Latvia’s national airline airBaltic has presented a revised business plan aimed at strengthening its long-term financial sustainability and adapting its operations to changing market conditions. According to an airBaltic press release, the new strategy envisages a stronger focus on Riga as the airline’s main hub, a smaller fleet, greater reliance on ACMI operations and significant cost reductions.

airBaltic stressed that scheduled operations will continue unchanged and that implementation of the new business plan will not affect the existing flight schedule or passenger services.

The biggest change concerns the fleet. airBaltic currently operates 54 Airbus A220-300 aircraft, while the airline expects its operational fleet to be reduced to approximately 36 aircraft by the end of 2026. Gradual growth is expected thereafter, albeit at a significantly more moderate pace than previously planned, reaching around 40 aircraft by 2031.

Despite the reduction in the number of aircraft, airBaltic expects improved fleet utilisation to allow it to maintain a relatively stable level of capacity in scheduled operations.

airBaltic’s previous strategy, developed as part of preparations for the planned initial public offering, assumed continued growth in passenger numbers and revenue, alongside a gradual increase in the fleet to as many as 100 aircraft.

The airline now says that circumstances have changed significantly in the meantime. Growth in demand and revenue has slowed, geopolitical developments related to the war in Ukraine and conflicts in the Middle East have increased uncertainty and operating costs, while prolonged issues with the availability of Pratt & Whitney engines have limited the airline’s ability to utilise its entire A220 fleet. The new strategy therefore shifts the company’s priorities towards financial stability before further growth.

“Every successful airline must continuously adapt to changes in the market. This business plan is based on disciplined decisions that will strengthen airBaltic’s long-term competitiveness while preserving what matters most – reliable connectivity and operations, as well as financial sustainability,” said airBaltic President and Chief Executive Officer Erno Hildén.

Under the new business plan, Riga will be positioned even more strongly as airBaltic’s primary hub. Instead of broadly expanding its network, the airline intends to focus on existing markets and increase frequencies where demand and profitability are strongest. Other bases will continue to serve selected point-to-point routes, while seasonal and tactically selected operations are expected to improve fleet utilisation throughout the year.

Scheduled capacity, measured in available seat kilometres (ASK), is expected to decline from approximately 9.6 billion in 2026 to 8.7 billion in 2027. Thereafter, airBaltic expects a gradual recovery to around 10.5 billion ASKs by 2031.

A key part of the new strategy will be the expansion of ACMI operations, under which aircraft are leased to other airlines together with crews, maintenance and insurance.

airBaltic believes that longer-term and more stable ACMI contracts will enable more balanced fleet utilisation across the summer and winter seasons. This should reduce the negative impact of seasonality, particularly during the winter months when demand across the airline’s own network is weaker.

Through the combination of changes to its fleet, network and operating model, airBaltic expects to generate approximately €45 million in annual recurring benefits, primarily through lower operating costs, but also through additional revenue.

Alongside the operational restructuring, the airline is also preparing a comprehensive recapitalisation. To cover short-term liquidity needs and support implementation of the new business plan, airBaltic is seeking €225 million in interim financing. This is intended to serve as a bridge until a permanent financial structure is established. The proposed long-term financing package includes up to €225 million in new debt and an additional €100 million in equity.

The plan also envisages a partial conversion of the airline’s senior secured notes due in 2029 into equity, while the remaining portion would be exchanged for a new, smaller debt instrument of up to €125 million. A partial conversion of other balance-sheet liabilities into equity is also planned. Agreements on the financing and recapitalisation have not yet been concluded and remain subject to the consent of relevant stakeholders, bondholders and other required approvals.

A reconvened vote by holders of the 2029 Senior Secured Notes on the required resolutions is scheduled for August 17, 2026, with further voting rounds also expected.

According to financial projections included in the revised business plan, airBaltic expects revenue of approximately €800 million in 2027, around €900 million in 2029 and €1 billion by 2031.

EBITDAR is expected to increase to approximately €192 million in 2027, €243 million in 2029 and €300 million in 2031, with an EBITDAR margin of roughly 25% to 29%.

The airline also expects a gradual reduction in leverage. Following the recapitalisation, the net debt-to-EBITDAR ratio is expected to stand at approximately 4.8 at the end of 2026, decline to 2.4 by the end of 2029 and fall further to around 1.6 by the end of 2031.

airBaltic cautioned that these are projections based on current expectations and assumptions, and that actual results may differ due to changes in fuel prices, exchange rates, inflation, demand, supply chain disruptions and the effectiveness of the implementation of the business plan itself.

The airline will publish details of further steps through stock exchange announcements, while the current flight schedule continues as planned.

The example of airBaltic demonstrates how a responsible company reacts when it becomes clear that its existing business model and previous plans are no longer sustainable. Rather than insisting on previously targeted growth at any cost, the Latvian carrier has chosen to confront the new reality and pursue a genuine restructuring that also involves painful measures – reducing the fleet, abandoning ambitious expansion plans, cutting costs and changing its network strategy. Such decisions are neither popular nor easy, but the purpose of restructuring is not to preserve the existing model at any cost; it is to safeguard the company for the long term.