Air Baltic - comment

Inconsistencies. As we are in the final stages of deliberating over our positioning on Air Baltic, Bloomberg broke the news this morning that the company is meeting with restructuring advisors ahead of the mid-May coupon. While this makes sense to us, we struggle with the causality - that the reason is the fuel price. The airline is practically unhedged, which will either force it into price hikes before the competition (much of summer already sold), or absorb those losses, which it can’t. But on our math, the additional liquidity needed on the current forward curve is a mere ~€50m. The company already requires at least €150m, and both Lufthansa and the state already knew that when injecting the cash in August. We should be finalising our analysis tomorrow, so please let us know if you are having any thoughts / want to discuss.