Lufthansa Group has signed an agreement to receive a convertible share representing a 10% stake of the Latvian state airline airBaltic, which will be issued at a subscription price of 14 million euros (about $14,567,000).
Additionally, Lufthansa Group will receive a seat on the airBaltic supervisory board.
The convertible share will be changed into ordinary shares upon a potential IPO of airBaltic. The size of the stake will be determined by market pricing of the potential IPO, with Lufthansa Group’s share amounting to no less than 5% of airBaltic.
The transaction is building on the existing wet lease agreement between Lufthansa Group and airBaltic and, according to an announcement, intends to strengthen airBaltic’s role as a strategic partner of Lufthansa Group. Expanding this commercial cooperation, according to the announcement, allows Lufthansa Group to improve the quality of its network and to add additional markets.
A wet lease in aviation is an arrangement where one airline (the lessor) provides an aircraft, complete crew, maintenance and insurance (ACMI) to another airline or business entity (the lessee).
The closing of the transaction is planned for the second quarter of this year and is subject to antitrust review.
AirBaltic is Latvia’s national and largest airline, with its headquarters and hub in Riga. It operates a fleet of 50 Airbus A220 aircraft. The Lufthansa Group has been working with airBaltic since 2019.
