024 alone, as any attempt to return the engine to active service was pushed further and further back.
Do you think there will be investment in airBaltic, or are they unfortunate to be operating at a time when supply cannot keep up with demand? Let us know your thoughts in the comments below.
