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| The President and CEO of airBaltic, Martin Gauss Photo airBaltic |
The President and CEO of airBaltic, Martin Gauss has sent an email to update the Latvian carrier's customers on the revised business plan Destination 2025 CLEAN. The update comes just hours after the Cabinet of Ministers of the Republic of Latvia, airBaltic's majority shareholder holding around 80% of the company's stock approved an investment of up to €250 million into the equity of airline as it works to overcome the economic crisis caused by Coronavirus COVID-19.
The plan has yet to get European Commission permission will see the investment come in waves or instalments to the airline. Each investment instalment would be, according to the carrier, in line with market rules and not exceed the losses caused as a result of COVID-19 crisis.
Martin Gauss said: "With this new equity investment, we can begin to execute our new business plan Destination 2025 CLEAN which focuses on a new start for airBaltic once international flight resume. This will facilitate successful growth for the company once the impact of the COVID-19 crisis begins to ease."
Once completed this new investment will see the Latvian state’s shareholding in airBaltic increase from 80.05% to 91%.
In the letter to the airline's customers, Gauss thanked the government, employees and passengers for their support over the crisis and gave more details of the future plans.
"Our airline was on a very strong path to execute its business plan. The first months of this year again showed new records in passenger numbers and revenues. However, in just two months, the current global crisis put a stop to all the achievements of the past eight years. In line with other airlines, the base for our successful business has completely changed.
We are fully aware of our responsibility and are thankful after the decision of the Latvian state to significantly increase the equity of airBaltic. We understand that this crisis required extraordinary measures to overcome the economic effects of it. The forward-looking decision of the Government of Latvia will enable airBaltic to deliver strong connectivity also in the future.
With the new equity, we will execute our Destination 2025 CLEAN business plan, which focuses on a new start once international flights resume. This will enable us to return to a successful growth path once the effects of the COVID-19 crisis begin to ease. The Baltics will have a strong carrier connecting the region to the world.
Our new Destination 2025 CLEAN business plan foresees a reduced fleet for the upcoming years, initially resuming operations with 22 Airbus A220-300 aircraft. The new plan takes into account the reduced capacity for the years 2020 and 2021, while at the same time foreseeing a return to growth with up to 50 Airbus A220-300 aircraft by the end of 2023.
We set out three main priorities to be able to go forward: stay, revise and grow. During the first stage, our main target was to achieve a significant cost reduction. This included revised payment schedules with all suppliers, staff reduction and postponement of all new investments as well as management salary reduction.
We are in the process of revising our business model to come back better than we were before. We aim to modernise our product and become greener, cleaner and more easily approachable by customers.
airBaltic has been providing a notable contribution to the economies of Latvia, Estonia and Lithuania. We have not only brought millions of visitors to Latvia, Estonia and Lithuania and supported businesses and tourism, but we have also been one of the largest taxpayers in Latvia. Indirectly, airBaltic supports more than 30,000 jobs in Latvia.
The additional equity enables us to return to the third pillar of our current plan – growth. By 2025, we still aim to fly with up to 80 Airbus A220-300 aircraft and perform an IPO taking the airline to the stock market.
Once travel restrictions are lifted, we intend to start our operations with only a few Airbus A220-300 aircraft. We then plan to gradually add one aircraft per week as demand returns. During the first week, we will fly to more than ten destinations. We will connect the Baltics with every major European business and leisure hub as soon as it will be possible to perform commercial flights to each of the cities.
The past two months have been very historic for our company and the aviation industry in general. The timely decisions we have taken during this period are already shaping the future our company will have. Our management and our employees have shown their dedication to the company and to the Baltics by leading the airline through this crisis. Together we will do our utmost to get our green tails back into the skies as fast as we can. We will return even stronger than before.
Thank you for your support,
Martin Gauss President and CEO of airBaltic |
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| Photo airBaltic |
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