LONDON – On April 14, the Baltic States carrier airBaltic revealed that it is wet-leasing 11 of its Airbus A220 aircraft.
The Wet Leasing…
As part of the effects of the ongoing war in Ukraine with Russia, airBaltic has decided that it is going to be wet leasing 11 of its Airbus A220-300 aircraft.
So far airBaltic has secured a couple of contacts with the German leisure carrier Eurowings and the Scandinavian carrier SAS. Both contracts consist of the aircraft being wet-leased under an ACMI agreement.
An ACMI agreement is where two airlines have an agreement to utilize aircraft, crew, maintenance, and insurance.
Not only does airBaltic already have agreements with Eurowings and SAS, but they have also stated that they are also negotiating for a further two aircraft to go to Russian and Ukrainian airlines. However, the respective names of those carriers have not been released.
airBaltic Senior Statements and Financial Results…
As part of a live stream where airBaltic announced their 2021 full year (FY), their Chief Operating Officer, Pauls Calitis said, “This is a way to improve the airline’s profitability.”
“Assuming both Russian and Ukrainian markets stay closed for the rest of 2022, the negative impact on the passenger revenue is estimated to be 25 million euros.”
Adding thoughts to Calitis’ comments, it is evident that airBaltic relies heavily on their Ukrainian and Russian routes as a large way of bringing in cash flow, so in order to maintain their profits the wet-leasing agreements will enable them to keep aircraft within the fleet but bring in cash whilst they cannot utilize them for a fraction of their route network.
On top of Calitis’ statement, airBaltic’s Chief Financial Officer, Vitolds Jakovlev said, “In our business plan, we have a slower COVID recovery scenario, which means the passenger traffic rebounding in the Baltic States is on a slower pace than we would like.”
Not only did Jakovlev mention the above, but he also added that airBaltic could wet-lease some of its aircraft to other carriers for two to even four years. This will help the airline greatly in keeping its profitability over the coming years as the pandemic begins to settle.
As part of their financial results for the full year of 2021, the airline recorded a loss of €136m, however, this is still positive for them as it’s less than their recorded losses of €246m back in 2020.
Not only this but airBaltic carrier 1.63 million passengers during 2021 which is an increase of 21% from their passenger numbers during 2020.
airBaltic is also anticipating that during 2022 they are expecting their passenger numbers to increase to 3.3 million and earn a profit of €400m in revenue, despite the fact that the Baltic States are still slow at recovering from the pandemic.
It is evident that airBaltic is suffering heavily from the impact of not only the war between Ukraine and Russia but also the fact that the Baltic countries, Estonia, Latvia, and Lithuania are quite far behind the rest of the world in their recovery from the pandemic.