This week, airBaltic announced that it will receive a €250 million ($274 million) investment from the Latvian government. The country’s cabinet approved the move in a bid to help its flag carrier overcome the financial impact of the global health crisis.
An existing relationship
The government of Latvia is the majority shareholder of the airline. Therefore, it is taking steps to ensure its stability through the outbreak. According to a press release, its stake in the firm will increase from 80.05 percent to 91 percent with the deal.
If the European Commission approves the plan, the investment will be provided in tranches. Each portion will be given in line with market rules and will not exceed the losses caused due to impact of coronavirus.
Plans for growth
airBaltic CEO Martin Gauss spoke of the funding that his company is receiving. He clarified that the money would be used to help the airline implement a new strategy after the pandemic slows down.
“With this new equity investment, we can begin to execute our new business plan Destination 2025 CLEAN, which focuses on a new start for airBaltic once international flights resume,” Gauss said, according to the release.
“This will facilitate successful growth for the company once the impact of the COVID-19 crisis begins to ease.”
The carrier connects the Baltic region with over 55 destinations in Europe, the Middle East, and the Commonwealth of Independent States. The new plan will see airBaltic operate a reduced fleet for a few years. It will initially conduct services with its 22 Airbus A220-300 aircraft. After that, once there is a need for an increase in capacity, it hopes to fly with up to 50 A220-300s by the end of 2023.
While the majority of the operator’s services have been suspended, it has been conducting vital cargo flights with its A220s. Last month, it flew between the Latvian capital of Riga and Urumqi in China to ship crucial medical supplies for use in Latvia.
A fresh approach
Altogether, the airline is confident in its ability to conduct efficient operations when the dust settles. Rather than deferring or canceling its order for A220s, it is relying on them for a swift post-coronavirus expansion.
Unlike the A220s, airBaltic’s 12 DHC Dash-8s and three Boeing 737s are not going to return to action. Therefore, its flights are going to be entirely performed by the Airbus narrowbody.
Simple Flying reached out to airBaltic for comment on its government support but did not hear back before publication. We will update the article with any further announcements.
What are your thoughts on the support that airBaltic is receiving? Will this be enough to tide it over? Let us know what you think of the situation in the comment section.