The Latvian government will support its flagship carrier. For airline AirBaltic, which stopped flights due to COVID-19, a treasury loan of € 36.1 million was preliminarily approved. Also, the Baltic state is ready to provide the operator with additional means of support in the event of a continued crisis due to a pandemic.
airBaltic is 80% owned by the Latvian government. The remaining 20% is owned by Aircraft Leasing 1 SIA, which is fully controlled by Danish businessman Lars Tuesen. AirBaltic executives approached both shareholders regarding a possible increase in capital. The airline said in a statement that it currently has a “strong cash position,” but the epidemic of the new coronavirus could cause malfunctions for several months, which will affect carrier revenues.
Maintain a clear plan
Latvian Transport Minister Talis Linkates said the agency will support a “clear action plan” that will allow airBaltic to return to normal operations as soon as possible.
“This is a difficult time for our economy, therefore it is especially important that state support is provided to a company that can overcome the crisis with a strong financial base. This is in line with the state’s long-term development interests,” the official said.
The Director-General of the carrier, Martin Gauss, in his address to passengers, said that according to the results of 2019, the airline’s revenue exceeded 500 million euros. airBaltic is one of the largest taxpayers in Latvia, and the sudden suspension of its activities has affected all areas related to it in the country.
“There are no passengers at the Baltic airports. Transport companies, car rental companies, and shops at the airport have no income. Mail and cargo arrive more slowly than before because airBaltic transported tons of cargo during our operations. Hotels in the Baltic are empty, and most had to close. The same applies to local restaurants. The tourism industry is suffering and tourists do not come until we fly, “said Martin Gauss.
He also added that the airline is still considering an IPO, which will help its shareholders to return part of their investments and at the same time support the future growth of the operator.
Termination and restart
Earlier, airBaltic became one of the first airlines in the world to announce the complete suspension of regular flights. Carrier flights, except for charter and cargo flights, were discontinued from March 17 to April 14. Almost half of the airline’s staff fell under the reduction — 700 people.
The airline also postponed the launch of new routes from all three Baltic countries and canceled almost 50% of flights scheduled for the period from April 15 to October 31, 2020. The resumption of airBaltic will be gradual.
“As soon as the restrictions are lifted, we intend to start working with only five Airbus A220-300 aircraft. Then we plan to gradually add one aircraft per week as demand returns,” said Martin Gauss. “Most likely, this year we will not resume flights on several routes. Our network will remain limited soon, but we still intend to continue to fly direct flights not only from Riga but also from Tallinn and Vilnius. “
The airline plans to return to the air transportation market with a fleet consisting only of Airbus A220 aircraft (22 aircraft in the fleet). Most likely, the remaining in a small number of old Boeing 737-300 / 500 will be completely decommissioned. AirBaltic also has 12 Dash 8-400 turboprops (formerly the Bombardier Q400); their gradual withdrawal from the park was planned until 2024.
Martin Gauss, moreover, reports that the total airBaltic order still includes 80 A220 (including option). The operator plans to agree on an optimal schedule for the supply of new aircraft.
Given that the airline intends to commission five aircraft first, and then one aircraft a week, it can take more than four months to restore it.