Air Baltic cuts costs and shrinks fleet to focus on profitable routes

Latvian airline Air Baltic will reduce its fleet, focus on its most profitable routes and expand aircraft leasing to other airlines as it cuts costs under a new business plan approved by its board, ERR reported. The airline also needs a 225 million euro temporary loan to meet its short-term liquidity needs.

The plan prioritises financial stability over growth and aims to align Air Baltic’s network, fleet, cost base and capital structure with market conditions while maintaining its role in providing connections in Latvia and the Baltic states.

Riga will remain Air Baltic’s main hub. Instead of pursuing extensive expansion, the airline plans to strengthen its presence in existing markets and increase flight frequencies where demand and profitability are highest.

By the end of this year, Air Baltic plans to operate about 36 Airbus A220-300 aircraft, down from the current 54. The fleet is expected to grow gradually to about 40 aircraft by 2031, while overall flight capacity is expected to remain broadly stable.

Through efficiency measures, the airline aims to save 45 million euros a year. Most of the savings are expected to come from lower operating costs, alongside new revenue opportunities. Air Baltic also plans to increase aircraft and crew leasing to other airlines.

To meet its short-term liquidity needs, the company is seeking a 225 million euro temporary loan and hopes to reach a permanent financing solution through bridge financing. In the longer term, it needs a loan of up to 225 million euros and 100 million euros in new equity.

Under the business plan, Air Baltic expects revenue of nearly 800 million euros next year, 900 million euros in 2029 and more than 1 billion euros by 2031.

The airline said the new plan would not affect its daily operations or the services offered to passengers, and that all scheduled flights would operate as planned.

Air Baltic reported a loss of 44.34 million euros last year, although this was several times smaller than its loss in 2024. Revenue rose by 4.2 percent year on year to 779.34 million euros.

A meeting of Air Baltic bondholders scheduled for the beginning of this week, where the airline intended to seek short-term financing, was canceled because a quorum was not reached. The new meeting date is August 17. The airline must pay interest on its loan payments three days earlier.