Current controlling stake in airBaltic has to be changed sooner or later - Silina

RIGA - The controlling stake in the Latvian national airline airBaltic should be changed sooner or later, Prime Minister Evika Silina (New Unity) said at a press conference after a government meeting on Tuesday.

The prime minister stressed that airBaltic was one of the country's largest strategic companies, so it was important for the government to make preparations to ensure that airBaltic could attract new investment.

The prime minister said that when providing support to airBaltic during the Covid-19 pandemic, the European Commission indicated that the company should reduce direct state aid over a five-year period. "This means that we would have to change this controlling stake sooner or later, so it is better to do it ourselves in a controlled and strategic way," said Silina.

The prime minister pointed out that if the state retained at least 25 percent plus one share in the company's capital after the initial public offering (IPO) process, it would be able to ensure the development of airBaltic, maintain direct flights and keep Riga Airport as a strategic hub.

Silina pointed out that the government has not decided to reduce the share capital of airBaltic, but has decided to start reducing the share capital. "This process will only be completed when the IPO process is successful, we will know what progress has been made," Silina said.

She said that the Transport Ministry and airBaltic had indicated to the government that a successful IPO process requires allowing the reduction of share capital to start.

''If the IPO process is successful, we will finalize this action. If it is clear that we can attract additional investment, and it is in our interest as the government to reduce the next claim on the state budget so that citizens do not have to be compensated, we would like to allow airBaltic to go into the market and operate more on market principles," the prime minister said.

If the IPO process is not successful, the government will make a separate decision, Silina said. She also said that the state should not be in the business, but should give airBaltic the opportunity to earn more, to develop and to be as independent as possible from state funding.

The prime minister said that one can always provide more detailed information and better explanations. "I regret that the explanation came a bit later than it would have been expected," said Silina.

Asked about the strategic investor, the prime minister said that negotiations were still ongoing. The prime minister revealed that the IPO process and the attraction of a strategic investor would be conducted in parallel, so as not to delay the IPO process and the investor negotiations.

As reported, August 30, the government agreed in a closed-door session that the state should retain at least 25 percent plus one share in airBaltic's capital after the IPO.

Transport Minister Kaspars Briskens (Progressives) explained that currently there are no negotiations with the strategic investor of airBaltic on the sale of a controlling stake, but on the acquisition of a minority stake before the IPO or going to the IPO, as well as possible participation in the IPO.

In preparation for the IPO, airBaltic's share capital will be reduced by EUR 571.293 million and the company's existing share structure will be simplified.

Last year, airBaltic carried a total of 4.536 million passengers, 35.7 percent more than in 2022, and operated 44,100 flights, 18.3 percent more than a year earlier.

Last year, airBaltic's audited turnover was EUR 664.289 million, up 33.2 percent compared to 2022, and the company made a profit of EUR 33.852 million compared to a loss a year earlier.

The Latvian state owns 97.97 percent of airBaltic's shares, while the financial investor, Danish businessman Lars Thuesen's Aircraft Leasing 1, owns 2.03 percent.