Latvia's Cabinet has approved steps for the forthcoming initial public offering (IPO) of airBaltic (BT, Riga) including simplifying the airline's share structure to enhance its appeal to investors.
To prepare for the IPO, airBaltic will consolidate its four existing share classes into a single class, in line with an August 30 Cabinet decision. The airline said in a statement that the move aims to increase transparency, improve the company's capital structure, and reduce nominal share value by offsetting past accumulated losses. Although this consolidation reduces the share capital, it does not affect the overall value of the airline or the state's stake in it.
"This is a common international practice to make the share structure even more transparent and attractive to the market," the statement said. "This is a technical accounting process that does not change the value of the airline or the value of the state's shareholding."
According to local media reports, the Latvian flag carrier's share capital will be reduced by EUR571.3 million euros (USD630 million), from EUR596.5 million (USD658 million) to EUR25.2 million (USD27.8 million).
President and CEO Martins Gauss emphasised that the restructuring is crucial for preparing airBaltic for its IPO and attracting financial and retail investors. The consolidation is part of broader efforts to bolster the airline's equity and boost its market value, he said.
"Our priority at the moment is to ensure that airBaltic is ready for the next stages of its development. Simplifying the share structure is one of the homework tasks we need to do now to help the company implement the IPO. Notably, the purpose of the IPO is to increase the company's capital and attract new investors, which will increase the company's value. It is planned that the potential IPO will enable not only financial investors but also private retail investors to become shareholders of airBaltic," he disclosed.
The Cabinet also reviewed the conditions necessary for a successful IPO, including maintaining flight connectivity and operations centred at Riga.
The company is majority-owned by the Latvian state, which holds a 97.97% stake, with private shareholders owning the remaining 2.03%.
With a fleet of forty-eight A220-300s (plus 42 more on order), airBaltic operates more than 130 routes from Riga, Tallinn Lennart Meri (Estonia), Vilnius (Lithuania), Tampere (Finland) and, seasonally, Gran Canaria (Spain), offering connections in Europe, the Middle East, North Africa, and the Caucasus.
