A decision on additional capital needed for Latvia’s national airline airBaltic will have to be made this year, Finance Minister Arvils Ašeradens of New Unity (JV) said during parliamentary debates on Thursday.
He explained that the short-term loan granted to the airline served as so-called “bridge financing,” allowing the company’s new management to prepare a new business plan. The Ministry of Transport of Latvia could present proposals on further action to the government in August or September.
Ašeradens stressed that the airline’s future operations require capital investment, but providing it will be complicated because neither the state budget law nor fiscal discipline regulations directly foresee such an option. As a result, the government will have to seek additional sources of funding.
The minister admitted that financing airBaltic will be one of the biggest challenges for the state budget, especially considering the already approved budget deficit of 3% of gross domestic product (GDP). Such obligations may limit the government’s ability to finance other priorities this year.
He added that the situation also affects the possibility of providing additional support to residents,
including compensation for rising fuel prices, because any new measures will have to comply with fiscal discipline requirements and available financial resources.
At the same time, Ašeradens emphasized that the government’s priority is to ensure support for critically important services and socially vulnerable groups, while opportunities to finance other initiatives will remain limited.
As previously reported, a majority of members of the Saeima of Latvia approved the issuance of a 30 million euros short-term state loan to airBaltic.
The loan was supported by 49 MPs, while 23 voted against, including coalition MP Uldis Augulis from the Union of Greens and Farmers (ZZS). One deputy abstained, while 15 deputies from United List (AS) and the National Alliance chose not to vote.
It was also reported that airBaltic Group’s turnover last year increased by 4.2% compared to 2024,
reaching 779.344 million euros. Meanwhile, the airline’s losses amounted to 44.337 million euros, which is 2.7 times less than in 2024.
In 2025, the airline carried a total of 5.2 million passengers, 1% more than in 2024.
Last summer, Germany’s national airline Lufthansa became a shareholder in airBaltic. Currently, the Latvian state owns 88.37% of airBaltic shares, Lufthansa owns 10%, Danish investor Lars Thuesen’s company Aircraft Leasing 1 holds 1.62%, while 0.01% belongs to other shareholders. The company’s share capital stands at 41.819 million euros.
After airBaltic’s initial public offering (IPO), Lufthansa’s ownership stake will depend on the eventual IPO market price. The agreement also provides for that Lufthansa will own no less than 5% of the airline after a potential IPO. On August 30, 2024, the Latvian government agreed that after the IPO the state must retain at least 25% plus one share in airBaltic.
Last August,
the government also decided that Latvia, like Lufthansa, would make a co-investment of 14 million euros
into airBaltic ahead of the potential IPO.
However, taking into account the airline’s 2025 financial results and market conditions, airBaltic has suspended the possible IPO and currently does not view it as a potential capital source for 2026, according to the company’s annual report.
The report states that despite expected operational and commercial improvements, the airline is projected to continue operating with negative free cash flow in 2026. Based on current forecasts, management expects that an additional cash injection of 100 million euros to 150 million euros will be necessary to finance operations during the 2026/2027 winter season.
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