Another EUR90 million euros (USD105 million) of Latvian public money has been promised to airBaltic (BT, Riga) to help keep it afloat, the Latvian government decided at a cabinet meeting on August 17.

The additional funding, which will be injected in return for new state-held shares and tops up the government’s previous investment of EUR250 million euros (USD292 million) in the company’s equity last year, is designed to “compensate the losses caused by the ongoing Covid-19 pandemic and to support overcoming the economic crisis,” the airline said in a statement.

As before, it is subject to European Commission approval. airBaltic won Brussels’ approval for the initial bailout on July 3, 2020, after the Latvian cabinet had approved it in May. The commission stressed at the time airBaltic’s “key role for the Latvian economy.” As a result of that support, the Latvian state bumped up its stake in the carrier from 80.05% to 96.14%.

The airline’s chief executive, Martin Gauss, echoed these sentiments by commenting on the latest pledge of taxpayer funds: “The support of our majority shareholder to overcome the crisis reflects the recognition of the positive impact airBaltic has on the economy.”

A discussion on the matter took place behind closed doors, local media reported. Minister of Transport Tālis Linkaits emphasised that the funds would not be a grant or a gift and would start to be repaid once airBaltic achieves its long-awaited Initial Public Offering (IPO), now planned for the end of 2022 or beginning of 2023.

“The company will have to repay the money to the state when the shares are publicly sold on the international markets,” the minister said, as quoted by the Latvian public broadcaster LSM.

airBaltic confirmed in its statement that “the investment is planned to be returned to the Latvian state in form of proceeds from selling shares during a planned initial public offering of airBaltic in the future.” It described itself as “a strategic facilitator of the Latvian economy and is responsible for more than 2.5% of Latvian GDP.”

The confirmation of additional state funding follows local reports last month that airBaltic had approached Riga for more financing. In April 2021, the company posted a full-year loss of EUR264.6 million (USD310 million) for 2020 on turnover that was 72% lower than the previous year.