Photo credit: AirBaltic CEO Martin Gauss says operating in wartime is the "worst" thing for an airline to deal with. AirBaltic
From its base in Latvia on Europe’s doorstep to Russia, AirBaltic has taken quick action in response to the Russian invasion of Ukraine. Select flights are suspended, staff accounted for, and routes adjusted following the closure of Russian and Ukrainian airspace. But quick action does not make the situation any better.
“I think it’s the worst you can have as an airline when you have to deal with a war,” AirBaltic CEO Martin Gauss said in an interview Monday. But “it doesn’t really matter what the airline thinks and does because it’s about the people,” he added.
AirBaltic has suspended Moscow and St. Petersburg flights through at least the end of May — one of the longest airline suspensions announced to date — and to Kyiv and Odessa until it is safe for the airline to return. Russia made up 2 percent of the airline’s planned capacity in February, and Ukraine nearly 5 percent, according to Cirium schedule data.
With Russian airspace closed to European airlines, every carrier has suspended flights. The question is for how long. Finnair has also cancelled service to Moscow and St. Petersburg through the end of May, while Air France and the Lufthansa Group have only suspended operations “until further notice,” according to spokespeople.
“As soon as Ukraine is a free country again, we will immediately re-enter and help to rebuild,” said Gauss. The airline had no staff on the ground when Russia invaded Ukraine on February 24 due to a precautionary decision to not park any aircraft on the ground overnight in the country in the weeks prior.
But Gauss was not as kind to Russia. “Being in a war in Europe, we cannot — and don’t think it’s right — to offer connectivity to Russia,” he said.
AirBaltic is rapidly adjusting the crisis. It has already revised its budget for 2022 to adjust for higher fuel prices; Brent crude stood at $100.74 per barrel on Monday, up nearly 29 percent since the beginning of the year, per Bloomberg data. And flights that would typically fly over Russia, including between Riga and Dubai, have been rerouted — though none suspended — which adds cost.
Other European airlines face a heavier toll from the conflict. On Monday, Finnair warned that the closure of Russian airspace would have “significant financial impacts” on the carrier that, prior to the pandemic, flew over the country on nearly all of its flights to Asia, which represented roughly half of its system capacity in 2019. And immediately following the invasion, discounters Ryanair and Wizz Air moved quickly to get their aircraft and staff out of Ukraine, a country where both were planning robust growth in the months ahead.
Despite Gauss’ concern for the crisis and the people effected, his job remains managing AirBaltic. On that front, the airline continues to look towards its recovery from the Covid-19 crisis. To that end, weekly bookings were up 377 percent on Monday compared to 2021, though they have dropped from up 500 percent year-over-year prior to the Russian invasion, he said. Bookings are down roughly 53 percent compared to 2019.
The airline’s other strategic initiatives continue to move forward as well. A planned public stock offering, or IPO, to repay the state aid that AirBaltic received during the crisis, as well as fund future expansion, remains on track for 2023 or 2024, said Gauss. This has been approved by shareholders as the preferred repayment method, and will happen regardless of the geopolitical situation.
In addition, AirBaltic continues to take delivery of new Airbus A220 jets with seven more due this year after the arrival of its 33rd aircraft earlier in February. It has another 10 aircraft on firm order for delivery from 2023, plus options for 30 more. AirBaltic could exercise some of its options to coincide with its IPO, said Gauss.
And a new base in Tampere, Finland, will open as planned in May. AirBaltic will station one aircraft in Tampere and launch six new routes, including to Copenhagen, Frankfurt, and Malaga, at that time. Gauss is optimistic for the operation and listed off reasons for the base, including Tampere being the fastest growing Finnish city with a catchment area of 1 million people — Riga, for comparison, has a catchment of 750,000 people — and its status as a tech center. Top of the list was Finnair’s decision to exit Tampere and serve it with a connecting bus to the Helsinki airport, which Gauss said “brought it on a silver tablet” to AirBaltic.
But even as AirBaltic moves forward with its various strategic initiatives, Ukraine remains top of mind. One concern of Gauss’ is how western media has presented the Baltics as in or near a war zone — he emphasized that Latvia does not share a border with Ukraine — and that could pose challenges for the airline if travelers begin to avoid the region, especially this summer when most European airlines were betting on strong travel demand.
“We are a free country, undisrupted,” he said. “The media is making something out of the Baltics — beautiful nature, beautiful countries, for 30 years independent, having the Euro as a currency. It’s worth visiting.”
Story updated with Air France, Finnair, and Lufthansa Group flight suspensions to Russia.