The Saeima Budget and Finance (Taxation) Committee on Wednesday approved in principle the state’s potential participation in the financial stabilisation of Latvia’s national airline airBaltic, including the possible purchase of up to €30 million in interim financing bonds and the conversion of €50 million in existing bonds into equity.
A draft law on financial stabilisation measures for airBaltic was submitted at the Budget Committee meeting.
Seven MPs voted in favour of advancing the bill to its first reading in the Saeima, while four voted against – Svetlana Čulkova, Kristaps Krištopans (LPV), Harijs Rokpelnis (ZZS) and Ģirts Štekerhofs (ZZS).
The committee designated the bill as urgent.
The Saeima is expected to consider the bill in both its first and second readings on Thursday, August 20. An extraordinary meeting of the Budget Committee is planned during a break in the parliamentary sitting.
At an extraordinary meeting on August 14, the government approved in principle three decisions concerning the financial stabilisation of airBaltic, which still require approval by the Saeima.
Among other measures, the government will ask the Saeima to authorise the state’s potential participation in the purchase of up to €30 million in airBaltic interim financing bonds, alongside private investors and on identical terms. The Cabinet of Ministers would then be able to adopt a separate decision on purchasing the bonds if necessary.
There are also plans to convert claims arising from the state loan and bonds already held by the state into the company’s share capital. This means that €50 million in state-owned bonds and the remaining loan balance of more than €17 million could be converted into shares in airBaltic.
The government also approved in principle extending the repayment deadline for a €30 million state loan from the end of August until the end of this year. By July 24, airBaltic had repaid a total of €12.9 million in principal and contractual interest payments on the state loan.
The meeting of the Saeima Budget and Finance (Taxation) Committee took place just days after airBaltic bondholders approved the capitalisation of the next two bond interest payments, as well as several other measures providing the airline with additional flexibility in implementing its revised business plan.
Bondholders approved adding the interest payments due on August 14 and November 14 this year to the principal amount of the bonds instead of paying them in cash. A temporary waiver of minimum liquidity requirements until November 2026 was also approved.
At the same time, airBaltic’s planned €225 million interim financing package was not discussed at the bondholders’ meeting on Monday, August 17, as the issue was not included on the agenda.
Prime Minister Andris Kulbergs (AS) previously told LETA that negotiations on airBaltic’s financial restructuring had resulted in an agreement to continue working towards a solution, although no final agreement on the company’s future has yet been reached.
The prime minister stressed that the Saeima will have to decide on the future status of the €50 million in airBaltic bonds held by the state, including their possible conversion into equity, and provide the government with a mandate to potentially participate in further financing of the company.
The purpose of the draft law is to establish measures for the financial stabilisation of airBaltic and ensure effective management of the state’s financial interests during the process. It would enable the state, as a shareholder, creditor and bondholder, to act in a timely and coordinated manner and on equal terms with the company’s other shareholders, bondholders and creditors.
Under the draft law, one or more measures could be implemented to stabilise airBaltic’s finances. Decisions on implementing these measures would be taken by the Cabinet of Ministers, which would determine their scope, conditions and other relevant terms.
Among the measures envisaged is an amendment to the agreement governing the €30 million state loan granted to the airline, extending the deadline for repayment of the outstanding principal, accrued interest and other obligations arising from the agreement.
The draft law also provides for the possibility of fully or partially converting into equity any claims arising from the €30 million state loan granted to airBaltic.
Another possible measure mentioned in the bill is the capitalisation, conversion or other restructuring of claims arising from airBaltic bonds held by the state. The amount would not exceed the actual outstanding principal of the state-owned bonds, capped at €50 million, plus the corresponding accrued interest and other claims arising from the bonds.
The draft law also provides for the possibility of the state participating in interim financing for airBaltic by purchasing up to €30 million in newly issued airBaltic bonds.
The state would purchase the newly issued bonds in accordance with the bond issuance documentation, including the prospectus and instructions from the arrangers. The Ministry of Transport would be responsible for preparing financial, legal, fiscal and state-aid assessments, as well as the terms of the interim financing transaction.
The Cabinet of Ministers would be required to report to the Saeima Budget and Finance (Taxation) Committee on the implementation of the financial stabilisation measures at least once every quarter.
As previously reported, airBaltic’s Supervisory Board has approved a business plan that, among other measures aimed at improving liquidity, envisages raising €225 million in interim financing using the existing collateral package securing its senior bonds due in 2029.
In the longer term, the plan envisages recapitalising the company through up to €225 million in new debt and €100 million in new equity. Part of the existing 2029 bonds would be converted into equity, while the remaining portion would be replaced with new, reduced debt of up to €125 million.
The business plan also provides for the airline to operate 36 Airbus A220-300 aircraft by the end of 2026, compared with 54 aircraft currently, with the fleet gradually increasing to approximately 40 aircraft by 2031.
airBaltic Group’s revenue increased by 4.2% last year compared with 2024, reaching €779.344 million. The group posted a loss of €44.337 million, 2.7 times lower than in 2024. In 2025, the airline carried a total of 5.2 million passengers, an increase of 1% compared with 2024.
Last summer, German flag carrier Lufthansa became a shareholder in airBaltic. The Latvian state currently owns 88.37% of airBaltic’s shares, Lufthansa holds 10%, Aircraft Leasing 1, a company owned by Danish businessman and financial investor Lars Thuesen, holds 1.62%, while other shareholders own the remaining 0.01%. The company’s share capital amounts to €41.819 million.
In view of its 2025 financial results and current market conditions, airBaltic has suspended its potential initial public offering (IPO) and does not currently consider it a potential source of capital in 2026, according to the airline’s annual report.
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