Latvia’s national airline airBaltic has agreed with certain existing bondholders and third-party financing providers on the terms of bridge financing of up to 257 million euros, the airline said.
The financing is intended to strengthen the company’s liquidity and provide the financial resources needed to implement its new business plan.
The planned financing still requires approval from airBaltic’s bondholders and shareholders.
A bondholders’ meeting to consider the proposal has been convened for 11 September.
The airline explained that, subject to the necessary approvals and other conditions being met, 180 million euros is expected to become available shortly after bondholder consent is obtained, while a further 77 million euros will become available once additional conditions have been fulfilled.
The bridge financing is expected to be raised through the issuance of new bonds maturing on 26 February 2027. The interest rate has been set at 25% per year.
According to airBaltic’s stock exchange announcement, the transaction provides for the issuance of new higher-ranking “super senior” bonds of up to approximately 257 million euros. The financing would be provided by London-based investment management company Polus Capital Management and Israel-registered investment firm Klirmark Capital 4. Existing bondholders, including the Latvian state, will also have an opportunity to participate in the new issue on a pro-rata basis.
airBaltic Supervisory Board Chairman Andrejs Martinovs told LETA that the investors are prepared to provide bridge financing of up to 257 million euros, while all existing bondholders will also have the opportunity to participate in proportion to their current bond holdings.
“It is not a mandatory requirement, but an opportunity available to bondholders. This also applies to the Latvian state,” Martinovs stressed.
The financing is intended to refinance existing liabilities related to aircraft and engines, as well as cover ongoing expenses, including repair, maintenance and airport fees.
Commenting on the interest rate, Martinovs said it was the best financing airBaltic could currently obtain, as short-term bridge financing instruments of this kind are more expensive than other forms of financing. He stressed that airBaltic’s calculations and implementation of its business plan envisage that the company will be able to service such interest rates.
In its stock exchange announcement, airBaltic reiterated that its flight schedule will continue as planned throughout the implementation of the interim financing and review process, with no disruption expected for passengers.
The airline said the financing providers have committed to making the full amount of the planned financing available, subject to the necessary approvals and fulfilment of the other transaction conditions. All existing airBaltic bondholders will also have the opportunity to participate in providing the financing.
airBaltic stressed that the planned bridge financing does not depend on financial participation by the Latvian state. However, as an existing airBaltic bondholder, the state may, under recently adopted legislation, choose to participate in the financing proportionally to its bond holdings.
The planned financing forms part of broader measures aimed at strengthening airBaltic’s financial position and implementing its new business plan.
airBaltic CEO Erno Hildén said the planned financing would provide the liquidity needed for the airline’s next stage of development. He stressed that the revised business plan includes targeted measures to strengthen the company’s financial position and create a more efficient and financially self-sufficient airline, while the bridge financing would provide the time and resources needed to implement those measures without disrupting the planned flight schedule.
As previously reported, airBaltic’s Supervisory Board has approved a business plan that envisages raising 225 million euros in interim financing to improve liquidity, using the existing collateral pool securing 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 equity, while the remainder would be replaced with new, smaller debt of up to 125 million euros.
The business plan also envisages airBaltic operating 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.
On 25 August, Latvian President Edgars Rinkēvičs promulgated the airBaltic Financial Stabilisation Measures Law, which had been adopted by the Saeima under an urgent procedure on 20 August.
The law authorises the government to potentially participate in the purchase of airBaltic bridge-financing bonds for up to 30 million euros, alongside private investors and on identical terms. The Cabinet may take a separate decision on purchasing the bonds if necessary.
The law also allows claims arising from the state loan and bonds already held by the state to be converted into airBaltic equity. This means that state-owned bonds worth 50 million euros and the remaining loan of more than 18 million euros may be converted into shares in the airline.
On 25 August, the government also approved extending the repayment deadline for the remaining 18 million euros of the state loan until 30 December this year.
airBaltic bondholders have also approved the capitalisation of the airline’s two nearest interest payments, as well as several other measures giving the company additional flexibility in implementing its revised business plan.
Interest payments due on 14 August and 14 November will be added to the principal amount of the bonds rather than paid in cash. Bondholders also approved a temporary waiver of minimum liquidity requirements until November 2026.
Last year, airBaltic Group’s revenue increased by 4.2% compared with 2024 to 779.344 million euros. The group recorded losses of 44.337 million euros, 2.7 times lower than in 2024. The airline carried a total of 5.2 million passengers in 2025, up 1% from the previous year.
German flag carrier Lufthansa became an airBaltic shareholder last summer. The Latvian state currently owns 88.37% of airBaltic, Lufthansa holds 10%, Danish businessman Lars Thuesen’s Aircraft Leasing 1 owns 1.62%, and other shareholders hold 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.
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