Latvia's parliament has approved a €30mn ($32.7mn) short-term state loan to national carrier airBaltic after a dispute that threatened to collapse the ruling coalition, LETA reported on April 16.

The loan was approved by 49 votes to 23, with one abstention. A further 15 MPs from the opposition United List and National Alliance did not register for the vote.

airBaltic requested the loan at the end of March after jet fuel prices surged on the back of the US-Israeli war on Iran, which began on February 28. The airline had hedged only 6% of its fuel requirements for the current quarter, the lowest reported figure among European carriers.

Spot crude oil prices have risen from around $96 a barrel before the war to as high as $197, driven by the near-total closure of the Strait of Hormuz and the loss of refinery output across the Persian Gulf. Northwest European jet fuel hit $1,840 per metric tonne on the Platts assessment on April 3, a record.

The Gulf region accounts for around a third of the global aviation fuel market. airBaltic had already suspended flights to Tel Aviv and Dubai on safety grounds, hitting revenue and route network efficiency.

The ruling Union of Greens and Farmers had objected to the loan, and there were reports that the airline's actual funding needs were significantly higher. Management expects it will need an additional €100mn to €150mn ($109mn-$163mn) to finance operations through the 2026/2027 winter season. The airline's planned IPO, intended to refinance debt and fund fleet expansion, has been suspended indefinitely.

The government approved the funding on March 31, but objections from the Union of Greens and Farmers stalled the process for several weeks.

Prime Minister Evika Silina did not rule out a collapse of her coalition ahead of the April 16 vote. "If a disintegration of the coalition is the price for securing support for airBaltic, I am ready," she wrote on X.

On the morning of April 16, MPs from the Greens and Farmers faction put forward a three-point proposal that included the resignation of Transport Minister Atis Svinka of the Progressives in exchange for their support for the loan. The Progressives rejected the demands, while Silina's New Unity urged coalition partners to continue talks.

Coalition partners reached an agreement later in the day to continue working together, with the Greens and Farmers backing down. Silina said Svinka had been tasked with ensuring airBaltic returned to profitability or taking responsibility if it failed to do so.

airBaltic posted a loss of €44.3mn ($48.3mn) in 2025, 2.7 times smaller than the previous year's loss, on revenue of €779.3mn ($849.2mn), up 4% year on year. The Latvian state owns 88.37% of airBaltic, with Germany's Lufthansa holding 10%, Denmark's Aircraft Leasing 1 holding 1.62% and other investors holding 0.01%.

The loan is repayable by the end of August 2026.