Air Baltic. Photo: Sergio Torres Parra, Shutterstock Latvian airline airBaltic announced that it and some of its subsidiaries have voluntarily filed for Chapter 11 bankruptcy in the Bankruptcy Court for the Southern District of New York.
This US legal process allows companies to restructure under court supervision while continuing operations. airBaltic emphasizes that the process is intended to help the company rebuild its capital and liability structure and achieve a more sustainable financial structure.
According to the company, the procedure is not expected to affect flight operations. All flights will continue to operate as scheduled, existing tickets and reservations will remain valid, and passengers will continue booking flights and flying as usual.
Customer service will also continue to operate as usual. Refunds, vouchers, gift cards and credits related to baggage or service claims will be processed in accordance with existing policies. Passengers with a future reservation are not required to take any action.
As part of the process, Air Baltic has secured a commitment for new DIP financing of EUR 350 million. Strategic Value Partners arranged the financing, which will be provided by Barclays, Hayfin Capital Management, Morgan Stanley, Oaktree Capital Management, and Strategic Value Partners.
The interest rate on the financing was set at SOFR plus 8%, i.e. approximately 12%.
The company is expected to seek customary approval from the US court to access the financing in the coming days. Air Baltic notes that, together with cash flow from its ongoing operations, the financing is expected to provide it with sufficient liquidity to continue operations during the Chapter 11 process.
During the process, the company will continue to operate day to day, with management and the supervisory board remaining in their positions. The company announced that it will continue to meet its obligations to suppliers, service providers and partners in the normal course of business.
Air Baltic said that the goal of the process is to reach a more stable and sustainable capital structure, alongside a competitive cost structure and a significant reduction in the level of liabilities that the company can manage over time.
International airlines have used the Chapter 11 process in the past, including SAS, United Airlines, Delta Air Lines, GOL, and American Airlines, and more recently Spirit, which ceased operations after its rescue attempts failed.
Air Baltic estimates that it will complete the procedure around June 2027.
At the end of the announcement, the company said that it is owned by the State of Latvia, which holds 88.37% of the voting rights. Deutsche Lufthansa AG holds 10%, and the remaining 1.63% is held by private shareholders.