Air Baltic swings to first-half profit despite A220 engine woes

Air Baltic overcame the impact of around 25% of its own fleet being grounded during the second quarter to report a profitable first half of 2023. Outlining its six-month performance on 9 August, the carrier said it continues to see reliability issues with the Pratt & Whitney PW1500G engines that power its all-Airbus A220-300 fleet – a situation exacerbated by a shortage of spare engines, which is prolonging aircraft time on ground. In the April-June period, on average, 11 of its A220s were grounded at any one time, it says, echoing recent challenges faced by other operators of aircraft with PW1000G-family engines. To offset those groundings, Air Baltic has continued to wet lease-in capacity – largely older A320s – with a number of undesirable consequences, including increased fuel burn, punctuality issues relating to more complex operations, reduced load factors, higher airport and handling charges, lower customer satisfaction, and costs to secure the leases, it says. It estimates that extra costs relating to the leasing-in of aircraft amounted to around E30m ($33m) in Q2 alone. At the beginning of July 2023 – outside the first-half earnings period – it received a E20.4m “commercial support payment” relating to the engine issues, the carrier says. Despite its engine challenges, Air Baltic swung to a net profit of E14.6m for the January-June period, from a loss of E91m a year ago. EBIT also reached E31.8m, against a loss of E24.8m in 2022. Its record H1 revenue of E291m was up 52% year on year and 33% over its 2019 figure, helped by ”healthy yields”. Some 15%, or E45m, of the carrier’s revenue came from ACMI lease deals with other airlines. Air Baltic had previously indicated that it would wet lease-out up to 14 of its A220s for the summer season, as its own markets felt the impact of the Ukraine war in particular. <br/>