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Recorded at CAPA Airline Leader Summit, 17-18 May 2018

airBaltic CEO Update: Reporting Records As It Takes Further Steps To Becoming An Exclusive Bombardier CSeries Operator

airBaltic chairman of the board and CEO Martin Gauss discusses how a record 2017 performance has been a platform for further success over the first four months of 2018. He highlights the strong performance of its Bombardier CSeries fleet; how the aircraft has become a natural fuel hedge in a current environment where costs are on the rise; and charts the airline’s ongoing transition to becoming an exclusive operator of the type. He also provides an update on the search for a new strategic partner.

Transcript

Martin GaussWe had a very successful 2017. We thought that was a record, but now we started into this year with even a better year, so the first four months were very good. Baltic was doing well. We have the Bombardier CS300 for more than a year in operation. More than a million people have flown on it, helping us a lot right now, because it's the latest technology and it makes us also in the world seen as somebody going for innovation.

It's a natural fuel hatch as we call it because the fuel burn on that new engine technology is significantly lower, and of course we feel it. I would love to have the fuel price where it was last year. It rise now rapidly and we all airlines will have to deal with it if it stays there or if it goes even further up. But better having a brand new aircraft burning less fuel than having an older version. So we are in the transition to an old C-series fleet and it will helping at least to have a lower fuel burn.

We have eight aircraft right now in operation. We get another six this year, another six next year. That's from the order which we placed in all, but we are in process of securing an additional order. That would then enable us to transition over the years, 2020 to 2023 to be an all C-series operator.

The amount will defined then. I mean it will be firm aircraft depending on the business plan at the time, and then we try to get some options. But we have an idea, but we're not disclosing it yet because we are discussing it.

We have in the Baltic's 6 million people living there and we have 12 million passengers in the Baltic's. If we just go Norse, there's Finland. There's 6 million people living in Finland, and there's, I don't know, 20 million passengers just in Finland, but there must be much more passengers in Finland. So I think looking at the potential passenger volumes the Baltic's can give our whole market with the three capitals, there's quite a number of aircraft which can be placed in the Baltic's. That is on top of what the competition is doing there. So we see a lot of potential in the Baltic's, and then if we are done there, I think then we just discuss where could we go next. But the Baltic's have three capitals, three countries, which is our whole market, and we've just started to grow in Vilnius and in Tallinn, and to other markets, very successful. We continue doing that.

We just, on Monday, this week, opened Sochi as a route from Riga, and of course we are connecting a lot. Half of our passengers connecting, so we'll have a lot. We're the only western European carrier serving Sochi at the moment, so yeah there will be a demand on these routes during the championship. But of course, we opened the route not just for the championship. It's a seasonal route at the beginning, and we serve all the championship places in Russia. So yeah we expect some traffic coming from that via Riga. But let's see. I mean we need to see and who will be the winning teams. That makes a lot of difference to who's going to book us.

It's still ongoing, so Baltic will still be one day strategic partner. That's all we say. We're not commenting it further. We have this very good year last year. We are able to do things ourselves where we thought two years ago we needed an external investor. So therefore ... but the process is going on and we will inform the public as soon as something happens.

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