The Estonian government will on July 3 begin discussions on a proposal from Latvia’s Ministry of Transport to acquire a stake in the airline airBaltic. Both Estonia and Lithuania are expected to contribute under the same conditions as the Lufthansa Group, but the parties are not disclosing the details of the offer ahead of the meeting.
Latvia’s Ministry of Transport confirmed to “Aktuaalne kaamera” that both Estonia and Lithuania had received a formal offer to acquire a stake in airBaltic. Lithuanian officials have previously stated that any agreement would require a firm deal regarding either a base in Vilnius or flight operations.
The exact contents of Latvia’s offer have not been made public. The Latvian government discussed involving neighboring countries during a closed session. It was also decided that airBaltic would abandon plans to expand into foreign markets and instead focus on profitability and the development of Riga Airport.
“Lufthansa has decided to invest EUR 14 million and become a strategic partner. We’re offering Estonia and Lithuania the same terms and are awaiting their response. The next opportunity would be to join through the IPO. We’ve made it clear that airBaltic must bring in private capital,” said Latvian Minister of Transport Atis Svinka.
Estonian leaders have so far offered airBaltic political support, but not financial backing.
“That’s what we’ll be discussing in the government. My view of airBaltic is positive – it’s a very solid company from Estonia’s perspective. But the full proposal from the Latvians will be presented to the government. We’ll explain in more detail at the press conference what we discussed and where we stand,” Prime Minister Kristen Michal (Reform) said.
Germany’s competition authority was hesitant to approve Lufthansa’s stake in airBaltic, as Germany and the Baltic States were competitors in the regional aviation market. In Latvia, there are already concerns that airBaltic ticket prices may rise. Lufthansa is investing EUR 14 million in the airline. The size of the stake it receives in return will be determined during the IPO, once the airline’s actual value is known. It will amount to at least 5%. While Estonia and Lithuania joining in would not solve the Latvian airline’s financial issues, it could increase the company’s credibility. (ERR)