Latvian parliament OKs government rescue for airBaltic

Latvia's parliament, the Saeima, has granted the government the authority to inject up to 80 million euros in new capital into the national airline, airBaltic. This financial lifeline will be achieved through the conversion of bonds and debt into airline shares, aiming to bolster the company's finances.

The approved law permits the government to convert 50 million euros in bonds and unpaid interest owed to the state into shares. This is part of a larger bond issuance of 380 million euros starting in 2024. Additionally, the government is authorized to purchase 30 million euros in bonds as part of a "provisional financing" package for the airline, which is expected to involve external private investors.

The vote, which passed with 54 in favor, 21 against, and one abstention, occurred despite divisions within the ruling coalition. Some lawmakers opposed the measure, labeling the additional funding as "throwing taxpayer money into a bottomless pit." The law also allows the government to extend the repayment deadline for a 30 million euro bridge loan granted to the airline earlier in the year.

AirBaltic stated that its operations have been significantly impacted by substantial changes in the operating environment, including the wars in Ukraine and the Middle East. The airline also pointed to prolonged limitations in the availability of Pratt & Whitney engines, which have restricted the maintenance and replacement of its Airbus engines, as a contributing factor to its financial difficulties.

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throwing taxpayer money into a bottomless pit