
It is not except that the Latvian national airBaltic in the future could join the German Lufthansa Group, announced Minister of communication Kaspars Briskens (Progressives) after signing the agreement on a strategic partnership between the airlines. The real value of airBaltic will be determined only before the primary public placement (IPO) of shares, whether the Latvian airline will need another fundraising is not known. In the next three years airBaltic will lease airplanes to its own investor – Lufthansa Group.According to Briskens, the scenario of airBaltic’s entry into the German group of airlines is not excluded also because Latvia is interested
that the cooperation with Lufthansa will strengthen. Minister reported called the deal of strategic partnership airBaltic and Lufthansa Group “a historic event”. On Wednesday, January 29, in the evening it became known that the partnership agreement has been signed: in exchange for investments Lufthansa Group will receive a convertible share, giving it a 10 percent share. It will be issued at the subscription price of 14 million euros. This convertible share will subsequently be converted into common shares after a potential primary public placement (IPO) of airBaltic shares. After IPO the size of Lufthansa Group will be determined by the market price of the potential IPO. The Investment deal also
provides that Lufthansa Group will hold at least 5% of airBaltic’s equity after the potential IPO. Commenting on the price of the deal, Briskens noted that before the deal the range was established for the approximate valuation of airBaltic. “Of course, there were discussions, but that is why we have supported
their valuation.came to convertible shares, as it would be a fair instrument, when the first public
offering (IPO) would determine the true value of airBaltic,” the Minister added. In the press conference Briszkens remembered that the government had decided to retain
the state after IPO 25% of airBaltic shares. Earlier, as we recall, airBaltic Chairman Klavs Vasks, who retired in February, said that the airline could require one more funding from the public funds. “When looking forward, whether the state needs to invest and in how much, this will
be determined by the market valuation before IPO. We will observe and track, because the higher the valuation of the company, the less the government will need to invest, to keep that 25%,” Briskens said at a press conference.
According to him, if the market valuation of airBaltic before IPO is higher, the state can keep the 25% and no additional funding is required, at that time as
if the valuation were lower, the government would have to decide to keep 25% in the capital
of the company. Commenting on whether Lufthansa will co-invest in the IPO process, Brischkens noted, that the deal with would provide the opportunity to participate in IPO, but, of course, it would be the decision of the German company itself. Briskens also noted that the entire amount of the deal of 14 million
euros will be invested in the development of airBaltic. In her turn, leading partner of the advocacy firm Sorainen Eva Berlaus noted, that the documents of the deal did not indicate the obligation of the state to participate in further investments, if onlyThe state will not take on its own obligation. Also no additional benefits
or bonuses are provided in the deal with Lufthansa . We would like to remind you that airBaltic is already aligned with Lufthansa with the agreement to lease new airplanes to Lufthansa . When it became known about the
delay of the maintenance of the airplanes, airBaltic decided to cancel 4670 year-old flights, but continues to fulfill the lease obligations to Lufthansa. Refusal to lease Lufthansa to benefit their flights would be dangerous with fines sanctions. Commenting on the viability of airBaltic, the Minister
of reporting noted that at the level profits in the last year were not expected good results, but investors will look at the strategic direction of the company, including EBITDA whether it can be maintained and increased. Also Briskens, commenting on the composition of airBaltic’s management, noted that he has always observed the principles of good management, So the new Council will evaluate the business plan of management, and it
will be in their hands. Three of the four members of the Board, including the chairman, will resign in February, as remember, the shareholders of the airline. At the same time Member of the Management
and Financial Director of airBaltic Vitolds Jakovlevs noted that the convertible shares were selected in the transaction with the opinion of the consultants, because the most objective evaluation of the company will be given when it is preparing for the IPO. “This was theoretical assessment before
IPO, but the real assessment will be when we go to IPO. If the price of IPO is higher, Lufthansa will receive less to 5%,” he said. Jakovlevs also mentioned that investors are looking at how muchThe company will be able to earn, when, for example, its fleet reaches 100 aircraft, and also to whether the airline will be able to earn, when it pays 300 million euros. According to him, the
real value of the company will be determined by the market, and the amount of statutory capital does not reflect its real value. “If you want to participate in IPO, you will receive
shares at the same price as Lufthansa, because Lufthansa shares at the moment IPO will be converted,
” Jakovlevs explained. As already reported, on Wednesday, January 29, an agreement was agreed between the Ministry of communication, airBaltic and Lufthansa Group, which provides for the investment of
the Lufthansa group in airBaltic in the amount of 14 million euros. In exchange for the investment Lufthansa Group will receive convertible shares, which will provide its 10% participation, and the investor will be guaranteed a seat on the Board of airBaltic. Later, after the potential IPO airBaltic, these convertible
shares will be converted into common shares. After IPO IPO the size of Lufthansa Group will be dependent on the potential market price for IPO. The deal also provides that after the potential IPO Lufthansa Group will own at least 5% of airBaltic’s capital. The transaction is scheduled to be completed in the second quarter 2025 year after evaluation by the agencies supervising competition.
The Prime Minister of Latvia Evika Silinja (New Unity) after signing the deal said on the Network “X”, that AirBaltic will continue to be based in Riga, and the connectivity
of flights will not be reduced. At the same time, she emphasized that the government wants to maintain its participation in the airline and should take into account future investments in the airline.is an enterprise. “The goal is to allow airBaltic to go through the IPO process, so that private investors can contribute private financing and with the state to increase the value of the airline, ” the head of the government. In September last airBaltic in September last year already extended cooperation with Lufthansa group for the next three years.
This contract will become in force from the summer season of this year. The contract provides for a three-year cooperation, in the course of which until 21 the A220-300 of the Latvian airBaltic will operate
from the name of Lufthansa group in its route network. The Latvian government 30 August 2024 year agreed that after IPO shares of airBaltic the state should retain at least 25% plus one share.
Also at this meeting of the government decided that the statutory capital of airBaltic when preparing for IPO, will be reduced
by571,293millioneuros,alsowillsimplifythestructureofexistingsharesofthecompany,but,accordingto”Firmas.lv”,no changeshavebeenmadeuntilnow.TheRulesforreductionofstatutorycapitalstatethatthestatutorycapitalofairBalticwillbereducedto25,179millioneuros.In2024yearairBalticcarrieda total of5.2millionpassengers,whichis13%morecomparedwiththelastyear,andconducted47000flights,whichis7%morethanthelastyear.AuditedturnoverofairBalticin2023was664,289millioneuros,whichis33,2%morethanin2022year,andthecompanyreceivedprofitintheamountof33,852millioneuros.2022wasaloss yearfortheairline.Beforetheregistrationoftheexpectedchangestothestate.Latviaowns97.97%ofairBaltic shares,andthefinancialinvestor,theownerofDanishAircraftLeasingToussaint2.03%.