AirBaltic Files for Chapter 11 Bankruptcy Protection in United States

The Latvian airline airBaltic has voluntarily filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code in New York. The company is seeking to restructure its debts and ensure its viability amid a broader crisis in the aviation sector. AirBaltic has secured a financing commitment of 350 million euros (approximately 405 million US dollars) from financial institutions including Barclays, Morgan Stanley, Oaktree Capital Management, Strategic Value Partners, and Hayfin Capital Management. This funding, which carries an interest rate of about 12 percent, is intended to maintain operations during the restructuring process and remains subject to court approval. CEO Erno Hilden stated that the company expects to reach sustainable agreements with stakeholders and hopes to see an annual result improvement of 44 million euros. The airline expects to conclude the process by June 2027, and flights will continue to operate normally in the meantime.

The airline faces significant financial burdens, including approximately 583 million US dollars in debt and lease liabilities, as well as 106 million euros in unpaid payroll taxes and aviation fees. Its revenue in 2025 was approximately 779 million euros. The company is majority owned by the Latvian government, with the German carrier Lufthansa holding a 10 percent minority stake. Latvian Prime Minister Andris Kulbergs noted that the filing followed a decision by bondholders representing over 70 percent of the debt to opt for liquidation. He described the Chapter 11 process as one of the best options to provide the time and tools necessary for restructuring. The government is also seeking a strategic investor while the airline reduces its fleet of Airbus A220-300 aircraft.

Reports differ on the primary drivers of the crisis. Center and center-left sources emphasize the impact of the war with Iran, noting that aviation fuel prices have doubled, creating the worst industry crisis since the COVID-19 pandemic. Some center-left reports also highlight long-term struggles including the loss of routes through Russia and Ukraine, engine issues with Pratt and Whitney, and the lingering effects of the pandemic. AirBaltic is the second airline to collapse due to the conflict with Iran, following the May closure of Spirit Airlines.