Latvian parliament backs possible state role in airBaltic financial rescue
Latvia's Saeima is fast-tracking a bill that would let the state take part in stabilizing airBaltic's finances, including buying new bonds and converting existing claims into equity. Bondholders have already approved several relief measures for the airline.
The Saeima, Latvia's parliament, is advancing an urgent bill granting the government authority to potentially participate in stabilizing airline airBaltic's finances. Under the draft law, the Cabinet of Ministers could decide to buy up to €30 million of new bridge-financing bonds, acting alongside private investors on identical terms.
Converting claims into equity
The bill would also allow the state to capitalize its existing €50 million holding of airBaltic bonds, plus the remaining loan balance of more than €18 million, converting these claims into company equity. Additionally, the repayment deadline for the state's €30 million loan would be extended from the end of August to the end of the year. By July 24, the airline had already repaid €12.9 million in loan principal and contractual interest.
The Cabinet would be required to report to the Saeima's Budget and Finance Committee at least quarterly on the progress of the stabilization measures, while the Transport Ministry would prepare the necessary financial and legal assessments.
Bondholders already on board
Earlier this week, airBaltic's bondholders approved capitalizing the two nearest interest payments — due August 14 and November 14 — adding them to bond principal instead of paying cash, along with a temporary waiver of minimum liquidity requirements until November 2026. A separate matter, the airline's planned €225 million bridge financing, was not discussed at Monday's bondholder meeting because it was not on the agenda.
Background
airBaltic's board has already approved a business plan envisioning long-term recapitalization of up to €225 million in new debt and €100 million in new equity. The fleet is set to shrink to 36 A220-300 aircraft by the end of 2026 from 54 currently. In 2025, the airline's revenue rose 4.2% to €779.3 million, while losses narrowed to €44.3 million. The Latvian state owns 88.37% of airBaltic, with Lufthansa holding 10%. A planned share IPO has been put on hold for now.
