The Estonian government decided on Thursday not to purchase shares of Latvia’s national airline airBaltic, Estonian Minister of Infrastructure Kuldar Leis told journalists after a government meeting.
He explained that the decision not to buy shares now was made because the airline has not yet completed its management transition, there is no clarity regarding the initial public offering (IPO), and the company’s financial situation remains problematic.
“There is no specific information about the potential IPO, so we did not make any decision on this today. We simply acknowledged that there are two possible ways to acquire shares in airBaltic,” said Leis, referring to either a direct share purchase or through the IPO.
“Given the current situation at airBaltic, with a new management team soon to be appointed, a new strategy still pending approval, and no significant improvement in the financial situation, we have decided not to purchase airBaltic shares at this stage,” the minister said.
Nevertheless,
Leis emphasized that Estonia is interested in developing cooperation with airBaltic,
which accounts for 30% of passenger traffic at Tallinn Airport. To support this cooperation, Estonia is prepared to offer the airline stable airport fees until 2030.
According to Latvian Minister of Transport Atis Švinka, speaking to Estonian public broadcaster ETV, Latvia had offered both Estonia and Lithuania the opportunity to buy airBaltic shares under the same terms as German airline Lufthansa, which plans to invest 14 million euros in the airline.
Leis confirmed that Estonia had been offered up to 10% of the shares for 14 million euros.
Lithuania has not yet made a decision regarding the purchase of airBaltic shares.
As previously reported by LETA, on the 30th of June
the German Federal Cartel Office approved Lufthansa’s acquisition of a 10% stake in airBaltic.
The transaction could be completed within two months, according to airBaltic’s Chairman of the Supervisory Board Andrejs Martinovs.
Following the IPO, Lufthansa Group’s final shareholding will depend on the market price, but the agreement ensures that Lufthansa will hold no less than 5% of the company’s capital.
Latvia’s government also decided on the 30th of August, 2024, that the state must retain at least 25% plus one share of airBaltic’s capital after the IPO.
Currently, Latvia owns 97.97% of airBaltic shares, while 2.03% are owned by financial investor Lars Thuesen through Aircraft Leasing 1.
In 2024, the airBaltic group reported audited losses of 118.159 million euros, in contrast to a profit the previous year. However, the group’s turnover increased by 11.9%, reaching 747.572 million euros.
In 2024, airBaltic carried 5.2 million passengers, a 13% increase year-on-year, and operated 47,000 flights, which is 7% more than the previous year.
Read also: Latvia offers “airBaltic” shares to Estonia and Lithuania on equal terms with Lufthansa