Air Baltic Files for Chapter 11 Bankruptcy Protection

On September 14, 2026, airBaltic, the national airline of Latvia, filed for Chapter 11 bankruptcy protection in New York. This legal process allows the company to continue operating while it restructures its debts and financial obligations. The airline has secured a significant financing commitment to support its operations during this period.

The filing was made voluntarily with the U.S. Bankruptcy Court for the Southern District of New York. airBaltic stated that its flights, ticket sales, reservations, and customer service would continue without interruption. The airline aims to complete its reorganization process by around June 2027.

Debtor-In-Possession Financing Secured

A key element of airBaltic’s restructuring plan is the securing of €350 million in debtor-in-possession (DIP) financing. This funding, which is pending court approval, is intended to provide the necessary capital for the airline to maintain its operations throughout the Chapter 11 proceedings. The financing comes with an interest rate of approximately 12 percent.

The group providing this financing includes prominent financial institutions such as Strategic Value Partners, Barclays, Hayfin Capital Management, Morgan Stanley, and Oaktree Capital Management. The total value of the commitment, depending on exchange rates at the time of calculation, ranged from $404 million to $405 million. This financial backing is crucial for airBaltic to manage its international financial obligations and address creditor claims while it works through the reorganization.

Court Oversight and Restructuring Goals

The Chapter 11 filing provides airBaltic with a legal framework to negotiate with various stakeholders, including aircraft lessors and other creditors. The airline’s management and supervisory boards are expected to remain in place during the restructuring process. The court-supervised process is designed to establish a clear timetable for these negotiations and agreements.

airBaltic’s stated objective for filing Chapter 11 is to reorganize its debt while ensuring the continuity of its services and maintaining Latvia’s air connectivity. The airline’s financial difficulties have emerged amidst a broader aviation industry crisis. The court protection offers a shield while the company seeks to reach sustainable terms with its creditors and lessors.

Management Targets Profit Improvement

The airline’s leadership has outlined a business plan that targets an annual profit improvement of €44 million. This strategic goal is a central part of the restructuring efforts aimed at ensuring the long-term financial sustainability of airBaltic. The company’s president and CEO, Erno Hilden, emphasized the focus on continuing airline operations while implementing the changes outlined in the new business plan.

The next steps in the process involve extensive negotiations with creditors. The court’s approval of the DIP financing is a critical early step that could allow the airline to access these funds promptly. airBaltic has not indicated any plans to suspend flights or ticket sales, maintaining its commitment to its passengers and its role in national connectivity.

Bondholder Decision and Government Interest

The decision for airBaltic to file for Chapter 11 was influenced by a prior rejection from bondholders. A significant majority of bondholders, holding over 70 percent of the debt value, reportedly favored liquidation over supporting a path that would have led to the current restructuring. The Latvian government remains the majority owner of airBaltic, highlighting the public interest in preserving the country’s air links. This government ownership places the restructuring within a broader context of national infrastructure and economic considerations.

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