The Latvian government is set to review a request from national airline airBaltic for a short-term loan, the Ministry of Transport (SM) has announced.
According to the government’s agenda, the Cabinet of Ministers will consider an informational report on the current situation at airBaltic during a closed session on Tuesday.
The ministry stated that at the end of March this year, airBaltic formally approached it, informing the shareholder about the impact of external factors on the company’s financial and operational performance. The military conflict in the Middle East has led to a significant rise in aviation fuel prices, increasing costs and affecting profitability.
“Having received and assessed airBaltic’s request for a short-term loan as a potential preventive stabilisation instrument, I have proposed that the issue be reviewed at today’s Cabinet meeting,” said Transport Minister Atis Švinka.
He stressed the importance of ensuring the airline’s uninterrupted operations
at a time when external factors are placing particular strain on the aviation sector.
The ministry noted that the airline continues to operate flights according to its planned schedule. If granted, the loan could help maintain a stable route network, avoiding abrupt changes and absorbing the pressure of rising fuel costs.
At the same time, SM emphasised that no decision has yet been made regarding the possible financing. The matter will be assessed in line with regulatory requirements, and any decision will depend on further evaluation and the necessary approvals.
The ministry also pointed out that, for security reasons, airBaltic had already suspended flights to Tel Aviv and Dubai, reducing revenues and affecting network efficiency. Meanwhile, aviation fuel prices in the Gulf region—which accounts for roughly one-third of the global market—have risen significantly due to the conflict, at times nearly doubling.
Work is also ongoing on a new business plan, expected to be finalised this summer.
A potential short-term loan could help stabilise operations until the implementation of the new plan begins.
As previously reported, airBaltic’s turnover last year increased by 4.2% to 779.3 million euros, while losses totalled 44.3 million euros—2.7 times lower than the previous year. In 2025, the airline carried 5.2 million passengers, up 1% year-on-year.
Last summer, Lufthansa became a shareholder in airBaltic. Currently, the Latvian state holds 88.37% of shares, Lufthansa 10%, Danish investor Lars Thuesen’s company Aircraft Leasing 1 holds 1.62%, and other shareholders 0.01%. The company’s share capital stands at 41.8 million euros.
Following a potential initial public offering (IPO), Lufthansa’s stake would be determined by the market price, but is expected to remain at no less than 5%.
The Latvian government has agreed that after the IPO, the state must retain at least 25% plus one share.
In August last year, the government decided that Latvia, alongside Lufthansa, would invest 14 million euros into airBaltic ahead of the planned IPO.
However, given the financial results of 2025 and current market conditions, the airline has suspended its IPO plans and no longer considers it a viable source of capital in 2026, according to its annual report.
The report indicates that despite expected operational improvements, the airline will operate with negative free cash flow in 2026. Based on current forecasts, management expects that an additional 100–150 million euros will be required to finance operations during the 2026/2027 winter season.
Minister Švinka noted that an IPO is not the only way to attract capital, and the airline’s management has been given a broad mandate to explore alternative financing instruments. As such, the airline’s priorities for 2026 include not only cost reduction but also securing additional capital.
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