Decision on airBaltic funding likely after elections
“At present, airBaltic is in a waiting phase. In order to continue developing and remain competitive in the market, the airline urgently requires additional financing. Following the cancellation of the IPO, the most realistic – and practically the only positive – scenario is a state subsidy. However, a decision to provide such support before elections would likely be politically damaging. Therefore, it is quite safe to assume that this issue will not be addressed until after the elections,” says Raitis Logins, Partner at the international financial advisory firm Grant Thornton Baltic.
Politicians are most likely to decide on another state capital injection into airBaltic only after the elections.
With its current financial position, the airline is still able to operate for some time. In particular, the €340 million bond issue does not mature until 2029, provided that the global aviation sector does not face a major crisis—such as a significant escalation of conflict in the Middle East, a sharp rise in fuel prices, or supply shortages. This situation allows the government to postpone a decision on additional support, potentially leaving it to the next government after the parliamentary elections expected in autumn.
Overall, the financial results present a mixed picture. The airline’s core business continues to grow, but its financial structure remains heavily burdened by debt. In the coming years, the key factors will be the company’s ability to attract new capital and improve profitability, which will determine whether the airline can transition to a sustainable profit model.
The latest financial data show that airBaltic significantly reduced its losses in 2025. The airline’s revenue increased to approximately €779 million, around 4% higher than the previous year, while net losses declined to €44 million compared with €118 million in 2024. At the same time, operational profitability indicators show some pressure: adjusted EBITDAR decreased to approximately €144 million, mainly due to engine supply and maintenance issues as well as increased operating costs affecting part of the fleet.
From a balance sheet perspective, the capital structure remains the main challenge. The company’s equity is negative at approximately –€184 million, while total liabilities exceed €1 billion, primarily due to aircraft leases and borrowings. Cash reserves at the end of the year were relatively modest.
Another important restructuring measure was the reduction of share capital from €596 million to €42 million, carried out to cover accumulated losses and improve the balance sheet structure. Such measures are often used by companies preparing for new capital raising or a potential stock exchange listing.
It is unlikely that the state would sell its stake at a symbolic price to Lufthansa or another airline.
According to the expert, although the company plans to engage additional business consultants to develop alternative financing scenarios, the current situation in the aviation industry suggests that state support remains the most viable option. Despite improvements in financial indicators, the airline’s historical losses, the challenging industry environment and the limited geographic market potential make it unlikely that a strategic investor would step in with the intention of further developing the airline rather than simply acquiring its valuable assets.
The impact of airBaltic on the Latvian economy should be assessed in a broader context: the airline is both a key driver of tourism exports and the anchor client of Riga Airport.
“It is unlikely that the state would sell its stake for a symbolic price or ‘one euro’ to Lufthansa or another airline whose primary interest might be the fleet rather than the development of the airline as a regional aviation hub,” Logins explains. “The impact of airBaltic on the national economy should be viewed more broadly. First, the airline is a key driver of tourism exports, bringing a significant number of visitors to Riga each year and giving Latvia a competitive advantage over neighbouring countries such as Lithuania and Estonia. At the same time, with more than 50% of all flights, it is the anchor client of Riga Airport and a cornerstone of its success.”
He also notes that Vilnius Airport has recently announced ambitious expansion plans and is already engaging in competitive pricing strategies, as indicated by statements from Ryanair. This means that if Latvia were to lose airBaltic, the country could also lose its competitive advantage over Lithuania.
“Latvia has previously lost its leading position in rail freight transportation. There is a similar risk of losing leadership in passenger air transport, which would undoubtedly have an economic impact. Therefore, it is unlikely that the state would refuse to support the airline if no strong investor emerges who is willing to continue developing airBaltic in Latvia’s strategic interests,” Logins adds.
