Investors eye airBaltic as IPO prepares for take-off

airBaltic announced this week that it was moving forward with an IPO that will enable not only financial investors but also private retail investors to become shareholders. 

Good news from the Baltics this week for both travellers and investors. The Baltic region’s largest airline, Latvia’s airBaltic, announced on Wednesday that it was adding 16 new routes—four from Riga, five from Tallinn, and seven from Vilnius—to its already extensive network that has long been the mainstay of air travel to and from the three Baltic states.  

Lithuania’s national airline, Lithuanian Airlines/flyLAL collapsed in 2009, while the Estonian flag carrier Estonian Air ceased operations in 2015, and its successor Nordica halted all scheduled services in 2019. 

• Latvia’s investment promotion success confirms the Baltic state’s upward trajectory
• Budapest eyes an opportunity to create CEE’s first ‘mega’ airport
• The Latvian firm bringing low-cost sourcing to the airline industry

According to airBaltic’s CEO Martin Gauss, “airBaltic is the connectivity backbone for the entire Baltic region”.  

“With the introduction of [these] 16 new routes, we continue to strengthen our position as the leading airline in the region.” 

airBaltic now operates more than 130 routes from Riga, Tallinn, Vilnius, Tampere, and, seasonally, Gran Canaria, offering connections to a wide range of destinations in the airline’s route network in Europe, the Middle East, North Africa, and the Caucasus. 

Founded in 1995, airBaltic operates as a hybrid airline, leveraging the upsides of both traditional network and low-cost carriers. The airline is majority-owned by the Latvian state, which holds a 97.97 per cent stake, with the remaining 2.03 per cent owned by private shareholders. 

airBaltic’s IPO

That, however, might soon be about to change. Also this week, airBaltic announced that it was “moving forward” with plans for an initial public offering (IPO), and that it was simplifying its share structure and working “intensively” with banks and international advisors to prepare for a listing on a stock exchange. On which exchange the IPO will take place has not yet been revealed. 

“Our priority at the moment is to ensure that airBaltic is ready for the next stages of its development,” says Gauss.  

“The growth of the airline will bring high added value to the Latvian state, society and the economy as a whole. Simplifying the share structure is one of the homework tasks we need to do now to help the company implement the IPO.  

“Notably, the purpose of the IPO is to increase the company’s capital and attract new investors, which will increase the company’s value. It is planned that the potential IPO will enable not only financial investors but also private retail investors to become shareholders of airBaltic.” 

Last month, Latvia’s Minister of Transport Kaspars Briškens told Estonian television that the state would sell most of its shares and that the IPO would likely take place later this year.  

Post IPO, the Latvian state would retain just 25 per cent of the company’s shares, he confirmed, adding that the IPO process would occur concurrently with negotiations with a strategic investor. 

“We will ensure that the airline’s main base remains at Riga Airport, and that the company continues to develop flight connections for both Latvia and the other Baltic states. This must be guaranteed regardless of who the investors will be,” said Briškens. 

“airBaltic plays an important role in the region’s GDP growth and connectivity,” adds Martin Gauss.  

“At the same time, the airline facilitates investment flows, supports services, creates jobs and generates tax revenues that have a significant impact on the much broader economic picture.” 

Revenue, passenger numbers up

AirBaltic had a good first half of 2024, driven primarily by an increase in flights and passengers, according to Gauss. 

Revenue for the first six months of the year climbed 16 per cent year-on-year to a record 339 million euros, while adjusted EBITDAR was up 39 per cent to nearly 77 million euros—another record. The airline carried more than two million passengers in the first six months of 2024, an increase of 11 per cent on the same period of 2023. 

Net, however, the airline posted a loss of around 88 million euros in the period January to June (it made a profit of 18.9 million euros in the first half of 2023), something that Gauss puts down to accelerated depreciation costs driven by engines undergoing full interval shop visits ahead of schedule, as well as currency depreciation, and one-off costs associated with the early redemption of a bond. 

“Similar to others in the industry, we have faced rising costs and capacity challenges, yet our strategic focus and operational efficiency have allowed us to handle these challenges successfully,” says Gauss.  

“Moreover, airBaltic’s performance in [the first half of 2024] demonstrates the airline’s resilience and capability to adapt and thrive in a challenging market environment. 

“Looking ahead, our core objectives remain unchanged—to ensure the best connectivity from the Baltics, as well as to enhance the passenger experience and deliver a fundamental contribution to the economy.”

Unlike many news and information platforms, Emerging Europe is free to read, and always will be. There is no paywall here. We are independent, not affiliated with nor representing any political party or business organisation. We want the very best for emerging Europe, nothing more, nothing less. Your support will help us continue to spread the word about this amazing region.

You can contribute here. Thank you.