On Tuesday, the government supported the purchase of bonds of the Latvian national airline “airBaltic” worth up to 136 million euros, Minister of Transport Kaspars Briškens (P) said at a press conference on Tuesday after the government meeting.
The state could purchase these bonds alongside private investors, under the same conditions as private investors, Brishken said. Bond investments of this type will be in accordance with market rules and the conditions of European Union (EU) state aid.
Briškens explained that the government decided to participate in the issue of bonds worth up to 136 million euros, because it is clearly visible the economic contribution from interest payments, which the state would receive in the same amount as private investors, as well as it would significantly promote the development of the capital market of Latvia.
“The state would be involved not only as an investor in the financial sector, but also in strategically important state-owned enterprises,” Brishken said.
The minister noted that the final decision will have to be taken in the Saeima.
On Monday, Finance Minister Arvils Asheradens (JV) admitted after the coalition meeting that state “airBaltic” bonds worth no more than 100 million euros could be purchased.
It has already been reported that the Saeima recently adopted the government-directed amendments to the “Law on Budget and Financial Management”, with which the Minister of Finance is given the authority to use state budget funds with the support of the Saeima and the government for the purchase of fixed income securities of capital companies in which the state has a decisive influence.
Transport Minister Kaspars Briškens (P) has noted that the adopted changes will enable the state to participate in the bond issue of the Latvian national airline “airBaltic” alongside and under the same conditions as international private investors.
On the other hand, Finance Minister Arvils Asheradens (JV) has emphasized that such purchase of bonds of state capital companies, which the state could make on the same terms as private investors, does not create pressure on the state budget deficit. At the same time, Asheraden pointed out that the purchase of such bonds can only be financed by borrowing, so this would increase the amount of borrowed money.
It has already been reported that in July 2024 the maturity date of the 200 million euro bonds of the Latvian national airline “airBaltic” will expire, so the airline is looking for external financing to refinance the bonds, and the company also plans to attract additional financing in the amount of about 100 million euros.
“The airline plans not only to refinance 200 million euros, but also to attract an additional 100 million euros in order to improve the cash balance and facilitate the financing of further capital investments related to increasing the company’s capacity,” the airline’s 2023 annual report explains.
The audited turnover of “airBaltic” last year was 664.289 million euros, which is 33.2% more than in 2022, and the company also made a profit of 33.852 million euros, in contrast to losses a year earlier.
The Latvian state owns 97.97% of “airBaltic” shares, while “Aircraft Leasing 1” owned by financial investor, Danish businessman Lars Tūsen – 2.03%.
