Acquisition of 10% stake in airBaltic by Lufthansa to be vetted by German Federal Cartel Office

RIGA - Acquisition of a convertible share granting a 10 percent stake in national airline airBaltic by Germany's Lufthansa Group for EUR 14 million will be vetted by Germany's Federal Cartel Office (Bundeskartellamt), as airBaltic representatives informed LETA.

airBaltic explains that the legal teams involved in the transaction have evaluated the relevant regulations and concluded that the investment does not meet the notification thresholds in accordance with the competition laws of the two countries.

However, in order to ensure full compliance, the parties have contacted the German Federal Cartel Office after the signing of the agreement, as Germany's law sets different criteria for notification.

According to airBaltic, the purpose of this consultation is to receive confirmation that notification is not necessary and the parties can complete the transaction without a merger permit.

Transport Minister Kaspars Briskens (Progressives) explained to LETA that the transaction did not involve acquisition of a majority stake or decisive influence, therefore there should be no problems. "It is a formal procedure that must be completed, and only then will the deal be concluded and the money paid to the company," the minister added.

As reported, 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.

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.