Latvian airline achieves profit in first half of 2014
The Latvian airline airBaltic says it has swung to a net profit of €14 million for the first half of 2014, a dramatic turnaround from the €12 million loss it posted for the same period in 2013. However, new challenges are arising in the airline’s eastern markets.
“The geopolitical turbulence in the east creates a very challenging market environment for airBaltic, where we see our transfer passenger numbers going down,” said Martin Gauss, the airline’s chief executive. “Despite this, we have achieved significant cost savings through capacity management, cost controls and efficiency gains as we now enjoy the benefits of our modernized, more uniform fleet of two aircraft types.”
He added: “In addition to our operational improvements, we have managed to restructure our past obligations towards [Latvian bank] Latvijas Krājbanka. The positive result we have achieved will help us adapt further to the market conditions and improve our point-to-point product for the winter season.”
Due to declining demand, airBaltic has cut capacity and discontinued flights to Odessa, Simferopol and Kaliningrad so far in 2014. But the share of point-to-point passengers has improved and now stands at 52%, compared to 50% in the Jan-Jun period of 2013.
airBaltic serves 60 destinations from its home base in Riga. For the winter season, it will launch two new direct routes, to link the Estonian capital Tallinn with Paris and the Lithuanian capital of Vilnius with Amsterdam. Both routes will be four flights a week and will start at the end of October. The carrier had in recent years cut back its presence in Vilnius and Tallinn as part of general cost cuts.
“We are reinforcing links between the Baltic capitals and European hubs in line with our restructuring plan, and our customers will benefit immediately,” claims Christophe Viatte, the airline’s chief commercial officer.
airBaltic made a net profit of €1 million in 2013, a year ahead of its previously forecast turnaround schedule. The carrier also claimed recently that it had become the world’s first airline to accept Bitcoin as payment for its tickets.
[pictured: Martin Gauss, airBaltic CEO]