Dear media representatives and dear people of Latvia! It has been a full year in this unprecedented crisis that has affected all of us.
One year ago, airBaltic was on its way to have new record results for the year 2020. The whole world followed the success story of airBaltic at the time. We received international awards for being an outstanding airline and a successful business coming from Latvia. The Covid-19 virus changed the situation, but not only for airlines. Everybody’s life has changed and there is nobody who has not experienced a negative impact on their life. The emotional stress caused by lockdowns and restrictions will leave long-term scars on many of us.
In the case of airBaltic one year ago, we stopped flying for 62 days. Such an impact to an airline had not been seen before. We took several decisions with a clear focus to return after the crisis to the success story we had built for our Latvian airline. We acted promptly and reduced our cost base significantly. Unfortunately, this came with a hard decision to reduce our staff by 700 employees. Additional cost savings came from the strategic decision to unify our fleet and stop operations of two aircraft types – the turboprop Q400 and the Boeing 737. We reduced our fleet from 40 aircraft to 25. With that decision we were able to focus only on the most modern aircraft – our Airbus A220-300. The airBaltic success story is linked with the global recognition of the Airbus A220-300, being not only the most modern but also one of the most efficient aircraft in terms of sustainability.
Today, one year after Covid-19 was first confirmed in Latvia, the whole world has learned about the reality of what that virus means for aviation. The impact to the aviation industry is beyond any imagination of what could have happened. Furthermore, we reassured that our country cannot be left without essential connectivity, as well as mail and cargo deliveries could not be disrupted. All European states know that and are supporting their carriers with billions of euros to ensure air connectivity during the crisis and once the crisis is over.
When executing all of the changes we were always ready to restart our operations with all of our 25 aircraft, and we are still ready today. More than 1 000 professionals are making sure that all of our aircraft are able to get back into the air.
Currently airBaltic cash reserves are reducing by around 3.5 million euros cash every week. To explain these losses, we need to look at an aircraft like a “machine” in a factory. One of our Airbus A220-300 aircraft has a list price of around 75 million euros. Every month, we pay the financing or leasing fee, to be able to use the aircraft. One of our Airbus aircraft can generate around 20 million euros in revenue per year if we can use it efficiently in the future. In the case of airBaltic that could mean a revenue close to 1 billion euros in the year 2025, but at the moment our technicians just maintain most of our “machines” without them being able to generate revenues for us.
In this crisis we have adjusted our business plan Destination 2025 CLEAN which now includes the cost of the crisis and the cost of returning to profits. Before the crisis airBaltic was on a positive growth path and after the crisis we will be even stronger as we have used the time to accelerate our transformation process to fly with only one type of aircraft. The investment of 250 million euros from the Latvian state in the equity of airBaltic will be returned to the Latvian state in the form of a sale of shares during the planned initial public offering (IPO) on the stock exchange. This will not only repay the temporary help airBaltic needed during the Covid crisis, but it will also strengthen the capital markets in Latvia as we intend to do a dual listing on an international stock exchange and on the Nasdaq Riga exchange.
Over the last 25 years airBaltic has developed as a strong, profitable and internationally respected airline. airBaltic is by far the best known international brand of Latvia and responsible for more than 2.5% of the Latvian GDP. To start an airline like airBaltic today and to build it to the same level would need much larger investments and years of development. Over those years the positive GDP effect would be significantly lower. airBaltic is a valuable asset to Latvia and we need to use it and grow it.
Every crisis has an end, and with that in mind we at airBaltic are maintaining our operations and even investing in the future by taking in more Airbus A220-300 aircraft this year. By the end of 2021 we will have 32 Airbus aircraft and with that we will offer 75 destinations from Riga, Tallinn and Vilnius in the summer months.
The outlook for the next 12 months still sees a number of restrictions on travel. Proof of a negative Covid-19 test, Covid-19 passes, or vaccine passes will most likely be required to travel. We are working together with IATA and all leading airlines in the world to incorporate these documents in a single mobile application to simplify the boarding procedure for you in the next months to come.
We at airBaltic are looking forward to the time when travel is possible again without restrictions. We are using the time before the restrictions are lifted to improve our product even further. airBaltic was the first airline to receive a 5-star Covid-19 safety rating that proves our ambition to be a leader in ensuring safe and healthy travel.
I would like to thank all our customers, our staff and the Latvian society for the support throughout this historical crisis.
We are here today to serve your travellers’ needs; we will be there tomorrow to deliver a world-class product and to take care of you while you are on board on one of our flights.
I am looking forward to welcoming you on board of one of our aircraft very soon.