Latvian flag carrier airBaltic has initiated financial restructuring proceedings under Chapter 11 of the U.S. Bankruptcy Code before the U.S. Bankruptcy Court for the Southern District of New York. The airline stresses that its regular operations will continue without interruption and that the process will not affect passengers, flight schedules or existing bookings.

Chapter 11 allows companies to restructure debt and other financial obligations under court supervision while continuing normal business operations. airBaltic says it has taken this step in order to reduce its financial obligations, strengthen its capital structure and establish a more sustainable financial foundation for future operations.

All flights will continue to operate according to the existing schedule, while purchased tickets and reservations remain valid. The airline will continue selling tickets, planning future schedules and processing refunds, vouchers, gift cards and passenger claims in accordance with existing policies. Passengers with upcoming bookings do not need to take any additional action.

To support operations during the restructuring process, airBaltic has secured a commitment for €350 million in debtor-in-possession, or DIP, financing. The financing was arranged by Strategic Value Partners, with Barclays, Hayfin Capital Management, Morgan Stanley, Oaktree Capital Management and Strategic Value Partners participating as lenders.

The interest rate on the new financing will be SOFR plus eight percentage points, corresponding to approximately 12% under current conditions. airBaltic will seek approval from the U.S. court to access the funds in the coming days. The airline expects that the new financing, together with cash generated through ongoing operations, will provide sufficient liquidity to continue operating throughout the Chapter 11 process.

Chairman of the Supervisory Board of airBaltic Andrejs Martinovs said the company had carefully assessed the available restructuring options, with the main objective of ensuring continued operations and establishing a more sustainable long-term financial structure.

“Under court supervision and with protection from creditor claims, this process provides a clear framework and timetable for reaching agreements with creditors, including aircraft lessors and other stakeholders. At the same time, it allows the company to continue operating,” Martinovs said.

He added that the objective is for airBaltic to emerge from the process financially stronger and with a substantially reduced level of obligations that the airline can sustainably manage over the long term.

airBaltic President and CEO Erno Hildén stressed that the immediate priority is to maintain regular operations while implementing the company’s new business plan.

“For our passengers, our operations continue as normal. The process does not affect their travel experience – we are flying, selling tickets and planning our future schedule, with the same focus on safety and operational reliability,” Hildén said.

The existing Management Board and Supervisory Board will remain in place throughout the restructuring process, while airBaltic says it will continue meeting its obligations to suppliers, service providers and other partners arising in the ordinary course of business.

Chapter 11 has previously been used by a number of major airlines, including SAS, United Airlines, Delta Air Lines, GOL and American Airlines. airBaltic says the U.S. restructuring framework is suitable for the company because of the international nature of its financing arrangements, creditors, aircraft leases and other significant obligations.

The airline expects to complete the restructuring process by approximately June 2027. Milbank LLP and COBALT have been appointed as legal counsel, while Seabury Global Aviation Advisors is acting as financial adviser and investment banker.

airBaltic is majority-owned by the Latvian state, which holds 88.37% of the voting rights. Deutsche Lufthansa AG owns 10%, while the remaining 1.63% is held by private shareholders. The airline operates a fleet based exclusively on Airbus A220-300 aircraft.