Latvia Seeking Strategic Investor for Financially Struggling Airbaltic

‍RIGA — Latvian Government isin talks with strategic investor to aid country’s struggling national airline airBaltic (BT),  Prime Minister Andris ‌Kulbergs told Reuters. 

Details of potential deal remain undisclosed

The news comes ahead of a meeting on 3rd of August, 2026, where the carrier will seek short-term financing from its bondholders to strengthen its financial state and avoid the risk of default.

In the interview with Reuters, Kulbergs confirmed, "We are talking with a serious partner, yes, I can disclose that," however, the Prime Minister did not disclose the name of the potential investor nor the amount of investment.

Among the disclosed conditions of the investment deal is maintaining BT's hub at Riga Airport (RIX), where the carrier holds the title of the largest carrier. 

Andris ‌Kulbergs highlighted time restraints for the execution of the financing deal, "It is ⁠a matter of this summer to execute... We have to go through necessary steps in order ​to make the company ready for a strategic investor... If that happens, then airBaltic will fly." 

New stakeholder in airBaltic?

The airline's share capital is €41,819 million. The main stakeholder in BT is the Latvian Government (88,37%), together with Lufthansa (10%), Lars Thuesen's Aircraft Leasing 1 (1,62%) and other shareholders (0,01%). 

Kulbergs dismissed Reuters’ question about the potential investor’s stake in the state-owned carrier; however, he added that, "I think it's a very good proposal (for the investor)."

Financial struggles and debt obligations

Fitch Ratings said in its recent release that airBaltic’s €30 million (USD34 million) loan from the Government, given in April this year, is due in August 2026; the loan repayments started only in June. 

The government loan provided a short-term liquidity boost ahead of the strong summer season and gave the airline time to pursue broader funding opportunities. 

On 26 June 2026, the carrier failed to meet its obligation to fund the bond reserve account to the required balance under its outstanding €380 million senior secured notes due in 2029. 

Bond account funding would require diverting €21 million from the budget intended to support normal operations. 

Failure to meet the payment deadline resulted in a 16,5% quarterly interest rate on the payment due on 14th of August, compared to the standard 14,5% rate.

Fitch noted that BT’s decision not to finance the bond account underscores the airline's weakening liquidity and raises the probability of default in 2026.

Latvian carrier’s struggles highlight industry-wide issues, showing how rising costs since the start of the U.S.-Israeli war with Iran uncovered structural issues at a number of airlines, raising concerns among investors about airlines’ ability to meet their debt obligations.

Among the financial struggles, issues in engine supply for BT’s Airbus A220-300 aircraft, causing grounding on many airplanes, caused the airline to repeatedly delay its plans for IPO.

Two A220 aircraft left the fleet

Aircraft lessor and airBaltic have reached a mutual agreement on early return of two Airbus A220-300 aircraft, at the end of June 2026; Augusts Zilberts, airBaltic’s head of public and political relations, confirmed to the LETA news agency. It was not disclosed if early return of leased Airbuses provides penalty fees for airBaltic.

Zilberts commented that the decision to return two aircraft was made after airBaltic reassessed its fleet and capacity needs, based on the current macroeconomic situation, fuel prices, and geopolitical uncertainty, which are driving changes in demand and affecting profitability on certain routes. 

Following the return of two aircraft, the airline's fleet consists of 54 Airbus A220 aircraft. During the summer season 2026, up to 25 aircraft will operate within Lufthansa Group’s network - Swiss, Austrian Airlines, and Brussels Airlines - as well as operating on behalf of Air Serbia. For the upcoming winter season, six aircraft are expected to operate partner airlines’ flights.

When asked about the Latvian carrier’s plan to reach 100 aircraft by 2032, Zilberts told LETA that fleet development is being reassessed as part of a new business plan and did not provide any further comments on the matter.

New business plan

Kulbergs told Reuters that following the COVID-19 pandemic and the war in Ukraine, the airline's growth plans became unrealistic, and the recent crisis in the Middle East has weighed on airBaltic's operations.

The airline's management is working on a new business plan, which will be presented next week, including restructuring measures aimed at putting airBaltic on a sustainable path. "The (business) plan requires a lot of components to happen. One of them is cash, the other ⁠is the ​strategic investor," Kulbergs commented.