Overview of the Acquisition
Germany’s Lufthansa Group has officially acquired a 10% stake in airBaltic, the national airline of Latvia, based in Riga. This strategic move, confirmed on January 29, 2025, follows the Lufthansa Group’s recent expansion in the European aviation market, including the acquisition of Italy’s ITA Airways. The group’s investment in airBaltic is valued at €14 million ($14.6 million).
Details of the Agreement
The stake acquisition agreement was signed between the Latvian Ministry of Transport and the Lufthansa Group. As part of the deal, Lufthansa will gain a convertible share amounting to 10% of airBaltic, with options to convert these into ordinary shares in the event of an Initial Public Offering (IPO) by airBaltic. The timing of the IPO, initially scheduled for spring 2025, has been hinted to possibly delay until early 2026.
Furthermore, the transaction grants Lufthansa a seat on airBaltic’s Supervisory Board, enhancing the strategic partnership between the two airlines. The completion of this transaction is expected in the second quarter of 2025, pending approval from EU competition authorities.
Strategic Enhancements and Cooperation
The investment aligns with the existing wet-lease agreement, which has recently been extended for three additional years beyond summer 2025. This extension will involve up to five of airBaltic’s Airbus A220-300 aircraft in winter 2024/25 and up to 21 aircraft in summer 2025, operating across various Lufthansa Group hubs.
Lufthansa Group aims to utilize this partnership to respond more flexibly to customer demands, particularly during the peak summer season. This arrangement not only enhances the operational flexibility but also bolsters the quality and stability of Lufthansa Group Airlines’ connections to intercontinental flights at major hubs.
Impact on airBaltic’s Growth and Market Presence
The collaboration with Lufthansa Group since 2019 has significantly benefited airBaltic, establishing it as a reliable partner in the aviation industry. The recent acquisition of the 50th Airbus A220 aircraft, which features a special celebration livery designed by a competition winner, marks a milestone in airBaltic’s fleet expansion and operational capacity.
This strategic partnership is expected to further airBaltic’s growth, enhance its service offerings, and strengthen its position in the European aviation market. The integration with Lufthansa’s network is anticipated to open new market opportunities and streamline operational efficiencies for airBaltic.