The downgrading of the credit rating of the national airline “airBaltic“, as the bankruptcy notice is politely called, raises doubts about the answers of the heads of the Ministry of Transport to the members of the Budget Commission of the Saeima when they asked on October 14 about “the future financing of sectoral policies in the medium term”.
The wording of the question is taken from the entry in the agenda of the October 14 session of the Budget and Finance (Tax) Commission of the Saeima. However, it cannot be written more clearly what the MPs wanted after listening to the representatives of all the ministries in turn. So, we wanted to get an idea of the real needs that should be covered with the money from the 2026 budget so that international debt collectors do not come to Latvia during the next year, but protesters with conditional pitchforks do not gather directly in front of the Saeima.
The officials of the Ministry of Transport showed a complete understanding of the nature of the issues and explained how much it will cost next year to save roads and railways from complete collapse, even minimal maintenance of public passenger transport, etc. until the delivery of newspapers. In the 30th minute of the audio recording of the meeting, the story of aviation, which the Ministry of Transport imagined as a shining star above the pit of sorrow, begins. I would not want to blame the heads of the ministry for either incompetence or lies. Rather, they should be sympathized with the obligation to express themselves in such a way that the recognition of the need to invest money in “airBaltic” does not lead to the demand to invest this money immediately. Namely, so that banks or aviation fuel suppliers do not stop crediting “airBaltic” until the investment of state money. This would threaten the whistleblowers with big trouble. Therefore, it was better to wait until the international credit rating “Fitch Ratings” says the same. After the foreigners, former Minister of Transport Tālis Linkaits allowed himself to speak about the financial difficulties of “airBaltic” in the first quarter of next year, but the Ministry of Transport stands by what was said on October 14.
State Secretary of the Ministry of Transport Andulis Židkovs:
–Yes, aviation. We have very little funding for aviation from the state budget. Airport security only. The industry is self-financing. Of course, when creating policy, we look to ensure that Riga Airport remains as the center of Baltic aviation, and also the story of “airBaltic”. We are the only ones left in the Baltics who have their own airline. In relation to Covid, this required serious state support. The level of aircraft safety is not lower than the European average. These are the points that the Civil Aviation Agency evaluates. Aviation, so to speak, this industry is financed without state budget funding. The small amount of funding for the number of checked baggage checks is the modernization of security systems and passenger satisfaction with the airport. “Riga”. This is related to the waiting time at the security control and the reputation of “Riga” airport. These are the criteria by which to evaluate how the invested funding works.
Parliamentary Secretary of the Ministry of Transport Đirts Dubkēvičs:
–Considering the fact that funding is not directly allocated, the task is to maintain and develop the transport system so that it is self-sufficient. But at the same time maintain secure services. We have built safety into our performance indicators.
Therefore, the aviation section of the Ministry of Transport’s presentation was considered exhausted. A good half an hour passed, talking about other tasks and expenses of the ministry, until the MPs’ questions start during the hour and tenth minute of the recording.
Member of the “United List” Aiva Viksna:
–I didn’t notice “airBaltic”. All problems have been solved – there will be no IPO and… yesterday I received a report from the Fiscal Discipline Supervisory Board, where “fiscal risk to the budget in 2026, 2027 and 2028” was written in large letters. The question – what will happen and how will we reduce the risk that the Fiscal Discipline Council points to?
G. Dubkevic:
–We will continue to work on the efficiency of “airBaltic”. A lot has been done during the year. The company has a new chairman of the board from December 1. The company continues its drive to raise capital. The board and the board of the company come up with their own plan for raising capital. We have a strategic partner since September [“Lufthansa”]it has a representative on the board of the company, which provides a new view, a new vision of prospects and gives additional business opportunities. “airBaltic” has shown very good financial results. There will be 3rd quarter data that the public will be able to get acquainted with. The task of the new chairman of the board is to see how to make this model sustainable. The Ministry of Transport has also stated in its letter of expectation that there should be a sustainable model. Therefore, it is clear that attracting capital will be the company’s main issue. Sustainable capital raising to ensure the long-term operation of the company. It is a large company with a large impact on the economy…
A. Vīksna:
–It’s all clear. It’s simple – in 2026, 2027 and 2028, there is no money in the budget, everything is fine for the company, it will finance itself, attract capital and, therefore, reforms are not needed. So you don’t define anything, it’s just fine.
G. Dubkevic:
–There are currently no indications that funding is needed. Then we can place any position and ask for additional financing. But the goal is to work more efficiently. “airBaltic” is a capital company… with profit generators, which we as a ministry expect from the company.
Anda Čakša, member of the “New Unity” and chairperson of the commission:
–The goal is to understand what your plan is for this situation.
G. Dubkevic:
–The plan does not change. The Cabinet of Ministers has decided that we are moving towards the initial public offering or looking for a way to attract an investor to refinance the bonds.
A. Čakša:
–It is important not to give the impression that you want to sweep [“airBaltic”] under the table.
A. Zhidkov:
–There is a new waiting letter – [“airBaltic’] to be in Riga and not ask for money. (Everyone laughs.)
A. Čakša:
– It is important that you say it. Don’t be afraid.
Comment of the Ministry of Transport on December 4:
–The position of the Ministry has not changed and it has been expressed in the letter of expectations – “airBaltic” must work according to commercial and sustainable principles. The airline must ensure the financial viability of the operation, independent fulfillment of obligations and capital adequacy to ensure the core business, which is based on market mechanisms. “airBaltic” should continue to implement measures to improve operational efficiency and strengthen the capital structure. As the company’s management explains, in 2026 operational costs are expected to decrease along with the resolution of engine technical limitations, as well as less competitive pressure in the region.
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