airBaltic Files for Chapter 11 With €350m Financing Commitment

RIGA — airBaltic (BT) said it and certain subsidiaries filed for protection under Chapter 11 of the U.S. Bankruptcy Code on Monday, opening a court-supervised restructuring that the airline says will reduce debt while flights continue.

The case was filed September 14 in the U.S. Bankruptcy Court for the Southern District of New York. The public case page identifies Air Baltic Corporation AS in case No. 26-12188 and records two debtor entities.

The airline said it had secured a commitment for €350m in debtor-in-possession financing, subject to court approval. The proposed rate is the Secured Overnight Financing Rate plus eight percentage points, which airBaltic estimated at about 12% in total.

Strategic Value Partners is arranging the financing, with Barclays, Hayfin Capital Management, Morgan Stanley, and Oaktree Capital Management also participating as lenders. Debtor-in-possession financing provides operating money to a company already in Chapter 11 and can receive priority over existing unsecured claims if the court approves it.

airBaltic Says Flights and Bookings Continue

airBaltic says its flights will operate as scheduled, existing bookings remain valid, and passengers do not need to take action. The company also says it will continue handling refunds, vouchers, gift cards, baggage claims, and other service credits under its existing policies.

The public case page lists first-day motions concerning cash management and payments to certain non-U.S. vendors, along with case-management procedures. The requests still require judicial approval.

Chapter 11 does not itself mean that an airline stops operating. The U.S. Courts' explanation of the process says a debtor usually remains in possession of its business, may keep operating, and may borrow new money with court approval while it develops a reorganization plan.

“For our passengers, our operations continue as normal,” airBaltic President and CEO Erno Hildén said. He added that the carrier remains focused on safety and operational reliability while it implements its revised business plan.

Financial Pressure Before the Filing

airBaltic entered Chapter 11 with substantial debt and lease obligations. Its first-quarter financial statements showed €472.3m of borrowings and €883.8m of lease liabilities at March 31. The group reported negative equity of €249.3m and €15.6m in unrestricted cash, plus €17.2m held in a restricted bond-service account.

The Republic of Latvia held 88.37% of the airline's voting rights at the end of March, with Lufthansa Group holding 10%. The financial statements also identify Lufthansa Group airlines as customers under aircraft, crew, maintenance, and insurance agreements with airBaltic.

airBaltic had already replaced its former expansion strategy with a plan built around a smaller fleet, a more concentrated Riga Airport (RIX) network, and lower costs. The August business plan projected that the airline would operate about 36 Airbus A220-300s by the end of 2026, compared with 51 in its 2025 metrics, before gradual growth later in the decade.

A separate financing proposal circulated this month would have raised €257m in gross proceeds through new super-senior bonds carrying 25% annual payment-in-kind interest. The bondholder vote was due September 11 but was postponed until September 15. airBaltic's Chapter 11 announcement did not say whether that meeting will still proceed.

The new €350m commitment is larger and has a lower stated rate than the earlier bond proposal, though the two use different interest structures and the DIP's complete economics will depend on its motion, fees, collateral, draw conditions, and the court's orders. The financing is not available merely because it was announced.

What Happens Next

airBaltic says it plans to seek court approval to access the DIP financing. The Chapter 11 process may also address aircraft leases, debt, contracts, and the carrier's broader capital structure.

“Our aim is to complete the process with a financially stronger airBaltic and a substantially reduced level of obligations,” Supervisory Board Chairman Andrejs Martinovs said.

The company says it expects to complete the process by approximately June 2027. The company announcement and public case page reviewed for this article did not provide a restructuring plan, estimated creditor recoveries, or proposed lease changes. Later filings and court orders may clarify whether the process changes airBaltic's revised fleet and network plan.