Air Baltic files for Chapter 11 bankruptcy in New York with 350 million euros in DIP financing

Bankruptcy filing in New York court

Latvia's flag carrier, Air Baltic Corp AS, filed for protection under Chapter 11 of the United States Bankruptcy Code in New York on Monday, 14 September 2026. The airline initiated the court-supervised restructuring process to address a substantial debt burden and reorganize its financial commitments. The government of the Republic of Latvia holds a majority ownership stake in the carrier, which operates out of the Baltic region. According to corporate statements released on Monday, the filing aims to lower long-term debt levels while keeping commercial operations intact. Air Baltic selected the United States legal framework to conduct an organized financial rehabilitation under judicial oversight. The filing in New York allows the company to renegotiate obligations with institutional creditors while shielding its core aviation business from immediate creditor enforcement.

Debtor-in-possession financing package

To maintain liquidity throughout the court proceedings, Air Baltic secured a commitment for 350 million euros in debtor-in-possession financing. Financial reports valued this liquidity commitment at 404 million dollars according to Bloomberg, while Reuters reported the sum at 405 million dollars based on a benchmark exchange rate of 0.8653 euros per dollar. The credit package is backed by a syndicate of five international investment banks and asset management firms. The participating lenders comprise Barclays, Morgan Stanley, Oaktree Capital Management, Strategic Value Partners, and Hayfin Capital Management. The 350 million euro credit facility will supply working capital to fund ongoing operational costs, cover regular employee payroll, and satisfy supplier obligations throughout the reorganization.

Flight operations and Swiss partnership

Air Baltic stated that regular flight operations will continue without interruption for passengers across its route network. All passenger tickets, flight reservations, and customer service desks remain fully active and valid throughout the legal proceedings. Travellers can continue booking new flights as planned, with ground operations, airport assistance, and customer support functioning normally. In addition to operating scheduled passenger flights under its own brand, Air Baltic maintains commercial wet-lease agreements for Swiss International Air Lines, a subsidiary of the Lufthansa Group. Under these wet-lease contracts, the Latvian airline provides aircraft along with complete flight crews to conduct operations on behalf of Swiss. Company officials confirmed that the Chapter 11 filing in New York will not disrupt the wet-lease partnership with Swiss or impact ongoing cooperation with commercial partners.

Restructuring timeline and Chapter 11 mechanism

Chapter 11 of the United States Bankruptcy Code functions as a corporate reorganization mechanism that allows indebted companies to restructure their balance sheets without entering liquidation. The instrument has been utilized by numerous international and American air carriers facing debt challenges, including Scandinavian carrier SAS, United Airlines, and Delta Air Lines. Air Baltic management stated that it expects to conclude the court-supervised restructuring process by approximately June 2027. The airline will remain under the supervision of the United States Bankruptcy Court in New York until the restructuring plan receives formal judicial approval. The company intends to exit the Chapter 11 process with a reduced debt burden, stabilized finances, and ongoing operational capabilities across Europe.