The former head of Lithuanian airports on the purchase of airBaltic shares: for now, we are buying a cat in a bag

“The circumstances are such that it is difficult to speculate before anyone sees the investment project.

It is not clear what the offer is and what is the return per invested euro, what is the payback of the project. For now, it is not clear whether there will be more new routes, whether the existing ones will take place more often, or maybe there will be a redistribution of routes from Riga to Vilnius. For now, we are buying a cat in a bag,” he said.

As discussed, airBaltic is currently undergoing intensive development, so it needs to look for investors.

“No matter how we look at it, airlines are profit-seeking organizations, and profitable ones are mostly private. For example, in the case of Lufthansa, most of the shares have been bought by private investors,” said A. Stikliūnas.

According to him, there may be a catch here.

“The state generally looks at economic matters, but private investors look at the profit and loss line. Why airlines fail at certain stages of development, or why they are not as successful as private ones, is that when the state is involved in the management of airlines, there are also political goals that often take precedence over profits. <...>

So far, I see that there is no great faith in this project in the market.

For example, Lufthansa has a very diverse shareholder structure. Businesses from different countries participate, there is interest, and in the case of airBaltic, the market itself, as well as business, would see some sense in investing if it was a profitable project. Private businesses are looking for places to invest, especially in the aviation industry,” he said, adding that this means that if there is faith from private investors, it would indicate that the company’s strategy is good.

In the case of airBaltic, the market itself, as well as business, would see some sense in investing if it was a profitable project

A. Stikliūnas

A. Stikliūnas added that the overall competitive environment in aviation is really not very favorable.

“There are low-cost airlines as well as the big groups. The competitive outlook is quite limited because we need to have aircraft of the appropriate size to have a high reach,” said the former LTOU chief.

The Ministry of Transport does not comment further on the possible purchase of shares.

“At the moment, we cannot provide more information on this topic, when we can, we will definitely inform the media and the public,” she said a little earlier when asked about the plans.

The editors remind that the shares, as it was stated, could be acquired during the initial public offering (IPO), which will be announced in the second half of this year.

For now, Air Baltic itself does not comment on the more detailed plans for the distribution of shares and agreements with the Governments.

A little earlier, the Latvian airline “airBaltic” announced that in 2023 it recorded the highest profit in history, which reached 34 million. EUR – 88 million euros more than last year.

“2023 was a very successful year of growth for airBaltic. “Record revenue well over half a billion euros, the highest profit in the company’s history, an impressive record EBITDAR (159 million euros) and other positive business indicators mean that airBaltic has exceeded its pre-pandemic level,” said the President and CEO of airBaltic Martin Gauss.