Riga, Jan 29 (LETA) - An agreement has been reached and a contract has been signed with Lufthansa, the strategic investor of the Latvian national airline airBaltic, Prime Minister Evika Silina (JV) said on Twitter on Wednesday.

airBaltic said in a press statement the Transport Ministry, airBaltic, and Lufthansa Group have signed an agreement, according to which Lufthansa Group will invest EUR 14 million in airBaltic for a minority stake, and Supervisory Board seat.

In return for its investment, Lufthansa Group will receive a convertible share granting a 10 percent stake, which will be issued at a subscription price of EUR 14 million and converted into ordinary shares upon a potential IPO of airBaltic. After IPO, the size of Lufthansa Group’s stake will be determined by market pricing of the potential IPO, with Lufthansa Group’s holding amounting to no less than 5 percent of airBaltic.

The transaction builds on the existing strategic partnership between Lufthansa Group and airBaltic. Lufthansa Group will also appoint a Supervisory Board member upon closing of the investment. The closing of the transaction is planned for the second quarter of 2025, and is subject to antitrust review.

The deal provides airBaltic with additional funding and supports its growth plans, which include the expansion of wet lease agreements, and recognizes airBaltic’s leading market position and unique hybrid business model.

The prime minister said on platform X that Lufthansa is an internationally highly recognized company in the aviation sector and that the deal "will provide a good springboard for airBaltic's growth and also for raising additional capital".

Under the terms of the agreement, the company will remain based in Riga and flight connectivity will not be reduced, while the state will retain a majority stake in airBaltic, Silina said.

As reported, airBaltic carried 5.2 million passengers in 2024, which is an increase of 13 percent against a year before, while the number of the airline's flights rose 7 percent year-on-year to 47,000.

In 2023 airBaltic's audited turnover was EUR 664.289 million, up 33.2 percent on 2022, and the company made a profit of EUR 33.852 million, compared to a loss the year before.

The Latvian state owns 97.97 percent of airBaltic's shares, while the financial investor, Danish businessman Lars Thuesen's Aircraft Leasing 1, owns 2.03 percent.