airBaltic, Latvia’s state-owned carrier, has announced this Wednesday its financial results for the first half of 2023. The airline reported a net profit of EUR14.604 million over revenues of EUR291.3 million, representing a net margin of just over 5%.
In a press release, the airline labeled the result its “historically highest profit”, with its highest-ever revenues for the first half of the year — higher than the same period in 2019.
“The exceptional results of the first half of this year have exceeded our expectations. We are doing well in terms of business, and the operating cash flow is at an all-time high”, stated airBaltic’s CEO, Martin Gauss.
Despite the good results, the airline remains cautious with its current situation, as it is plagued by engine issues with it Airbus A220 fleet. According to the company’s half-year report, an average of twelve aircraft were grounded during the period. This has prompted the company to continue wet leasing aircraft from other operators.
Nevertheless, the company has kept developing its wet leasing business too, renting out some of its Airbus A220 to other airlines. As of the first half of the year, this represented 15% of its total revenues, compared to 14% in the same period of 2022 and 3% in 2019.
“The shortage of spare engines, which led to an average of [eleven] aircraft grounded, significantly impacted our performance of [the second quarter]”, Gauss stated (according to the report, the grounded A220s were twelve).
“That delayed even greater improvement in total results. To mitigate this capacity loss, we were forced to wet-lease in substitute aircraft. Despite these obstacles, airBaltic‘s commercial performance was strong”.
By the end of the second quarter, airBaltic had 42 Airbus A220-300 in its fleet, including grounded and leased out aircraft. By the end of the year, it expects to have 47. The remaining three A220s of its order are expected to be delivered next year, and the half-year report said the airline is “exploring the possibility” of exercising the 30 options and purchase rights it has for the type.
The airline reported it expanded its market share in its four operating bases — the three Baltic capitals, Riga, Tallinn and Vilnius — versus the first half of 2022.
Market share in Riga fell versus 2019 levels, airBaltic said, due to lost connecting traffic due to the War in Ukraine. An important part of its business was connecting passengers from European countries to markets in both Russia and Ukraine.
Commenting on its first base outside of Northern Europe, in Gran Canaria, the airline said the Spanish island was “one of the most popular winter destinations for travellers in the Baltic and Nordic region, however seat capacity has not yet recovered to the pre-pandemic level.” airBaltic said the new flights from Gran Canaria to these countries will also drive higher utilization in the Winter months.
While during this period demand for travel in Europe is the lowest, it is the peak season in the Canary Islands, as Northern vacationers flock into the archipelago seeking for its year-round sunny climate.
