Airport, Covid-19, Crisis, Latvia, Transport

International Internet Magazine. Baltic States news & analytics Monday, 11.12.2023, 04:15

airBaltic has submitted a solution to the Ministry of Transport to recover the state investment in the airline

BC, Riga , 27.11.2020.Print version
The Latvian national airline airBaltic has submitted to the Ministry of Transport a solution to recover the EUR 250 mln the state invested in the company's share capital this summer, airBaltic CEO Martin Gauss confirmed in an interview with LETA, adding that the proposal envisages selling the airline's shares on the stock exchange.

"We have submitted information on how we propose to do this to the Ministry of Transport, and the ministry will then submit this to the Cabinet of Ministers. As we already know, we offer to start listing airBaltic's shares. However, the earliest time this could take place would be the end of 2022 or the beginning of 2023," Gauss said.

He said that the initial public offering (IPO) should be such that the state could recover at least EUR 250 mln by selling the existing shares.

"The European Commission has also been informed about this plan. The government must now look at our proposal and figure out if it will accept it," Gauss said.

He added that an alternative solution is to find one buyer who would be willing to buy airBaltic shares for EUR 250 mln from the state, but this could be a very unlikely scenario in the coming years.

Gauss revealed that the airline will encourage the government to conduct an IPO of EUR 500 mln. "At the same time, it would be premature to give specific figures, because we have not even attracted banks to the IPO. But our goal is definitely to organize the biggest IPO in the Baltics, because airBaltic's story is global on the one hand and very local on the other. The process is almost always more important than dry figures," he said.

Gauss also mentioned that airBaltic shares should definitely be listed on the Nasdaq Riga Stock Exchange so that they can easily be purchased by Latvian residents as well, but the IPO is planned to be large, so the shares are likely to be listed on another larger securities market.

"I think there will be a lot of interest in airBaltic's shares, because we will emerge from this crisis quite strong and look good against many other airlines. [Norwegian low-cost airline] Norwegian is already going through bankruptcy proceedings and many others are struggling quite a lot, much more than airBaltic. We also expect that the shares will be of interest not only to investors, but also to Latvian individuals," said Gauss.

As reported, this past July, the European Commission supported the Latvian government's decision to invest up to EUR 250 mln in the share capital of Latvian airline airBaltic to help the airline overcome the consequences of the Covid-19 crisis.

At the same time, the European Commission's decision foresees that Latvia must recover the invest in between five to seven years.

Meanwhile, as a result of the coronavirus crisis, the turnover of Latvia's airBaltic national carrier airBaltic shrank 63.6% in the first half of 2020 to EUR 78.713 mln, while the group's loss expanded sevenfold to EUR 184.77 mln. airBaltic turned over EUR 503.281 mln in 2019, a 23.1% increase against 2018, and sustained a EUR 7.729 mln loss in contrast to a profit made year before, the company's audited statement shows.

The Latvian state currently owns 96.14% in airBaltic, and a 3.86% stake in the airline belongs to Aircraft Leasing 1, a company owned by Danish businessman Lars Thuesen.

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