Air Baltic - comment

So the trouble we are having this morning with the restructuring plan is the EV. Our plan foresaw projections very similar to the company's through '27, while maintaining investment in new aircraft, because in the long term the business needs greater scale to make the hub-and-spoke strategy work competitively. And even on those projections, the EV is closer to €350. Never mind. The €500m is required to "create" enough equity to justify a €100m investment for 51%, precisely, and even that only works when the debt currently secured on Aircraft and the hangar is written down to €33c/€ as well, which surprises us. An EV of €350m would provide the new €100m investor with only €20m of equity (assuming 51%, but even 100% would be unattractive). The bonds would have 2.3x of leverage ahead of them and see their security mostly stripped. If Latvia retains 25% (a number previously floated in Parliament) and the new investor gets 51%, then Lufthansa, bondholders and the leaseholders share 24%, most likely without board representation, illiquid and non-paying. That means we see the €33% hopefully second-lien reinstated paper as a best case for now and entirely justified by a poor liquidation alternative. The proposal looks better than feared, but it also isn't done yet. Let us know your thoughts.