Latvia’s flag carrier airBaltic has filed for Chapter 11 bankruptcy protection in the United States, launching a court-supervised restructuring to reduce its debt while keeping flights operating.
Air Baltic Corporation and certain subsidiaries voluntarily filed with the US Bankruptcy Court for the Southern District of New York on September 14, 2026. The airline said scheduled flights, ticket sales, reservations and customer services would continue normally throughout the process. Existing tickets, vouchers and credits remain valid.
The carrier says it has secured commitments for €350 million ($405 million) in debtor-in-possession financing from a group including Strategic Value Partners, Barclays, Hayfin Capital Management, Morgan Stanley and Oaktree Capital Management. The financing, which remains subject to court approval, is intended to provide liquidity while airBaltic negotiates with creditors, aircraft lessors and other stakeholders.
According to airBaltic, the facility carries an interest rate of SOFR plus 8%, equivalent to around 12% at current rates. The airline expects to complete the Chapter 11 process around June 2027.
airBaltic says flights will continue during Chapter 11
Chapter 11 does not mean airBaltic is ceasing operations or being liquidated. The US procedure allows a company to continue operating while restructuring debts and contracts under court supervision and provides protection against certain creditor claims.
“Our focus is on continuing to run the airline while implementing the changes set out in our new business plan,” said airBaltic President and CEO, Erno Hildén.
He added that passengers should not notice the restructuring, with the airline continuing to fly, sell tickets and plan future schedules.
The filing follows months of increasingly severe liquidity pressure at the Latvian carrier.
On September 3, 2026, airBaltic announced an agreement for €257 million in interim financing, including an initial €180 million tranche, as it sought short-term liquidity to implement its restructuring.
That followed an August agreement under which bondholders approved changes to the terms of €380 million in outstanding bonds, including the deferral of interest payments and a temporary waiver of minimum liquidity requirements.
Fuel shock compounded existing financial pressure
The airline’s difficulties were sharply aggravated by the rise in oil and jet fuel prices following the outbreak of the US-Iran war.
airBaltic had not hedged its fuel requirements against the increase, leaving it particularly exposed to the surge in prices. However, its financial pressures predated the latest geopolitical shock and included high debt and aircraft leasing costs.
The restructuring also marks a dramatic reversal of airBaltic’s earlier expansion plans.
airBaltic to shrink A220 fleet after years of expansion
The carrier currently operates an all-Airbus A220-300 fleet of 54 aircraft, but announced a new business plan in August 2026 that will reduce the fleet to 36 aircraft by the end of 2026 before gradually returning to around 40 by 2031.
That represents a striking reversal from airBaltic’s previous strategy, under which the airline planned to operate as many as 100 A220-300s.
airBaltic carried 5.2 million passengers in 2025 and generated €779.3 million in revenue, but recorded a net loss of €44.3 million.
The Latvian government remains its controlling shareholder with an 88.37% stake, while Lufthansa Group acquired a 10% minority holding in 2025 as part of a closer strategic relationship between the two airlines.
Kulbergs said the government continues to seek a strategic investor for the airline while the company restructures its obligations and reduces its fleet.
“I view this solution as one of the best options for ensuring airBaltic’s viability,” the prime minister said, arguing that Chapter 11 gives the airline the time and legal tools required to implement its restructuring plan.