Latvia’s national airBaltic airline has plans to attract EUR 100 million in additional financing, as mentioned in the company’s audited account for 2023.
The account mentions that July 2024 will mark the end of the EUR 200 million bond maturity period. This means the airline will start looking for external funding in order to refinance bond. The company also plans to attract EUR 100 million in additional financing.
“The airline plans to no t only refinance EUR 200 million, but also attract an additional EUR 100 million in order to improve the balance of funds and facilitate the financing of future capital investments related to the increase of the company’s capacity,” the account mentions.
The account also mentions that airBaltic has hired consultants from an international investment bank. On top of that, the airline also works on various refinancing opportunities, including the option to attract finances from the public and private markets.
The company’s management believes airBaltic is well-prepared to successfully refinance bonds before the end of their term.
At the same time, the annual account also makes it clear there are still some uncertainties regarding the refinancing of the bonds worth EUR 200 million by July 2024.
This uncertainty is related to the debt refinancing volume the airline can realistically attract in the first half-year of 2024, as well as the costs related to it.
The account mentions that in parallel to these efforts, the airline is also working on two other refinancing directions: direction of public and private debt sectors. If the private sector turns out too expensive, the airline may consider releasing bonds in order to complete the deal by the end of April 2024.
“The airline has an option to reduce costs related to new financing by ensuring a new debt for all unburdened assets. The airline also studies options of using several airline engines as collateral. The market value of these aircraft and engines is expected to exceed current liabilities, thus providing more financial security for the debt,” the annual account explains.
The document also mentions that the airline has commenced negotiations with shareholders in order to study their preparedness to finance a portion of the new debt alongside private investors.
“If, as a result of any external turmoil, the European Union’s high-yield debt markets become unavailable to airBaltic in the first half of 2024, the airline may seek debt financing from its shareholders, including the Latvian government,” the account mentions.
At the same time, the account also mentions that, because of better operational results, airBaltic board believes in that private and/or public financing sources will remain available to the airline in the first half of 2024. This is why they believe airBaltic will be able to successfully refinance its existing bonds and attract additional financing.
As previously reported, in 2019, airBaltic released five-year bonds worth EUR 200 million. More than 100 investors from 25 countries bought the bonds. Demand had even exceeded supply. The interest rate for those bonds is 6.75%.
At the beginning of July 2020, the European Commission (EC), after several months of evaluation, supported the Latvian government’s decision to invest EUR 250 million in the equity capital of airBaltic to provide support in overcoming the Covid-19 crisis. In the following years, the State invested additional funds in airBaltic’s share capital in two steps, and currently the company’s share capital is EUR 596.473 million. The EC decision provides for Latvia to recover the investment within five to seven years.
Also read: Mentioning sanctioned Lembergs, US ambassador urges Latvia to not go back
Follow us on Facebook and X!