On June 1, 2004 we will start flying not only from Riga, but also from Vilnius. By the end of the summer, we will be operating more than ten destinations with three aircraft from Vilnius (Copenhagen, Cologne, Dublin, Berlin, Hamburg, Helsinki, Tallinn, Oslo, Vienna and Warsaw). Already, we have more than forty people employed locally and with the increase of the operation, this number will increase further. The first results look very positive and exceed our initial expectations. This has encouraged us to continue the introduction of new destinations as planned with additional routes being opened already in July and yet more destinations to come in September.

For Riga we are also in the process of preparing for new destinations. On August 15, we will start flying to Cologne four times a week. On June 12, the new train station in Cologne airport will open and you will be able to buy a combined airBaltic and Deutsche Bahn tickets taking you to almost every place in Germany.

In the course of the summer, we will switch Stockholm, Vienna and Prague to service with Boeing 737-500 aircraft. This means reduced frequency to Vienna and Prague, but substantially shortened travel time.

A very controversial item has been our new buy-on-board concept in economy class. There has been some criticism in the press and also internally the new concept was not accepted immediately. The majority of passengers however appreciate the new service, because it is coupled with lower fares and wider availability of lower fares. We will continue in this direction. Air transport has to become more accessible to a wider range of customers, which means that price and cost have to stay low. To my opinion, buy-on- board is not a lowering of service standard. You have always paid for the food, but now you can choose whether you want to have it or not.

I hope you have a nice flight with us.

Yours

Bertolt Flick
President and CEO