Air Baltic IPO: Lufthansa's entry signals ambitions for a high valuation

PLY Analytics co-founder Vitalij Šostak commented for Verslo žinios on the valuation guidelines implied by Lufthansa Group’s investment in the Latvian airline Air Baltic ahead of its IPO.

“After adding Air Baltic’s net debt, which together with lease liabilities amounted to €1.23 billion at the end of the third quarter, the enterprise value (EV) would reach up to €1.36 billion,” calculates V. Šostak. “The company’s forecast 2024 EBITDAR amounts to €190–200 million. Accordingly, the implied maximum EV/EBITDAR valuation stands at around 6.8–7.2x.”

Lufthansa’s EV/EBITDAR valuation range is around 2.8–3.1x, while Finnair’s EV/EBITDAR stands at 2.95x. Compared with these valuations, Air Baltic’s “EV/EBITDAR range of 6.8–7.2x appears very ambitious,” notes V. Šostak. “It appears that reaching this range – convincing investors – may be quite difficult, and after the planned IPO Lufthansa could end up with a larger than 5% equity stake.”

Read more in the Verslo žinios article: „Air Baltic“ IPO: „Lufthansa“ atėjimas brėžia aukšto įverčio ambicijas.