airBaltic faces critical decision on state investment and debt

The future of Latvia’s national carrier, airBaltic, faces a critical turning point as the incoming government must decide by January whether to provide new investments and guarantee the repayment of a 350 million euro bridge loan. The airline is currently managing a total debt of 1.8 billion euros, which includes bonds, aircraft and engine leases, state and bank loans, supplier debts, and unpaid taxes.

To stabilize its finances, airBaltic must meet several strict deadlines. By early December, the company is required to present at least two potential strategic investors. Additionally, the airline must reduce leasing payments, review contracts with Airbus and Pratt & Whitney, and restructure agreements regarding aircraft leased for Lufthansa flights.

Discussions regarding potential investment are reportedly underway with several major carriers, including Lufthansa, LOT Polish Airlines, KLM, and Turkish Airlines. If private investors do not assume the 350 million euro debt guarantee, the Latvian state may be forced to do so. To maintain significant influence following a potential reorganization and new share issuance, the state would need to acquire at least 25% plus one share.