It turns out that regional powerhouse airBaltic has been having a tough time lately. Because of that, the airline is going to shrink and shuffle its priorities. They can spin this however they’d like, but the reality is that winter is just terrible for European airlines, and that is the crux of the issue here.

AirBaltic has been a darling of Europe for many years. It’s based in Riga, Latvia, and it was one of the early operators of the A220. With this new fleet, it had big growth plans and thought it would get up to 100 A220s some day. This idea would have been miraculous considering the size of its home market and its past as an airline that flew a lot of different aircraft in a lot of different ways.

Let’s start off by taking a look at the aircraft changes over the years.

airBaltic Block Minutes by Aircraft Type

^{Data via Cirium}

You donʻt have to go too far back to find an airline with a jumbled mess of a fleet. The backbone was the B737 Classic with -300s and -500s, but it also had a sizable turboprop operation with Fokker 50s that eventually were replaced by Q400s. On top of that, it had a couple Boeing 757s hanging around just for fun.

But in 2017, the transition began to an all-A220 fleet. This was achieved during COVID when everything else was retired, but there was a brief backtracking when the Pratt GTF issues grounded enough airplanes that airBaltic had to bring in capacity from elsewhere. That was mostly temporary, and the airline has been a growing A220 operator ever since.

The problem for airBaltic has been that its homebase in Riga is… not large. So if airBaltic really wanted to grow, it had to expand beyond its natural borders. With a whole bunch of A220s, it figured it could slot those into a lot of airlines who wanted that type of capacity and didnʻt have it on their own. Remember, itʻs a whole lot easier for European airlines to outsource capacity than in the US, so this wasnʻt necessarily a bad plan in theory. The end result was a massive expansion across the Continent.

airBaltic Block Minutes by Base

^{Data via Cirium}

Just look at this. Twenty years ago, airBaltic was trying to be the national airline of the Baltics. It was the primary airline for its home country of Latvia and for Lithuania via Vilnius. It also had a presence in Tallin, Estonia, but it wasnʻt until Estonian Air failed in 2015 and then Nordica tanked in 2019 that airBaltic really ramped up its presence.

Starting in 2016, you can see the beginnings of a strategy to expand elsewhere. This was clearly turbocharged post-pandemic. I probably donʻt need to show you this based on the destinations shown, but letʻs just do it anyway.

airBaltic Block Minutes by Marketing Carrier

^{Data via Cirium}

Before the pandemic, it had dipped its toes into wet leasing with some Thomas Cook/Condor work, and then right before COVID-19, it started flying for Lufthansa Group. SAS was briefly in the mix just after the pandemic, but lately itʻs been a little bit of Air Serbia and a whole lot of Lufthansa Group.

Itʻs gotten so big that this summer, airBalticʻs own flying only accounted for about 55 percent of the airlineʻs total block hours. Most of the rest were for Lufthansa Group.

But hereʻs the thing.

See those big ups and downs in all those charts? Thatʻs because Lufthansa Group wants a whole lot of help in summer, and a whole lot less in winter. For example, this May, airBaltic was scheduled to fly more than 7,300 block hours for Lufthansa. This coming November? Itʻs down to just over 1,000.

Itʻs really hard to run an airline that is supposed to be huge in summer and then tiny in winter. Weʻve seen some novel partnerships formed to try and solve this problem in the past. Smartwings in Czech Republic used to send airplanes to Canada in winter while Sunwing would send them to Europe in summer.

This works in some limited circumstances, but if youʻre airBaltic, youʻre not going to find a place to send half of your growing fleet in winter.

Of course, thatʻs not what airBaltic says is the issue. It lays the blame on both geopolitics and everybodyʻs favorite whipping boy, the enginemaker.

Demand and revenue growth have moderated, geopolitical developments in Ukraine and the Middle East have increased uncertainty and operating costs, and prolonged Pratt & Whitney engine availability constraints have affected the airline’s ability to deploy its full fleet.

I assume the focus on these issues is simply so it can blame things that have changed as ruining an otherwise perfect plan, even if it’s not the whole story. Either way, this is why the 100-airplane airline is off the table. In fact, even todayʻs 54-airplane airline isnʻt going to work. It will shrink to 36 airplanes by the end of the year and gradually climb back to 40 by 2031 which is obviously many years away to add just four airplanes.

Now, the airline is going to turn its focus to its home base of Riga. It will still have “selected point-to-point services,” but it will also scale back the work it does for other airlines. It says it will have contracts that will put capacity out there “in a more balanced way during both the summer and winter seasons supports.” And that makes a lot of sense.

But what about Riga? Letʻs take a look at how capacity share has changed there over time.

Riga Seat Capacity Share by Airline

^{Data via Cirium}

It looks like airBaltic has held surprisingly steady for the last decade with some small gains. But look at what has happened with the other airlines. Wizz came in big and then disappeared. Letʻs not forget the Russian airlines which have not flown there since the pandemic thanks to that impacts of the Ukraine war.

Ryanair is the airline that has really taken advantage of that situation. It is the clear number two with nobody really aiming at that position, even if Norwegian is in third place. But so far, Ryanair and airBaltic haven’t really been huge competitors. And Ryanair has shrunk in Riga every year since 2022, largely because it hates Latvia’s high fees and taxes.

Looking at Cirium schedules for full-year 2026, only 12.7 percent of airBaltic seats from Riga operate on routes also flown by Ryanair. That is a little deceiving, however. Once you include secondary airports as one, like Charleroi and Brussels or Torp and Oslo, that climbs to 23.3 percent. But you never want to turn your back on Ryanair for a even a minute. This is by far airBaltic’s most important market, so it makes sense that it would finally turn a focus back to it.

This change in plans shifts the airline from one that cares most about growth to one that cares most about being a financial success. It’s the right strategy, but it does mean being a smaller airline.