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AirBaltic Sees Potential Second-Half IPO, With 2025 Contingency

Bombardier employees cheering during a press conference to mark the first delivery of the company's CS300 jet aircraft to airBaltic in Mirabel, Quebec, Canada, on Monday, Nov. 28, 2016. Bombardier is seeing increased momentum for its C Series jet family as the plane prepares to make its commercial debut, with airBaltic using the CS300 to gradually replace its Boeing Co. 737 fleet. Photographer: Valerian Mazataud/Bloomberg (Valerian Mazataud/Bloomberg)

(Bloomberg) -- AirBaltic Corp AS said the timing for its planned initial public offering could slip into next year depending on investor feedback, as concerns mount across the industry about airlines’ profitability.

While the Latvian carrier still expects to go ahead with the potential IPO in the second half of this year, Chief Executive Officer Martin Gauss said the company will “change the tone” and “do it likely in the first half of next year” if the business model isn’t accepted or understood by potential investors. 

“We are in the phase where we are evaluating if we can do such an announcement in the second half of this year,” said Gauss, adding that such a timeline remains the company’s intention.

The market timing and finances need to be right for an IPO to happen in the second half of the year, Gauss said in an interview at the Farnborough Air Show. On Monday, discount carrier Ryanair Holdings Plc cut its outlook for ticket prices in the crucial summer travel period and said fares will be “materially lower” as consumers grow more cautious, adding to pessimism that the post-pandemic rebound in flying is fizzling. 

AirBaltic, which operates an all Airbus SE A220 fleet, needs to educate investors about its business model, Gauss said. This summer should be better than last year, with fewer jets grounded due to issues with their Pratt & Whitney engines, he said. The airline is also in discussions with Airbus to firm up and accelerate options for 20 jets.

The summer is crucial for airlines as the period when they make most of their money. Ryanair’s warning follows other carriers, including Deutsche Lufthansa AG, Delta Air Lines and Qatar Airways, all saying that there’s pressure on fares. 

Gauss declined to comment on the airline’s demand ahead of earnings but said generally that yields were under pressure depending on routes.

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