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Reuters reported that airBaltic and two subsidiaries made the voluntary filing in the US Bankruptcy Court for the Southern District of New York as the airline seeks court protection from creditors while it negotiates sustainable debt terms. The carrier secured commitments for €350 million in debtor-in-possession financing from lenders that include Strategic Value Partners, Barclays, Hayfin Capital Management, Morgan Stanley and Oaktree Capital Management to maintain liquidity during the process that is expected to conclude around June 2027. Court documents cited by Reuters show airBaltic holds about $583 million in funded debt and finance lease liabilities in addition to €106 million owed in payroll taxes and airline fees while its 2025 revenue reached around €779 million.
The US war with Iran has caused jet fuel prices to double since early 2026 according to Reuters which described the development as triggering the aviation sector’s worst crisis since the COVID-19 pandemic. airBaltic’s board stated in the filing that the company has been experiencing acute financial stress due to a combination of financial and geopolitical factors that built on earlier strains from Russia’s invasion of Ukraine and Pratt & Whitney engine problems affecting its Airbus A220 fleet. This filing marks the second airline linked to the Iran conflict after the May collapse of US discount carrier Spirit Airlines which failed to secure a government bailout.
AirBaltic said in a statement that flights ticket sales and customer service will continue without interruption during the court-supervised restructuring with passengers facing no need to alter travel plans. The airline which according to Reuters is 88.37 percent owned by the Latvian government and 10 percent by Lufthansa had received a €30 million state loan in April that proved insufficient to offset mounting losses from unhedged fuel exposure and lease obligations. Aviation Week reported that the carrier chose Chapter 11 because its obligations are international in nature and the process offers an established framework for such reorganizations.
The company plans to use the proceedings to cancel or defer a $3.5 billion order for 40 additional Airbus aircraft and $106.7 million in Pratt & Whitney engines as part of a revised business plan that will shrink its current fleet of 54 A220s to 36 planes by the end of 2026 before growing modestly to around 40 by 2031. airBaltic is also targeting annual profit improvements of €44 million while it engages stakeholders on revised terms for its obligations Reuters reported from the statement. Chairman Andrejs Martinovs emphasized that maintaining Latvia’s connectivity remains a central priority as the airline substantially reduces its debt burden to achieve long-term sustainability.
President and CEO Erno Hildén said in the release carried by Reuters “Our focus is on continuing to run the airline while implementing the changes set out in our new business plan.” The airline which rapidly expanded its all-Airbus A220 fleet over the past decade had signaled funding difficulties this summer when it abandoned further growth plans and arranged interim financing. Fitch ratings had warned in August that airBaltic faced a sizeable negative free cash flow in 2026 with limited visibility on bridging the gap without additional support.
Other carriers including AirAsia have also sought fresh capital amid the same pressures from elevated fuel costs and foreign exchange losses according to Reuters which noted that executives had warned for months that airlines with stretched balance sheets would be most vulnerable. The Latvian carrier additionally intends to reduce its workforce of around 3,000 as part of the restructuring though specific targets were not detailed in initial filings. The proceedings will allow airBaltic to maintain its existing management board and supervisory board while protected from creditor claims during negotiations.
