AirBaltic files for Chapter 11 bankruptcy in New York with €350M restructuring loan

Chapter 11 filing and DIP financing

Latvia flag carrier airBaltic filed for Chapter 11 bankruptcy protection in New York on September 14, 2026. The voluntary filing initiates a court-supervised debt restructuring that the company expects to conclude by June 2027. To maintain liquidity and sustain operations during the proceedings, the airline secured a commitment for 350 million euros (405 million dollars) in debtor-in-possession financing at a 12% interest rate. The funding group includes Strategic Value Partners, Barclays, Hayfin Capital Management, Morgan Stanley, and Oaktree Capital Management. Scheduled passenger flights, reservations, and customer service operations across more than 70 destinations will continue without disruption throughout the legal process.

Fleet reduction and workforce restructuring

The restructuring plan requires adjustments to fleet capacity and staffing levels. AirBaltic operates an all-Airbus A220-300 fleet of 54 aircraft, serving regional hubs in Riga, Vilnius, and Tallinn, alongside five German airports including Frankfurt and Munich. In August, management reduced its long-term fleet target from 100 aircraft down to 36 jets by the end of 2026, with a target of about 40 aircraft by 2031. Chief Executive Erno Hilden, who previously served as Chief Financial Officer at Scandinavian Airlines during its own restructuring, stated that capacity cuts would require labor adjustments.

“We are currently carrying out the consultations with the labour unions.”

Hilden added that the restructuring will focus heavily on modifying the airline wet-lease division, which supplies aircraft and crew to external partners.

Current fleet54

End-2026 target36

Previous long-term goal100

Current fleet

54 aircraft

End-2026 target

36 aircraft

Previous long-term goal

100 aircraft

Data from the article text

Jet fuel costs and mounting debt pressures

The carrier faced liquidity pressures after jet fuel prices doubled following the outbreak of the Iran war in late February. Because airBaltic had not hedged its jet fuel requirements, the closure of the Strait of Hormuz caused operational expenses to rise rapidly. In March, the airline suspended direct flights to Dubai until October and proposed raising up to 257 million euros in super-senior debt, which pushed up yields on its 380 million euros in bonds due in 2029. In 2025, the airline carried 5.2 million passengers and grew revenue by 4.2% to 779.3 million euros, but generated a net loss of 44.3 million euros. Aviation analyst John Strickland noted the specific risks confronting regional operators in the current market.

“Smaller, niche players are (most) at risk.”

Shareholder position and commercial partnerships

The Latvian state holds an 88.37% majority stake in airBaltic, while Germany Lufthansa acquired a 10% share in 2025. The airline was founded in August 1995 as a joint venture between Latvia and SAS before the Scandinavian carrier exited in 2009. Among key creditors, engine supplier Pratt & Whitney holds 66.5 million dollars in claims, while the Latvian state holds 20 million dollars. Latvian Prime Minister Andris Kulbergs endorsed the New York filing on Monday as a structured path to address liabilities.

“I consider this solution to be one of the best ways to ensure the viability of airBaltic, as it provides the necessary tools and time to implement the developed restructuring plan.”

Swiss, a long-standing wet-lease client of airBaltic, stated that it is monitoring developments while maintaining its existing flight operations.