Grant Thornton expert: airBaltic's 25% loan is buying expensive time, not a rescue plan
Grant Thornton Baltic managing partner Raitis Logins warns that airBaltic's newly secured €257 million financing at a 25% interest rate merely delays the airline's problems while increasing its financial risks. He outlines three possible scenarios for the coming months.
Raitis Logins, managing partner in Latvia of international financial and audit firm Grant Thornton Baltic, says the €257 million financing package recently secured by airBaltic, carrying a 25% annual interest rate, should not be seen as a rescue plan. On the contrary, he argues the move further increases the airline's financial risks even as it buys time to address the situation.
According to Logins, the 25% rate alone sends a harsh signal to financial markets about how much risk lenders see in the company. If the full amount of financing is drawn, airBaltic would pay roughly €64 million a year — about €176,000 a day — in interest alone. That makes every additional month without a strategic investor extremely costly, meaning the airline can no longer afford to simply wait for better market conditions.
Three possible scenarios
Logins outlines three paths forward if airBaltic fails to attract a strategic investor or significantly improve its financial position by 26 February 2027. The first is another short-term loan to cover existing obligations, which — given the already high rate — could come with even harsher terms, pulling the company deeper into debt.
The second scenario is a new injection of state funds, a decision that would fall to the incoming government. However, Logins notes that each further investment becomes politically harder to justify without a clear path toward profitability.
The third and harshest scenario is insolvency, should no timely and credible solution be found.
Grant Thornton Baltic has operated in the Baltic states for 30 years and is one of the region's leading financial consultancy firms, employing more than 300 people and serving over 3,000 clients. In Latvia, it ranks as the fifth-largest audit and financial consultancy firm, with more than 70 employees.
