Latvian government reviews airBaltic financing progress again, still no decision on state involvement

Latvia's Transport Minister told reporters after Thursday's government meeting that the question of a possible additional state investment in airBaltic is not currently on the agenda, and any such move would require a separate cabinet decision. The government on Thursday simply took note of an update on the airline's financial stabilization process.

The minister explained that the extraordinary meeting was called because the cabinet had not finished discussing certain issues on Tuesday, prompting consultants and the airline to prepare additional clarifications presented on Thursday. He expects several more such cabinet meetings in the near future, as ministers want to stay informed as the process unfolds step by step according to plan.

Bridge financing grows to €257 million

airBaltic Supervisory Board chairman Andrejs Martinovs said the bridge financing amount, originally set at €225 million in the business plan, has risen to €257 million for reasons he described as objective but did not detail further. The airline has reached agreement with some existing bondholders and third-party financiers on terms for financing up to that amount, through a new issue of higher-priority "super senior bonds" backed by London-based Polus Capital Management and Israel-registered Klirmark Capital 4. Existing bondholders, including the Latvian state, have the option — but not the obligation — to participate proportionally in the new issue.

A bondholder meeting scheduled for Friday will vote on the proposal. Once approvals are secured, €180 million is expected to become available shortly afterward, with the remaining €77 million released once additional conditions are met. The new bonds would mature in February 2027 and carry a 25% annual interest rate.

A law passed by Latvia's parliament on August 25 authorizes the government to participate in the bond purchase with up to €30 million, on equal terms alongside private investors. In August, bondholders already approved capitalizing upcoming interest payments and temporarily waiving minimum liquidity requirements.

airBaltic's group revenue rose 4.2% last year to €779.3 million, while losses fell 2.7-fold to €44.3 million. The airline carried 5.2 million passengers, up 1% year-on-year. The Latvian state holds 88.37% of airBaltic shares, Lufthansa 10%, with the remainder held by other investors.