RIGA, July 17 The Latvian government is negotiating with a strategic investor for struggling state-controlled airBaltic, Prime Minister Andris Kulbergs told Reuters, as the carrier seeks to shore up its finances and avert the risk of a default.
The comments come ahead of an August 3 meeting at which airBaltic, in which Germany’s Lufthansa has a minority stake, will seek short-term financing from bondholders. “We are talking with a serious partner, yes, I can disclose that,” Kulbergs told Reuters in a wide-ranging interview on Thursday, declining to name the company. “It is a matter of this summer to execute
We have to go through necessary steps in order to make the company ready for a strategic investor… If that happens, then airBaltic will fly,” he said. Latvia’s main condition for any investor would be maintaining airBaltic’s hub at Riga airport, where it is the largest airline, said Kulbergs. “I think it’s a very good proposal (for the investor),” he added, dismissing questions about what stake a potential investor could take in the carrier.
AMBITIOUS GROWTH TARGETS AirBaltic did not specify in its notice about the August 3 meeting how much funding it needs to raise. Fitch Ratings said in a note last week that it has yet to repay a €30 million ($34 million) short-term loan from the Latvian government due in August and failed in June to replenish a reserve account required under its 2029 senior secured notes. AirBaltic’s financial strains highlight how rising costs since the start of the U.S.-Israeli war with Iran have exposed structural issues at some airlines, fuelling investor concerns about their ability to meet debt obligations.