It seems that “We are the Borg. Your biological and technological distinctiveness will be added to our own. Resistance is futile.” is the order of the day, with The Latvian Ministry of Transport, airBaltic, and Lufthansa Group signing an agreement for the sale of a stake in the airBaltic.
airBaltic and Lufthansa together – Image, Economy Class and Beyond
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% stake, which will be issued at a subscription price of €14 million (US$14,561,400) 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% of airBaltic.
The transaction is building on the existing wet-lease agreement between Lufthansa Group and airBaltic and intends to strengthen airBaltic’s role as a strategic partner of Lufthansa Group. This was recently extended for a further three years beyond the summer of 2025.
This partnership enables airBaltic and Lufthansa Group to flexibly deploy up to 21 additional Airbus A220-300 aircraft in summer and five aircraft of this type in winter at various Lufthansa Group hubs, building on a partnership that has been in place since 2019.
The closing of the transaction is planned for the second quarter of this year and is subject to antitrust review.
Further Consolidation ahead
It seems that the aviation industry in Europe continues its march towards consolidation and shopping for bits of airlines that add value or deliver capital when needed. In this case, Lufthansa Group gets a seat on airBaltic’s supervisory board – allowing them to add their voices to airBaltic’s direction, whilst the Lativan government gets €14 million.
With the industry seemingly still in the mood to consolidate further, other airlines will be carefully weighing up their options and seeing who wants to dance with who.
For now, the big airline groups – The Borg – appear to be adding to their collectives.
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