Latvia’s airBaltic is increasingly reliant on revenue from aircraft leasing as it navigates a planned fleet expansion and prepares for a potential public offering next year. The airline, a key player in the Baltics’ aviation sector [[1]], will soon shift its focus away from directly operating leased aircraft – discontinuing a deal with Carpatair – while together aiming to triple the number of planes it leases to *other* airlines this summer. This strategic move highlights a growing trend within airBaltic, where leasing revenue now accounts for roughly one-fifth of the company’s income.
Latvia’s flag carrier, airBaltic, will discontinue leasing aircraft from Carpatair next year, relying solely on its own fleet for passenger service. The airline currently leases eight aircraft to other commercial operators, a number it plans to triple this summer, meaning nearly half of airBaltic’s planes will be in service with other airlines. The move comes as the airline seeks to maximize revenue from its assets, though one Latvian lawmaker has criticized the strategy.
According to information obtained by Latvian Radio, airBaltic currently has five aircraft leased to Swiss International Air Lines, two to Air Serbia, and one operating in Israel. Plans to lease up to five aircraft to a new Uruguayan airline this year have been put on hold, as the South American carrier has yet to meet all necessary requirements. The airline does not anticipate providing aircraft to the Uruguayan company in the next six months.
“The leasing business is a profitable one for us, helping in two key ways,” said Pauls Cālītis, airBaltic’s Chief Operating Officer and board member. “First, it increases our volume, and as with any business, volume helps reduce other costs.”
“Secondly, by flying more and operating at a larger scale, we can secure more favorable pricing and rates for services used throughout the company.”
Cālītis explained that the leasing strategy allows airBaltic to increase its overall efficiency. Without the revenue generated from aircraft leasing, the airline’s core network and flight operations would be significantly smaller. The airline also utilizes leasing to account for seasonal fluctuations in demand, with higher demand during the summer months and lower demand in the winter.
AirBaltic is considered a leader in aircraft leasing within Europe, according to Anželika Berķe-Berga, an associate professor at the Faculty of Social Sciences at Riga Stradiņš University. “Currently, it accounts for approximately one-fifth of their revenue. In reality, without this business niche, their profit and loss calculations would show a loss.”
“It provides more stable and predictable revenue compared to ticket sales,” Berķe-Berga added.
The airline plans to double its fleet to 100 aircraft by 2030. However, Andris Kulbergs, a member of parliament and transportation expert, questions whether airBaltic needs such a large fleet. He believes the airline’s best path to financial stability lies in maximizing aircraft leasing revenue and pursuing an initial public offering.
“We see that Lufthansa has a strong need, and we need to capitalize on that while there is demand for aircraft in the market. This could be the last opportunity to attract investment from the Middle East,” Kulbergs said. “The Middle East and Lufthansa are experiencing rapid growth in air travel and a shortage of aircraft. These are the shoulders we might be able to lean on, but it’s becoming increasingly difficult.”
AirBaltic anticipates going public in the second half of next year.
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