Air Baltic’s Downgraded Credit Rating Raises questions About Ministry of Transport’s Statements
The downgrading of airBaltic‘s credit rating – a polite term for a bankruptcy notice – casts doubt on the answers provided by the Ministry of Transport to the Saeima Budget Commission on October 14th regarding medium-term financing of sectoral policies.
the Commission’s agenda clearly indicated their desire to understand the real financial needs for the 2026 budget, aiming to avoid both international debt collectors and domestic protests.
Ministry of Transport officials demonstrated an understanding of infrastructure needs, outlining costs for road and railway maintenance, public transport, and even newspaper delivery. The discussion then turned to aviation, presented as a success story. however,it seems the Ministry was tasked with navigating a delicate balance: acknowledging the need for investment in airBaltic without triggering immediate demands for funds that could jeopardize existing credit lines from banks or fuel suppliers. The strategy appeared to be to wait for confirmation from international credit rating agencies like Fitch Ratings. Former Transport Minister Tālis Linkaits had previously alluded to airBaltic’s financial difficulties in the first quarter of next year, but the Ministry stands by its October 14th statements.
State Secretary Andulis Židkovs stated: “Yes, aviation. We have very little funding for aviation from the state budget – only airport security. The industry is self-financing. Of course, when creating policy, we look to ensure that Riga Airport remains as the center of Baltic aviation, and also the story of ‘airBaltic’. We are the only ones left in the Baltics who have their own airline. In relation to Covid, this required serious state support.The level of aircraft safety is not lower than the European average… Aviation, so to speak, this industry is financed without state budget funding. The small amount of funding… is the modernization of security systems and passenger satisfaction with ‘Riga’ airport.”
airBaltic’s Financial Outlook: No Immediate Need for State Funding, IPO or Investment sought
Recent discussions between Latvian government officials and representatives of airBaltic indicate the airline does not currently require additional state funding. The airline anticipates financial self-sufficiency through 2026-2028, relying on its own revenue generation and attracting capital.
During a commission hearing, A. Vīksna stated the current budget situation allows airBaltic to operate independently, eliminating the need for reforms. G. Dubkevic, representing the Ministry of Transport, echoed this sentiment, noting there are “no indications that funding is needed” and emphasizing the expectation that airBaltic operate as a profitable capital company. Dubkevic also stated the airline’s plan remains focused on either an initial public offering (IPO) or attracting investors to refinance bonds.
Anda Čakša,chairperson of the commission,stressed the importance of openness and avoiding the perception that the airline is being shielded from scrutiny.A. Zhidkov jokingly remarked on a perceived expectation for airBaltic to operate without requesting further financial support, a sentiment Čakša encouraged.
In a statement released on December 4th,the Ministry of Transport reaffirmed its position,stating airBaltic “must work according to commercial and sustainable principles.” The Ministry expects the airline to maintain financial viability, fulfill obligations independently, and ensure capital adequacy based on market mechanisms. The Ministry also noted the airline anticipates decreased operational costs in 2026 due to resolving engine technical limitations and reduced regional competition. https://www.lsm.lv/raksts/ekonomika/airbaltic-lidostas-vaditajs-gaida-ka-2026-gada-operacionais-izmaksu-samazinajums-bus-no-lidzeklu-ierobezoumiem.494498/
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