Air Baltic's loss reduces to €54.2 million

Air Baltic aircraft.
Air Baltic aircraft. Source: Kārlis Miksons / Latvijas Televīzija

Latvian airline Air Baltic made a loss of €54.2 million on a turnover of €500 million last year. Year-on-year, the company's turnover increased by 145 percent and its losses decreased by 60 percent.

The head of the company said that the company's growth has helped improve its financial results.

"With more than half a billion euros in revenue and 3.3 million passengers, Air Baltic is on its way back to continuous profitability," said Martin Gauss, chair of Air Baltic, of the company's positive operating profit turnaround.

"Our core objectives remain unchanged – to ensure the best connectivity between the Baltics – a key European business centers of the future – and the world,," Gauss added.

The company is planning to go public because, according to the company, the European Commission has previously ruled that the Latvian state should reduce its stake in Air Baltic by at least 20 percent within five to seven years.

According to the company's annual report, the pandemic restrictions that were still in effect in the first quarter of last year, the start of a full-scale Russian war in Ukraine and the resulting operating restrictions on Air Baltic, as well as higher fuel prices, all had a negative impact on Air Baltic's profits.

Air Baltic also claims that it had difficulty obtaining aircraft engines, forcing it to rent aircraft with crew from other companies during peak summer months to meet demand.

On the plus side, Air Baltic has said that customers were much more willing to fly than many experts thought they would be, even after the war broke out, which affected local airlines more than the rest of Europe.

Second, Air Baltic claims that it has successfully leased out 11 of its own aircraft with crew to European companies for the first time, demonstrating that this can be a viable strategy as well.

Last year, Air Baltic had a negative cash flow of €41.5 million, but it was able to turn its equity into a positive number.

The positive change in equity was caused by the decision of the Latvian government to increase the company's share capital in 2021. According to Air Baltic, the company received €45 million in December 2021, and €45 million in the second quarter of last year.

Air Baltic had €37.6 million in cash at the end of the year, which the company believes will be sufficient for the current year.

However, Air Baltic intends to raise additional funds this year in order to improve liquidity, such as by issuing bonds or seeking a loan from the Latvian government.

Air Baltic is a 98 percent Latvian state-owned airline that serves over 70 destinations throughout Europe, Scandinavia, the CIS and the Middle East.

The company operates 39 Airbus A220-300 aircraft.


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Editor: Huko Aaspõllu, Kristina Kersa

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