Lithuania should not invest in Latvia’s national airline airBaltic until the financially troubled company becomes profitable, Lithuanian President Gitanas Nausėda said on Friday.
“The company needs to make very radical decisions to cut costs and increase profitability. Until there are such guarantees, I do not think it would be very responsible to make any generous promises – not until we see how the company’s revival (…) from the ashes and its profitable operation will be ensured,” Nausėda told journalists in Vilnius.
“We need to assess all the financial aspects and all the associated risks because the company’s situation is not simple,” Nausėda said when asked whether Lithuania should consider a proposal to acquire shares in airBaltic if one were made.
Nausėda stressed that Lithuania is interested in the successful operation of Latvia’s airBaltic so that the country can be easily reached by air, with as many flights as possible, during Lithuania’s presidency of the Council of the European Union in the first half of next year.
“There will be a lot of work and a lot of travel, so convenient transport connections are a very important aspect,”
the Lithuanian president said.
Lithuanian Prime Minister Mindaugas Sinkevičius said during a visit to Riga on Thursday that, if Latvia made such a proposal, Lithuania would consider acquiring a stake in airBaltic, taking all arguments into account and putting its own interests first.
As previously reported by LETA, on Thursday, the 20th of August, the Latvian parliament, the Saeima, adopted in its final reading a law allowing for possible state participation in the financial stabilisation of airBaltic. This includes the potential purchase of up to 30 million euros in airBaltic bridge-financing bonds and the capitalisation of 50 million euros in existing bonds.
The adopted law authorises the government to potentially participate in the purchase of up to 30 million euros in airBaltic bridge-financing bonds alongside private investors and on identical terms. The Cabinet of Ministers will be able to take a separate decision on purchasing the bonds if necessary.
The plan also provides for the capitalisation of claims arising from the state loan and bonds already held by the state into the company’s share capital. This means that 50 million euros in state-owned bonds and
more than 18 million euros of the remaining loan could be converted into shares in airBaltic.
The repayment deadline for the 30-million-euro state loan is also expected to be extended from the end of August until the end of this year. By the 27th of July, airBaltic had repaid a total of 12.9 million euros in loan principal and contractual interest payments.
This week, airBaltic bondholders approved the capitalisation of the next two interest payments, as well as several other measures providing the airline with additional flexibility in implementing its revised business plan.
Bondholders approved adding the interest payments due on the 14th of August and the 14th of November this year to the principal amount of the bonds instead of paying them in cash. A temporary waiver of minimum liquidity requirements until November 2026 was also approved.
Meanwhile,
the issue of airBaltic’s planned 225-million-euro bridge financing was not considered at the bondholders’ meeting
on Monday, the 17th of August, because it was not included on the agenda.
As previously reported, the airBaltic supervisory board has approved a business plan that includes raising 225 million euros in temporary financing to improve liquidity, using the existing collateral pool for the 2029 senior bonds.
In the longer term, the plan provides for the company’s recapitalisation through up to 225 million euros in new debt and 100 million euros in new equity. Part of the existing 2029 bonds would be converted into shares in the company, while the remaining portion would be replaced with new, smaller debt of up to 125 million euros.
The business plan also provides for the airline to operate 36 Airbus A220-300 aircraft by the end of 2026, compared with 54 aircraft currently, with the fleet gradually increasing to around 40 aircraft by 2031.
Last year, airBaltic Group’s revenue increased by 4.2% compared with 2024,
reaching 779.344 million euros. The group posted losses of 44.337 million euros, 2.7 times lower than in 2024. In 2025, the airline carried a total of 5.2 million passengers, up 1% from 2024.
Germany’s national airline Lufthansa became an airBaltic shareholder last summer. The Latvian state currently owns 88.37% of airBaltic shares, Lufthansa holds 10%, Aircraft Leasing 1, owned by Danish businessman Lars Thuesen, holds 1.62%, while other shareholders own the remaining 0.01%. The company’s share capital amounts to 41.819 million euros.
Given its 2025 financial results and market conditions, airBaltic has suspended its potential initial public offering and does not currently consider an IPO a potential source of capital in 2026, according to the airline’s annual report.
Read also: Latvian parliament gives “green light” to possible state involvement in airBaltic rescue