airBaltic needs another €225 million to survive, government ready to add €30 million

Latvia's national airline airBaltic is once again facing serious financial difficulties and is trying to reach an agreement with creditors to secure its solvency. The company's path forward will largely be decided at a creditors' meeting planned for Monday.

The airline wants to postpone two upcoming interest payments, adding them to the loan principal instead — the first payment, worth almost €14 million, was already due on Friday. To stabilize its finances and secure long-term profitability, the company needs €225 million in bridge financing plus another €100 million in new equity capital. Part of the existing bonds are planned to be converted into company equity. Since the start of the year, the market value of airBaltic's bonds has dropped by roughly 80%.

State ready to increase support

Although the government previously said the airline did not need new state funding, ministers decided in a closed session on Friday to ask parliament for permission to extend the repayment deadline of an already issued €30 million loan until the end of the year. The government also wants authorization to take part in the new bridge financing round, potentially contributing another €30 million — matching the state's existing share of the bonds.

Prime Minister Andris Kulbergs stressed that the state cannot be the airline's sole financier and that private investors must also get involved. He said airBaltic's insolvency would be the worst possible outcome and that this is essentially the last real chance to save the company. Kulbergs acknowledged his position has shifted since spring, when his party opposed a proposed €30 million loan due to a lack of information — a new business plan has since been developed.

Fleet reduction planned

The new business plan also envisions significant cost cuts and a smaller fleet, with the number of aircraft set to shrink from 54 to 36 by year's end. The aviation industry union warns that such a large-scale downsizing could lead to job losses affecting up to a third of the company's staff.

In 2024, airBaltic raised €380 million through bonds carrying a 14.5% interest rate to fund its fleet expansion plans, of which the State Treasury purchased €50 million worth. The airline's future now depends on whether it can reach an agreement with existing creditors and secure the new financing it needs.