airBaltic has filed for Chapter 11 bankruptcy protection, seeking to restructure its financial obligations while keeping flights operating. The flag carrier of Latvia announced the voluntary filing on September 14 and said tickets, reservations and customer services remain valid and available as usual.
The Riga-based airline and certain subsidiaries initiated proceedings in the federal bankruptcy court for the Southern District of New York. Management expects the process to run until approximately June 2027, with the objective of reducing obligations and establishing a more sustainable cost and capital structure.
The filing marks a new stage in the carrier’s retreat from rapid expansion, following its earlier fleet reduction and financing plans. The immediate passenger message is continuity, but the business emerging from restructuring could have a smaller aircraft commitment and a reduced role supplying capacity to other airlines.
Financing Commitment Requires Court Approval
airBaltic has secured a commitment for €350 million in debtor-in-possession financing, a form of funding intended to support operations during restructuring. Strategic Value Partners arranged the financing, with Barclays, Hayfin Capital Management, Morgan Stanley and Oaktree Capital Management also participating.
The airline said it would seek court approval to access the money. Together with revenue from ongoing operations, the proposed funding is expected to provide liquidity during the proceedings. The commitment therefore should not be confused with financing already approved and fully available.
According to the company, the interest rate is SOFR plus eight percentage points, described at announcement as approximately 12%. The borrowing is intended to give airBaltic time to negotiate with creditors, aircraft lessors and other stakeholders while implementing its revised business plan.
Reuters reported that the carrier had about $583 million in funded debt and finance lease liabilities, alongside €106 million owed in payroll taxes and airline taxes and fees. The figures illustrate why the process involves changes to financial obligations as well as operational efficiency.
Flights Continue as Fleet Plans Change
airBaltic says passengers with upcoming travel do not need to take action. Refunds, vouchers, gift cards and credits connected to baggage or service claims will continue to be handled under existing policies. The filing alone does not require passengers to arrange rebooking.
Beyond current reservations, however, management is preparing substantial changes. Reuters reported, citing a court filing, that airBaltic intends to cancel or defer deliveries linked to an order for 40 additional Airbus aircraft and further aircraft engines.
Chief Executive Erno Hildén also told Reuters that the biggest operational adjustments would involve downsizing the wet-lease business, which provides aircraft and crews to other carriers. Talks with labor unions about workforce adjustments are underway, with no final number of job reductions specified in that report.
The Latvian state remains the majority shareholder, while Lufthansa holds 10%. Existing management and supervisory boards will remain in place during the proceedings. The central challenge is to preserve the airline’s regional connectivity while bringing its fleet, financing and operating costs into line with a more sustainable business.
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