airBaltic’s chief executive foresees a future in which the airline could operate as many as 100 Airbus A220 aircraft. However, he warns that, for this to happen, negotiations with Airbus would have to conclude positively.
“We have a firm order of 50 aircraft with another eight aircraft coming within approximately the next 12 months,” said Martin Gauss, the Chairman and Chief Executive Officer (CEO) of airBaltic in an interview with AeroTime. The executive added that the Latvian flag carrier is currently in discussions to exercise an additional 30 options, taking the airline’s order book to a total of 80 aircraft so that it has sufficient aircraft for the years beyond 2024.
airBaltic’s 42nd and latest Airbus A220, registered as YL-ABP, arrived at its home base Riga Airport (RIX) on May 27, 2023.
The airline would like to add more Airbus A220 options for the future, following a potential deal with the manufacturer for its current options to react to a situation that might change in the coming years. “But that is something difficult because you need to discuss it [with Airbus],” added Gauss. “Once we have a framework agreed, then we would announce the new aircraft order.”
According to the chief executive of the Latvian airline, a new order would be structured with airBaltic exercising its rights for 30 aircraft and adding 20 more, which would take airBaltic’s total order book to 100.
“That is the status today, and we would like to bring the total number to potentially reach 100 aircraft, because we have a business plan developed now which goes on till 2030, and it has two options,” noted Gauss. He disclosed that one option is to have 80 aircraft by the end of the decade, while the other would be to end the 2020s with 100 Airbus A220s.
No certainty regarding potential Airbus A220-500 stretch
But how many of those A220s would be converted to the potential stretch of the type, the rumored A220-500, is still uncertain and therefore too early to discuss, according to the executive.
Still, when Airbus does make a stretch available, airBaltic would be interested in the variant as they would be buying A220s anyway. “We will not be able to define a number [of potential orders for the A220-500 – ed. note] today because we do not know when the stretched version will be available,” remarked Gauss.
In a separate statement to AeroTime in May 2023, an Airbus spokesperson said that a stretched variant of the A220 “is a matter of when and not if, though we are not able to give a timeline”.
Has airBaltic had any discussions with Airbus regarding the stretched variant? “We have the normal industry knowledge, which they make public, but we did not have any specific discussions,” Gauss noted.
And the executive denied the possibility of the pendulum swinging the other way – that is, airBaltic ordering the smallest A220 family member, the A220-100. “We would love to have it for the Vilnius [Airport (VNO)] – London City [Airport (LCY)] route because there is a tender out there and that would be perfect, as ours is too big,” said Gauss.
To note, the Lithuanian government recently launched a tender to operate the VNO – LCY route under the European Commission (EC) regulations covering public service routes. Currently, the flight is operated by LOT Polish Airlines, with the carrier utilizing an Embraer E190 to operate the flight between the two capitals until September 30, 2023, when the current contract is scheduled to expire.
Amerigo Vespucci Airport (FLR), located in Florence, Italy, is another airport to which airBaltic would be interested in flying, but again, the A220-300’s size prevents it from doing so. “We want to keep the simplicity, for the time being, of having a unified fleet. I do not want to exclude that one day that might be coming as we go bigger and bigger, but the business case for us works best on the -300,” Gauss explained.
The only difference between the -100 and the -300 is the number of seats, with the latter seating a maximum of 15 more passengers, according to Airbus’ commercial aircraft page. As Gauss has pointed out, even though the A220-100 has marginally lower operating costs, if it’s possible to fill an A220-300, it’s better to have the larger variant.
Grounded Airbus A220 fleet
However, airBaltic has been forced to wet lease several aircraft, breaking the singularity of its fleet at least until the winter, as several aircraft simply do not have engines to operate flights.
“Now, to date, we have seven aircraft on the ground, which means we’re missing 14 engines. [The number of missing engines] was [due to be] higher this summer, but now [the number] will go down significantly in the next few weeks because we have a larger number of engines coming in,” Gauss explained. He warned, though, that the airline expects to be short of engines in the autumn and winter, resulting in several aircraft staying put during the second half of the year.
“The situation developed after the war [in Ukraine] broke out where the assumption obviously was that we would not need all of our aircraft,” said Gauss. However, this was a miscalculation on Pratt & Whitney’s part, since the engine maker allocated spare engines to other airlines. “We ended up having too many engines in the maintenance process,” Gauss explained. Yet supply chain issues and labor shortages, experienced by the whole aviation industry, have resulted in engines spending more time during shop visits, with the situation escalating “to the situation we have today: that we have seven aircraft on the ground”.
In order to continue operating flights and avoid disruptions to customers, airBaltic wet leased up to 10 aircraft this year. Ch-aviation.com data shows that currently, airBaltic is wet leasing eight aircraft from other operators.
“But passengers are not happy. We have the most modern aircraft and we are using older equipment,” noted Gauss, mentioning that the carrier has had to wet lease several Airbus A319s and A320s, plus a Boeing 737. While some of them are very new, they are not the A220s, which is “currently the most liked aircraft in this sector,” according to the executive.
“Therefore, we get criticized for it, but it is out of our control because the alternative would be for us to cancel flights,” continued Gauss. While the situation is “not changing in the near future”, the forecast is that it will improve for airBaltic, before worsening for the winter. “In the winter it is a bit easier, because we’ll be having a reduced [flying] program, so we do not expect to have wet leases for the season.”
Still, looking ahead, growth is in airBaltic’s sights, with an Initial Public Offering (IPO) scheduled to commence in H2 2024. “The current status is that we will do an RFP [Request for Proposals – ed. note] for advisors and banks in September or October [of 2023], and then we will select the people who will advise us,” stated Gauss. He went on to explain that following the audit of airBaltic’s Q3 2024 results, the plan is to become a listed company in either late October 2024 or early November 2024. “The roadmap is clear, but if we get told that it is not the right timing for the markets, we could do it in 2025 instead,” noted the executive.
The airline also has a bond on Euronext Dublin, or the Dublin Stock Exchange, worth €200 million ($215.9 million), with airBaltic planning to call it early and place a higher bond. “We have investment banks already working on it,” Gauss revealed.
“Proceeds from the IPO will be purely used for our growth, for investing in aircraft and the growth of airBaltic,” he concluded.