Latvia’s national carrier airBaltic has filed for Chapter 11 bankruptcy protection in the United States as soaring fuel prices and mounting debt push the airline into one of the biggest restructurings in its history. The airline voluntarily filed in New York on Monday and plans to continue operating flights while it restructures its finances.
AirBaltic has secured commitments for €350 million ($405 million) in financing from lenders including Strategic Value Partners, Barclays, Hayfin Capital Management, Morgan Stanley and Oaktree Capital Management. The financing carries an interest rate of around 12%, and still requires court approval.
AirBaltic has approximately $583 million in funded debt and finance lease liabilities, and also owes around €106 million in payroll taxes, airline taxes and other fees. CEO Erno Hilden said the restructuring is targeting approximately €44 million in annual profit improvements, with the Chapter 11 process expected to conclude by June of 2027.
The airline’s difficulties predate the latest filing. AirBaltic reported a €44.3 million net loss on €779.3 million in revenue in 2025 and has also dealt with engine shortages that grounded some aircraft. An earlier attempt to secure up to €257 million in emergency super-senior financing at an interest rate of 25% failed to provide a lasting solution.
(Source: airBalitc)
AirBaltic currently operates 54 Airbus A220-300 aircraft but plans to shrink its fleet to 36 by the end of 2026. It could also use the bankruptcy process to cancel or postpone aircraft and engine commitments, while talks with unions have started over potential reductions to its workforce of more than 3,000 employees.
Airline Crisis Spreads as Fuel Costs Surge
AirBaltic is the first European airline to enter bankruptcy proceedings during the current Iran war-driven aviation crisis and follows the collapse of US budget carrier Spirit Airlines in May. The conflict has sent jet fuel prices sharply higher, which places particular pressure on airlines with weaker balance sheets or limited fuel hedging.
Other carriers are also showing signs of strain. Norwegian long-haul airline Norse Atlantic began a formal process in July to explore a potential sale, merger or partnership after continuing to report losses. Meanwhile, Greece’s Aegean Airlines swung to a first-half loss as higher fuel costs and Middle East disruptions weighed on earnings.
Wizz Air CEO Jozsef Varadi warned that further airline consolidation could follow, particularly among carriers that failed to hedge fuel costs. Wizz Air itself has hedged around 80% of its fuel needs at prices well below current market levels.
For airBaltic, Chapter 11 offers an opportunity to reduce debt and reshape its operations rather than shut down. Scandinavian carrier SAS previously used the same US bankruptcy framework during its own restructuring.
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