UK airlines are circling as AirBaltic seeks buyers

Some of Britain’s biggest airlines are looking at European carrier airBaltic in a race to crack fast-growing Estonian, Latvian and Lithuanian markets.

The Latvian government, which has hired investment bank Lazard to sell down its 80% stake in the budget airline, is seeking a strategic buyer and has sent sales documents to a range of British firms.

Two weeks ago the Latvian government said 40 potential investors had expressed interest and that due diligence would start soon.

In the past British Airways owner International Airlines Group has grown by acquisition having bought Spain’s Iberia, budget airline Vueling and Ireland’s Aer Lingus, and easyJet snapped up rival Go for £374m.

Ryanair has also expressed interest in failed Italian carrier Alitalia.

AirBaltic chief executive Martin Gauss would not be drawn on the identity of the British firms.

"We don’t want the speculation to go wild, but you cannot predict anymore what will happen," he told the Standard.

"Ryanair now say they want to buy Alitalia and somebody questioning ‘are we flying to the Baltics?’ and answering no, BA for example, could see there is this airline that could be acquired that already has more than 3 million passengers."

Lazard was given the mandate to sell the stake globally and recently issued a teaser document.

Once non-binding offers are received this will open the door to due diligence. The sale is on track to complete by the end of the year.

In 2011 the Latvian government was forced to step in and save its national carrier snapping up the equity.

Earlier this year Danish investor Lars Thuesen acquired 20% of the airline and is said to be open to either selling with the government or maintaining his stake.

The Latvian government is seeking to reduce its stake to 50%.

Since taking the helm Gauss has turned the business around – it has just posted its third year of profit, up to €1.2m, on sales of €286m.