Lufthansa Eyes Investment in airBaltic Amid Expansion Strategy in Europe

After having acquired 41% of the Italian airline ITA Airways, the expansionist ambitions of the Lufthansa group are not only focusing on TAP Air Portugal, but also on another company in northern Europe.

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According to Bloomberg, the German airline is considering investing in airBaltic, the Latvian airline that has experienced significant growth over the last decade after being nationalized and is known for being one of the largest operators of the A220 family (specifically, the CS300 variant, for which it was the launch customer when Bombardier still owned it in 2016).

Lufthansa’s entry into airBaltic would occur before the airline launches its anticipated Initial Public Offering (IPO). The negotiations, according to the report, are still in an early stage and no decisions have been made.

Both the German airline and airBaltic, along with the Latvian Ministry of Transport, have refrained from commenting on the information. However, the Minister of Economy, Viktors Valainis, stated that a potential investor was «a very well-known company» according to Baltic News Network. The agency also reported that during a meeting held on August 30, the Latvian government agreed that the State should retain at least 25% plus one of the total shares after airBaltic’s IPO. The investor would acquire 10% of the shares.

In 2023, airBaltic transported 6.9 million passengers, a 47% increase compared to 2022. Revenues reached 668 million euros (+34%), with an EBITDAR of 158.9 million euros and profits of 33.7 million euros. In the first half of this year, the number of passengers transported increased by 15%, and revenues by 16.5%, with stable EBITDAR, but losses amounted to 88.8 million euros, mainly due to issues with Pratt & Whitney engines, currency fluctuations, and rising fuel costs.

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The Latvian airline operates 47 Airbus A220-300s and expects to close the year with 48 aircraft. By 2029, the fleet is expected to reach 100 A220-300s, considering current orders.

Its network consists of more than 130 routes connecting over 70 destinations through its bases in Riga, Vilnius, Palanga, Tallinn, and Tampere.

The current portfolio of airlines within the Lufthansa Group also includes Austrian Airlines, SWISS, Brussels Airlines, and subsidiaries such as Air Dolomiti, Lufthansa CityLine, Lufthansa Airlines, Edelweiss, Discover Airlines, and Eurowings.

Last week, the group’s CEO, Carsten Spohr, visited the Portuguese government to explore opportunities related to the privatization of TAP Air Portugal.