airBaltic is entering Chapter 11
Latvian airline airBaltic has launched a financial restructuring procedure under US Chapter 11. The company plans to continue regular operations, while €350 million in new financing is expected to secure liquidity during the procedure.
airBaltic on 14 September filed a petition with the US Bankruptcy Court for the Southern District of New York. The proceedings have been recorded under case number 26-12188, and the affiliated companies Air Baltic Training and Baltijas Kravu Centrs are also included. The US Department of Justice confirmed that voluntary petitions for protection under Chapter 11 have been filed.
New funding should buy time for restructuring
The company has arranged €350 million in debtor-in-possession financing, which is still subject to court approval. Participating in the financing are Strategic Value Partners, Barclays, Hayfin Capital Management, Morgan Stanley and Oaktree Capital Management. The cost of the financing is around 12 per cent.
Chapter 11 enables airBaltic to continue operating while it negotiates with creditors and restructures its debt. Flights, ticket sales and customer services are continuing without changes for now, and the company aims to complete the restructuring around June 2027.
Financial problems did not arise overnight. In 2025, airBaltic generated a revenue of €779.3 million with a net loss of €44.3 million. At the same time, the company remained exposed to rising fuel prices because it did not have sufficient hedging in place for its future jet fuel requirements. Prior to Chapter 11, it was attempting to raise up to €257 million in new debt, at a very high cost of financing.
A smaller fleet is also changing airBaltic's business model
The restructuring will also be visible in operations. airBaltic currently has 54 Airbus A220-300s at its disposal, but has already announced a reduction of its fleet to 36 aircraft by the end of 2026. This practically abandons the earlier growth ambition towards a fleet of 100 aircraft.
Particularly interesting is the announcement of a reduction in wet-lease operations. In recent years, airBaltic has become an important supplier of aircraft and crews to other European carriers. Therefore, restructuring is not just a Latvian issue: fewer ACMI capacities could affect airlines that used this model to cover seasonal demand, crew shortages or grounded aircraft.
For Latvia, the stakes are even higher. The state holds 88.37 percent of the company, while Lufthansa has 10 percent. airBaltic carried 5.2 million passengers in 2025 and remains the cornerstone of connectivity for Riga and the wider Baltic region with European markets.
Source: Reuters
