airBaltic announced, on Thursday, that it will receive up to EUR 250 million in equity from the Latvian government to help it in the current aviation crisis caused by COVID-19. Low travel demand and international border restrictions have crippled many airlines; forcing governments to bail them out from further fiscal loss.
The Cabinet of Ministers of the Republic of Latvia, as the major shareholder of Latvian airline, has today approved the investment of up to EUR 250 million into the equity of @airBaltic to overcome the economic crisis caused by COVID-19. Read more: https://t.co/ojvFsqTwVw pic.twitter.com/OxiaKpFzUe
— airBaltic (@airBaltic) May 7, 2020
The Latvian state is already airBaltic’s primary shareholder and this investment will increase its share to 91%. The amount of investment, however, will be regulated by market rules and the total financial loss incurred by the airline. The transport minister, Tālis Linkaits, says:
We will start with EUR 204 million in the first stage and then perform previously supported base capital increase of EUR 36 million in state loan conversion. Then we will look how the industry develops, what the situation is and if there is a need for additional investments
Post-coronavirus Plans
The CEO of airBaltic, Martin Gauss stated:
With this new equity investment, we can begin to execute our new business plan Destination 2025 CLEAN which focuses on a new start for airBaltic once international flight resume. This will facilitate successful growth for the company once the impact of the COVID-19 crisis begins to ease
The business plan, already approved by the Supervisory Board but awaiting approval from the European Commission, aims to resume operations with a reduced fleet of 22 Airbus A220-300s in 2020 and 2021. Subsequently, growing to operate 50 Airbus A220-300s by late 2023.
Meanwhile, airBaltic has been operating repatriation flights to return Baltic states nationals to Riga. They include nationals and permanent residents of the Republic of Latvia, Lithuania, Estonia.
Let us know in the comments if the state aid is enough for airBaltic to survive the pandemic.
