airBaltic has received €90 million worth of financial support from the government of Latvia and now awaits the European Commission to approve the move.
The investment into the carrier’s equity was taken in order to compensate airBaltic’s losses during the pandemic, indicates the airline’s statement dated August 17, 2021.
“The support of our majority shareholder to overcome the crisis reflects the recognition of the positive impact airBaltic has on the economy,” Martin Gauss, the Chief Executive Officer of airBaltic, commented on the government decision.
The government expects that airBaltic would return the investment from proceeds of share sale during a planned initial public offering. However, the company has not specified the exact date of such a move.
Even though airBaltic implemented a harsh cost reduction program at the beginning of the pandemic in 2020, the number of passengers carried through the year decreased by 73% in comparison to pre-Covid times and significantly influenced the airline’s operations resulting in a €265 million loss in 2020.
The flag carrier has already taken a slice of the governmental support cake. Earlier in July 2020, the European Commission gave a green light for Latvian government to invest €250 million into equity to recapitalise the airline. The current €90 million comes as an additional investment.
airBaltic is Latvia’s flag carrier and contributes to 2.5% of the country’s gross domestic product, according to the airline’s estimations.