airBaltic pre-IPO investor talks continue despite apparent difficulties
January 8, 2025
Chairman of airBaltic’s supervisory board Klavs Vasks has speculated a potential public bail-out for the Latvian national airline may be on the cards, highlighting his perspective that strategic investment negotiations are apparently stalling. However, airBaltic strongly refutes this suggestion, with a spokesperson confirming “the discussions between airBaltic and a strategic pre-IPO investor are ongoing and at an advanced stage”.
Writing on LinkedIn, Vasks cautioned that “the negotiations with the strategic investor, which was conceived both as a validator of airBaltic’s business model and as a promoter of the IPO process, have not gone as smoothly as expected”. He further strengthened that “attracting such an investor is not only a significant financial support for the company’s capital, it also serves as a critical confirmation of the company’s operation and future growth opportunities”.
The airline is already undoubtedly entering into a challenging year, having announced last week it is to cancel 4,670 flights from its summer 2025 schedule; blaming GTF engine manufacturer Pratt & Whitney for its “inability to meet its timely maintenance obligations”. Looking to the months ahead, “it must be recognised that airBaltic is facing major crossroads,” continued Vasks.
In the nine months ending September 2024, despite reporting a net loss, airBaltic nevertheless achieved a 13% year-on-year increase in revenue; building on a strong first half of the year described by Gauss as “[demonstrating] the airline’s resilience and capability to adapt and thrive in a challenging market environment”. However, with airBaltic unable to continue to operate with negative equity, “current bond obligations and their interest rates are not sustainable for the long-term operation of the company,” added Vasks.
Although the identity of the strategic investor has not been publicly disclosed, its apparent reticence may derail airBaltic’s planned inaugural IPO (something the airline received governmental approval for in August 2024). The earliest possible date for this “is Spring 2025, depending on the time of concluding the final agreement with the strategic investor and the financial market situation,” said Vasks, warning: “however, we must admit that time is not our ally”.
“Negotiations with the pre-strategic investor in airBaltic are ongoing and at an advanced stage. Preparations for a potential IPO are also in progress with the earliest possible timing of the listing in 2025, and when the market conditions are right,” explained airBaltic.
Cautioning that although the Latvian Minister for Transport “has repeatedly emphasised” that the responsibility for raising capital lies on the company, Vasks repeated that “the role of shareholders in enabling an IPO is critical”. With the Latvian state holding a 97.97 stake in the national airline, this could mean a government bailout; likely to prove unpopular, but “likely unavoidable unless the state is prepared to completely abandon its investment”. However, even then, he believes “the amount required for the sustainable development of the company could prove to be insufficient, unless such an investment is made as part of the IPO process, which would allow the required amount of capital to be reached”.
However, Vasks concluded that “awareness of airBaltic’s influence and value in the Latvian economy could motivate the right decisions and necessary action,” stressing that “the airline’s influence on the Latvian economy goes far beyond its operational activities” and is “irreplaceable”.
“Building and developing a strong company is much longer and more complicated than being able to destroy it in a short time by making rash or short-term politically motivated decisions,” he concluded.
Updated 09/01/25 to include response from airBaltic.
