You've been working at airBaltic for 30 years, starting as a pilot. And for the past five years, you've been a member of the board. What kind of a flight have those 30 years been for you?

My professional career in aviation has been primarily based around airBaltic. As you said, I'm coming up on 30 years with the company. That has been a very fulfilling career in terms of growth, development and the different phases the company has gone through.

To be honest, it's actually a surprise — first, that so much time has passed so quickly, and second, that my career has been with the company the whole time. I've had the unique opportunity to be with airBaltic from the very beginning and be part of the story, part of the management that has developed this company.

Now I have a unique and very big responsibility to lead the company in an openly challenging phase of our story, but also a very exciting one that we, together with the team, are ready to face and are facing as we speak.

How did you receive the proposition two months ago to step up instead of Mr. Gauss, who was forced to leave? Was the move necessary, or was it just a political maneuver?

In terms of company management, I started my career as a pilot and was involved from the very first years in developing the pilot group. I've done many different functions in the pilot career. For many years I was part of the leadership team, responsible for flight operations.

More recently, over the last five years, I've been in executive management as chief operating officer, responsible for all operations. Together with Martin Gauss, we were three board members responsible for running the company, working up the strategy and bringing the company through different phases.

In those five years, we've had a number of very critical and difficult moments. When I started as COO, within a week, COVID hit. A week later, we stopped operations. That was unprecedented. /.../

Then came the Ukraine war, which, as you are well aware, affects our region, affects us geopolitically and economically. Combined with that, our aircraft fleet — being the youngest fleet — uses new technology engines, which have had issues getting to full maturity. That, in simple terms, has meant we haven't had enough engines to fly all our aircraft for the last few years. /.../

Despite these challenges, we're in a strong position with a clear strategy, a unique market position and the youngest fleet. But all that is on the back of having a pretty challenging financial position.

Earlier this year, in April, during the shareholders' meeting covering the annual results for 2024, the shareholder expressed non-confidence in Martin Gauss. We weren't aware of this decision. It was presented at that point in time, and the supervisory board, through the governance channels, took the decision to discontinue Martin's employment.

From that point on, I was offered and then accepted the position of interim CEO. That's been the story up until a few months ago.

Undeniably, Martin and the rest of us had worked closely together to develop and execute the strategy. He was instrumental in developing, communicating and being a leader of this company for almost 13 years.

Now it's a new situation. We have to turn the page to a new chapter. I'm now the interim CEO with a clear mandate, a clear responsibility and clear support from both the supervisory board and the shareholder.

Right now, we're focused on our core business, especially over the next few months, which are the most important of the year. That's flying and doing well commercially.

Secondly, from an economic point of view, 2024 was not where we wanted it to be. It was lower than expected. A lot of outside factors..., but still, it wasn't the year we wanted to have. 2025 has to show an improvement, we have to do better. That's a clear focus for us as a management team.

Stepping in as interim CEO, I have a very strong management team. I personally have the experience of being in this company, with this team and with the strategy. So from day one, there was no interruption. /.../ We were able to continue, execute and move forward. And that's what we've been and are doing.

Business is not just as usual. With every change, you have an opportunity. Over the last few months, we've been using this opportunity to take a look at different things and make improvements. There are a lot of different actions we're doing as a company to improve efficiency, operations, reduce costs and drive additional business and revenue. All of this is in the mix to ensure that 2025 has a better result than last year.

But how are you doing things differently? Can you give some examples? What is different from operations in previous years?

It's important to emphasize that we have a very clear strategy, and that strategy fundamentally remains unchanged. I'll just highlight the key points of this strategy.

First, we're a single-fleet operator. We use the newest and most efficient fleet, which our passengers know us for and really love — the Airbus A220-300, in a single configuration. We have 50 aircraft, and we'll continue our growth path on this aircraft.

Second, we continue as airBaltic. That means we are a company with a hub. Our network is hub-based around Riga, and that stays [the same]. /.../ The Baltic region is our home. We operate from Riga, but also from Vilnius and Tallinn. These three points are the core of airBaltic. We continue to grow all three parts of the network. We want to be not only the preferred carrier, we want to be the biggest and continue to grow in terms of all the flights we do as airBaltic, but also separately from all three points.

In addition, we've successfully developed a new business line over the last few years /.../ ACMI flying (a type of aircraft leasing agreement where the lessor provides the lessee with an aircraft, crew, maintenance and insurance coverage for a set period —ed.). For the last three years, we've had a contract with Lufthansa Group. Last year, we re-signed for another three years, which essentially uses all our capacity we have for this business during the summer.

As we speak, we have 19 aircraft flying for Lufthansa Group. It's actually four different airlines within Lufthansa Group. As you know, we have a shareholder agreement, or airBaltic has an agreement with Lufthansa Group for them to be a strategic investor. That agreement is concluded, and we're waiting for finalization through the German competition authority. We expect it in the next few months.

So, not only do we fly for them and provide capacity with our aircraft, but they will also become shareholders.

/.../

Outside of these parameters, there are always things we're working on, thinking about and trying to do better. As an example, in addition to the ACMI flying we do for Lufthansa, we also need to fly outside of that contract, especially in the months where we have less production for Lufthansa, which is our winter season. /.../ We've put a lot more focus and effort and resources on commercializing additional capacity. /.../

We're trying to go geographically outside of Europe and find a countercyclical region in terms of our seasonability and find work there.

Another thing we're doing differently is having a strong focus on commercial execution. Last winter, we had a number of routes that were not performing up to the standard we wanted to see. Route evaluations have been done in-house. We're making adjustments. /.../ For example, we announced a new winter flight from Tallinn to Madeira. /.../ So, the learning point is we're not doing something that we did last year and didn't work too well.

/.../

We also have a very quick sprint, as we call it, which is an in-house project — we didn't take [on] external consultants — created following the playbook of how the larger consultancies, McKinsey or BCG, would, within a timeframe of eight to ten weeks, do a full company internal review.

This means that we go data-driven through each area, looking with a project team that's not specifically from that area, at how the data comes together and where there are some discrepancies or questions being raised.

We're trying to challenge the management, the managers, and improvements have been made — for example, costs that are not a priority currently, that we could push further down the road or that could be eliminated, or where we can move some investments from one area to another and so on. There are a lot of internal adjustments that are being made.

First of all, we have to improve our results; secondly, we have a leadership transition taking place; and we also have the opportunity that with the IPO focus being put on pause, we internally have resources that are freed up. And once the IPO track opens up again, then we hit the play button again and we can move forward.

When will the IPO be back on your agenda? Do you have the resources to postpone it for as long as necessary?

The IPO remains the strategic focus going forward in terms of how to ensure the company's growth and recapitalization. We don't have a strong balance sheet — this is something that is a historical development and not out of the ordinary for companies with our background and shareholder ownership.

But this is something that we plan can be rectified and improved through the IPO. And that's why the management team is focused on that. /.../ The shareholder has also clearly said that it is the path forward. /.../

Internally, we've done our homework and the preparation is there. One of the internal factors that has to conclude is the selection of a permanent CEO. That process is being run by the supervisory board and is on track /.../

Externally, we need to wait for the market to return. Prior to this call, I was just on a different call where we were having an update to where the market stands, and the market is normalizing, but from the expert, financial community view, it's still not yet in the position that would welcome and would be fruitful for an IPO.

We, as a company, need to come out and demonstrate that 2025 is on track, that our plans and what we have been communicating to the market is being achieved in terms of our own position going forward.

We're definitely in a challenging environment. We have a lot of factors that affect us, and we need some of those factors to ease in order to improve our performance.

There are some good signs and a few things that I'll mention that are giving us an indication that there is some improvement happening.

But it still is a very challenging situation, particularly in terms of our total liquidity, because we were originally planning to have an IPO already in 2025.

Now, it's clear that early 2025 is not happening. At best, it could be at the end of 2025 or in early 2026.

What we have had to do over the last few months is to do a lot of work to make sure that we have not only the results, but we also have to maintain a clear and proper liquidity level in order to meet our responsibilities to the bondholders.

It is a top priority for us and something that we are working on.

You had lots of cancellations at the beginning of the year. How has that affected this year's results? Are your financials better than last year?

Yes, we made cancellations in January, which attracted a lot of attention. In total scope, even though it became an issue in public communication, /.../ it was 4 percent of our total production, and it was the right choice to do at that time. Partly because of that reduction, we have a very stable operation this year.

Previous summers have been more difficult, with more cancellations, delays and expensive flights hired from others to cover them — primarily because of engine issues. Now, the engine situation is improving. Operations are more stable. There are fewer delays, fewer cancellations and less compensation being paid to passengers.

We're also seeing strong booking trends — stronger than last year. Regarding specific figures, we will release our Q2 results in July, so we need to wait until July before we publicly announce our next financial results.

What we did release was the Q1 results. And Q1 results naturally are for all our airlines the weakest results of the year. And I have to say, we're very much based on already a very weak winter plan. So there's no surprise there that Q1 was not a good year or a good quarter for us. But what we're looking at now, of course, is Q2, Q3, which are the improvement and the strongest quarters of the year.

What I can say is that, for example, we had in Tallinn last year, in April, a market share of 23 percent, while this year, we're at 30 percent market share. So we're growing and the market is responding well. /.../

From January to May, we've had a growth of 19 percent in passengers and 15 percent in flights. So we're growing and also the market is responding well. /.../

With this focus on core business and commercial success, is it better news for Tallinn and Estonia, or are we losing something?

Tallinn is our core market and a place we feel at home and plan to grow. We want to ensure good connectivity from Tallinn and grow the direct network.

This summer, due to cancellations that we had to plan because of engine shortages, we're not flying as much as we originally planned. /.../ But we've added a direct flight to Madeira, and more flights to leisure places like Barcelona. We just last week opened up a direct flight to Tirana, Albania. We have business connections, more frequencies in Amsterdam and in Munich. /.../

We've had very good cooperation and dialogue with the [Estonian] airport authority. /.../ Not all discussions are easy — there is a commercial aspect to it and we want to make sure we have the best commercial conditions — but we have a very open dialogue, and it's something we've seen has developed over the years.

Some aviation experts have said that one reason you're not doing well financially is your single-fleet model. They say you should use smaller planes for short-haul flights — for example, from Tallinn and Vilnius to your hub in Riga — as the planes are sometimes half empty. Is there any chance you'll reconsider that strategy?

We are the world's largest operator of the A220-300, and we have a [continuing] order with Airbus to increase the fleet size over the next five years. That is fundamental to our strategy.

It's not just something accepted and validated by us internally. We've gone to the bond markets, through IPO preparations and [to] investors and analysts, and it's recognized that one of the fundamental strengths that we have is our fleet and our fleet strategy.

Yes, there have been technical issues with the engines. But all new technology engines — not just on Airbus, but on Boeing and long-haul fleets too, have had issues. But that's technology and something that can be resolved, and we already see improvements.

So yes, we are staying with the single fleet. It's the right choice.

Last year, we had an average load factor, a record load factor of above 80 percent. So our aircraft are full. The 150-seat size is the right aircraft for our market and strategy, which is also connectivity.

The fact that we fly for Lufthansa Group — across four different airlines — shows that this aircraft size and type are desirable. It's not just us saying that.

/.../

But are you still sticking with the plan of taking passengers from Tallinn and Vilnius to Riga, rather than having more direct flights?

Our only hub is Riga, so yes, there is a flow that goes via Riga. But in terms of strategy and what we have executed, we have already 17 direct destinations out of Tallinn. We are progressively growing the direct network as well.

There will be a lot of options and a very wide route network that's available for all our Baltic passengers. Some routes go via Riga, but as our fleet grows, we plan to add more direct flights.

Rail Baltica — Latvia is lagging behind in its construction. Do you and the Latvian government see Rail Baltica as an ally or a competitor to airBaltic? Should the state invest more in it, or is the delay actually good for you?

I'll separate the questions.

airBaltic sees Rail Baltica as a very big positive. We support it. We want it to happen; the quicker it happens, the better.

We feel that any connectivity is good, especially rail connectivity — particularly where Riga Airport network will be directly connected to the Rail Baltica network.

It's not a cake you either have or don't have. We see it as the whole cake growing, with increased choices and growth of the rail network as well.

As for the speed and execution — it's a huge infrastructure project, the biggest the Baltic states have undertaken. So there are naturally issues — financial, timing and politics. That's not our area. But as an airline, we are happy that Rail Baltica is happening. We are cooperating with airport authorities, and the sooner it happens, the better. We'll be able to bring more passengers in and out of Riga Airport and offer them a network that goes much wider than the rail network.

What will happen to you after your term ends? You're not in the running for the permanent position — or are you? Will you go back to being a pilot?

Right now, I'm really focused on our fundamental responsibilities — day to day. That's where my head is at.

There is a process ongoing for the selection of the permanent CEO. I'm aware and part of that process, and I'll be here until it concludes.

Are you applying for the position?

The selection committee is currently working through the applications. When they come out with the list and announce who is in the process, that's when this information would be released. I want the process to be the same for everyone involved.

Currently, no names are being named, and I will leave it at that. When the committee announces it, then it will be clear.

But you still see your future with airBaltic?

airBaltic is the company I've worked for for a number of decades. I know it well. It's part of who I am. In addition to being interim CEO, I'm also chief operating officer. I have a term in place, and I plan to fulfill that term in any case.

Thank you very much. I hope everything goes well for airBaltic — because if it goes well for you, it will also go well for us.

Definitely. We're not just a company from Latvia. We're a company that operates across all the Baltic states. Estonia is home for us too.

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