Building on its existing wet-lease contract with airBaltic, Lufthansa Group has inked an agreement with the Latvian carrier to purchase a convertible share equalling a 10 per cent stake for EUR 14 million. Upon a potential IPO of airBaltic, Lufthansa Group’s stake will convert into ordinary shares. The market pricing of the potential IPO will determine how big the stake would be. The agreement also states that the German airline group will hold no less than 5 per cent of airBaltic post the IPO.
In addition, Lufthansa Group gets a seat on the supervisory board of the Latvian airline. However, that will happen only after the transaction’s closing, which is planned for the second quarter of this year. Of course, the whole agreement is also subject to the antitrust review.
The deepened ties between the two parties will yield fruits for both. While airBaltic can use the funds to strengthen its operations, the German organisation will be able to reach new markets.
Also Read: It’s Official! airBaltic And Lufthansa Extend Their Codeshare Partnership