Latvia’s national airline, airBaltic, is taking a crucial step towards its long-awaited initial public offering (IPO). On August 30, 2024, the Cabinet of Ministers approved a significant move to streamline airBaltic’s share structure, making the company more attractive to potential investors. This decision marks a vital milestone in the airline’s strategy to attract new capital and expand its presence in the global aviation market.
The simplification of airBaltic’s share structure is expected to enhance transparency and create a more straightforward investment opportunity for potential buyers. This move lays the groundwork for a successful public offering, which will raise crucial capital to support the airline’s ambitious growth plans. airBaltic intends to use the funds to expand its fleet, improve operational efficiency, and further establish Riga as a key aviation hub in Europe.
As part of its IPO preparations, airBaltic has decided to consolidate its four existing share classes into a single class. This move aligns with international best practices and aims to improve the airline’s overall capital structure. By simplifying the share structure, airBaltic will enhance transparency, make it easier for investors to understand, and increase its appeal in the global marketplace.
The consolidation of share classes will also result in a reduction of the nominal value of each share. While this technical accounting adjustment does not affect the airline’s overall value or the state’s ownership stake, it helps to strengthen the airline’s equity by decreasing share capital and offsetting accumulated losses from prior years.
AirBaltic President and CEO Martin Gauss emphasized the importance of this move for the airline’s future, stating, “After the successful development of airBaltic in the first half of 2024, we are now together with banks and international advisors in an intense preparation for listing airBaltic at the stock exchange.” He further highlighted the positive impact of the IPO on the Latvian economy: “Our priority at the moment is to ensure that airBaltic is ready for the next stages of its development. 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.”
Gauss also emphasized the vital role airBaltic plays in the region’s economic growth and connectivity: “airBaltic plays an important role in the region’s GDP growth and connectivity. 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.”
The Cabinet of Ministers has carefully reviewed the requirements necessary for a successful IPO, including ensuring the airline maintains its network of destinations, the number of flights, and keeping Riga Airport (RIX) as its primary base of operations. These conditions are crucial to maintain airBaltic’s vital role in the region’s connectivity and ensure its continued success.
AirBaltic currently operates over 130 routes from key hubs including Riga, Tallinn, Vilnius, and Tampere, as well as seasonal flights from Gran Canaria. This extensive network provides convenient connections across Europe, the Middle East, North Africa, and the Caucasus region. With the upcoming IPO, airBaltic is poised to further expand its network, strengthening its position as a leading player in the global aviation industry and solidifying Latvia’s role in the international air travel landscape.
