airBaltic Places €200million Bond Issue To Prepay Aircraft

airBaltic today announced a €200 million bond issue. The airline announced the news in Riga this morning where Simple Flying was on hand to discuss it with the airline’s CEO, Martin Gauss.

airBaltic Bond Martin Gauss
airBaltic today announced a €200 bond raise. Photo: Anna Zvereva via Wikimedia

airBaltic, the Latvian flag carrier, is currently in the midst of a huge fleet transformation. While the airline currently operates four different types of aircraft, it is in the process of switching to a single aircraft type; the Airbus A220-300. Today’s big announcement will allow the airline to continue with its fleet simplification plan. Additionally, the money raised will also go to pay off more expensive loans.

A historic day

Today was a historic day, as it was the largest amount in history that anybody in Latvia has raised as a bond. airBaltic is especially proud of this achievement as it shows how well the airline is currently performing, and the level of trust investors have in the airline.

airBaltic’s CEO, Martin Gauss, told Simple Flying earlier today that it was not only a historic day for the airline, but also for the country of Latvia. It will additionally allow airBaltic to lead as an example to other businesses within the nation.

What will the bond be used for?

Simple Flying asked Mr Gauss what the bonds would mean for airBaltic going forward. He told us that the bonds would give the airline a better liquidity position. This will allow the airline to complete two objectives: prepaying outstanding aircraft, and paying off some of its more expensive loans. Mr. Gauss commented that,

“the main reason was to have a better liquidity position to go through the seasonality we have, we will be able to prepay our aircraft which are coming in the future.” He went on to add: “we will be repaying some more expensive bank loans.”

Why raise the bonds?

airBaltic is currently in the midst of executing its business plan named “Destination 2025”. Mr. Gauss mentioned that the main reason for raising the bond was in order to continue with the Latvian carrier’s plan for expansion of the airline.

airBaltic Bond Martin Gauss
Mr Gauss’ office has a desk comparing outstanding A220 orders to A220 deliveries. Photo: Tom Boon – Simple Flying

airBaltic was the launch customer for the Airbus A220-300 and has a total of 50 of the type on order. This makes them the aircraft’s third-largest customer behind Delta Air Lines and the startup airline Moxy.

So far 19 of the aircraft have been delivered, with Mr. Gauss telling me that the 20th is due to arrive at the airline soon. Simple Flying understands that the funding will go part way to helping to pay for some of these new aircraft. Mr. Gauss tells us that they are the “greenest narrowbody available”.

What do you make of airBaltic’s historic bond issue? Let us know in the comments!