On 21 December the European Commission permitted Latvia’s government to invest EUR 45 million into the country’s national airBaltic airline’s capital, as confirmed by the airline’s representatives.
The aforementioned investments into airBaltic’s base capital are needed in order to compensate the losses caused by Covid-19 pandemic and help the airline overcome the economic crisis.
airBaltic CEO Martin Gauss says the support from the main shareholder during the crisis means Latvia’s government understands the positive impact airBaltic has on the economy.
«The European Commission has concluded that the COVID-19 pandemic qualifies as such an exceptional occurrence that exceptional interventions by member states to compensate for the damages linked to it are justified,» said Gauss.
This investment is planned to return to the budget in the form of proceeds from the initial public offering of airBaltic in the near future.
This year Latvia’s Cabinet of Ministers, as the majority shareholder, conceptually approved investing EUR 90 million into airBaltic’s base capital. Before the remaining investment amount can be processed, it is necessary to receive approval from the European Commission.
According to information from Firmas.lv, the airline’s current base capital is EUR 506.473 million.
After several months of discussions European Commission approved in July 2020 the request from the Latvian government to increase the base capital of airBaltic by EUR 250 million in order to provide support to the airline to overcome the Covid-19 crisis. Last year financing was provided, increasing airBaltic’s base capital to EUR 506.473 million.
Last year airBaltic concern operated with turnover of EUR 142.6 million, which is 72% less than the year prior. The airline’s losses increased 29 times, reaching EUR 264.6 million. Revenue for three quarters of 2021 was EUR 127.462 million, which is 5.9% more when compared to the same period of 2020, according to the company’s information.
As the Ministry of Transport reported in August, airBaltic is a strategic contributor to Latvia’s economy that provides more than 2.5% of Latvia’s GDP. The aid from the state provided to the aviation industry, which has been greatly impacted by the Covid-19 crisis, is a major contribution to help overcome the crisis, continue operations and assist with the development of the national economy. The aid provided by the state will return to the state budget once the situation with Covid-19 has stabilized globally, the ministry explains.
Read also: Expert: it would be a good idea for Latvia’s half-empty sea ports to take over freights from Belaruskali
The Latvian state owns 96.14% of airBaltic capital. The Danish investor Lars Thuesen’s Aircraft Leasing 1 owns 3.86%.
European Commission permits Latvia to invest in airBaltic’s base capital
