Discussion took place behind closed doors and resulted in the government conceptually agreeing to invest 90 million euros in the share capital of the company to support the company's operations and compensate for losses caused by the Covid-19 pandemic.
Minister of Transport Tālis Linkaits (New Conservative Party) said that the cash would not be a grant or a gift and would be repayable if and when airBaltic manages to get its long-discussed Initial Public Offering (IPO) away.
"The company will have to repay the money to the state when the shares are publicly sold on the international markets," the minister said.
He explained that the decision provides for the issuance of new state-owned shares in the company, which will be sold on international markets with the proceeds going into state coffers.
Martin Gauss, Chief Executive Officer of airBaltic said:
“The support of our majority shareholder to overcome the crisis reflects the recognition of the positive impact airBaltic has on the economy.”
However, the decision still has to be approved by the European Commission to ensure it does not constitute illegal state aid or distort the market.
In May 2020, the Cabinet decided to support airBaltic by investing up to 250 million euros in its share capital. With the decision to increase the share capital, the Latvian state's share in airBaltic has increased from 80.05% to 96.14%.
"When the pandemic started in 2020, the company performed a significant cost reduction program and preserved around 1000 employees which were required to maintain the operation of the airline. The equity received in 2020 has been used responsibly to maintain the company’s operations and cover expenses that could not have been avoided due to the Covid-19 pandemic," the company said in a statement, stressing its role as "a strategic facilitator of the Latvian economy" that is "responsible for more than 2.5% of Latvian GDP."
In 2020, the airBaltic Group had a turnover of 142.6 million euros, which is 72% less than a year earlier, while the company's losses reached 264.6 million euros, reports LETA.