Dortmund to the German island of Usedom on the
Baltic sea, marking its first direct flights between two
points outside the Baltic States. Tis model could be
expanded beyond the Baltic region.
Tese additions reflect the fact that, just as eastbound traffic has been declining, airBaltic has seen
unexpected growth to some of its westbound destinations. “We had a double-digit growth from Germany
this year, which we didn’t expect, so that offset some of
the missing traffic,” Gauss said.
Te increased activity from secondary hubs at Tallinn
and Vilnius has echoes of airBaltic’s former strategy,
before it hit financial difficulties and was forced to
retrench under former CEO Bertolt Flick. However, for
the time being, airBaltic’s growth remains constrained
by an EU-approved restructuring plan.
“We are restricted to 25 aircraft and to a certain level
of capacity until April 2016 under the EU restructuring plan, but we are well within this. After 2016, we
will have to do something because we have just enough
aircraft [on order] to replace the current fleet and we
want to grow again,” Gauss said.
Today, airBaltic is right up against its 25-aircraft
cap—five Boeing 737-500s, eight Boeing 737-300s and
12 Bombardier Q400s—plus 13 Bombardier CSeries
CS300s on order and a further seven on option.
Gauss firmed up three CSeries options at the Farnborough airshow in July, but has no immediate plans to
act on the remaining seven. He shrugged off the technical hitches in the CSeries program and is keen to take
delivery of his first aircraft, which has been pushed back
from the final quarter of 2015 to September 2016.
In the meantime, airBaltic has been developing its
partnerships with other carriers. Te carrier has 19
codeshares in place, including British Airways, airberlin,
Etihad Airways, Scandinavian Airlines, Air France-KLM
and Austrian Airlines. Gauss said these agreements
make up a “big part of the business,” but airBaltic has
no aspirations to gain affiliate alliance membership.
However, the door remains open for another carrier
or investor to acquire a stake in airBaltic, which has
been 99.8% owned by the Latvian state since 2011.
Around two years ago, Latvia appointed mergers and
acquisitions specialist IBS Prudentia to sell a 50%
stake—minus one share—in airBaltic.
“From time to time, there is interest, but at the
moment we are not negotiating exclusively with one
party,” Gauss said. Before any deal goes through,
there are still some court cases pending that need to be
resolved, along with airBaltic’s negative equity, which
has been cleared for government intervention—but not
yet actioned— under airBaltic’s restructuring plan.
Aircraft Engine In Service On order Average Age
737-31S CFM CFM56-3C1 2 0 16. 2
737-33A(W) CFM CFM56-3B2 1 0 20
737-33V(W) CFM CFM56-3B1 2 0 16. 2
737-36Q(W) CFM CFM56-3C1 3 0 15. 4
737-522 CFM CFM56-3C1 3 0 22. 4
737-53S CFM CFM56-3C1 2 0 16. 2
CS300 PW1000(1524G) 0 13
DHC-8-402 (NG) PW100 (150A) 12 0 3. 9
737-53S CFM CFM56-3C1 2 0 16. 2
& Financial Data
Financial ($, 000) Jan.-June 2014 2013
Total Revenue 191,647 447,395
Net Income 19,772 1,376
Operating 2014 2013
Passengers (000) 2,636 2,801
RPKs (mil.) 2,748 2,958
Load Factor (%) 70.3 69.0
FTKs (000) 9,000 8,490
Source: AT W Research