Latvian flag carrier airBaltic has just announced that it’s filing for Chapter 11 bankruptcy protection in the United States. This shouldn’t come as much of a surprise, as we’ve known the company is having major financial issues, and is looking to radically change its business plan.
In this post:
airBaltic files for Chapter 11, continues operating as usual
airBaltic has today announced that it’s voluntarily filing for Chapter 11 bankruptcy in the United States, in order to restructure its financial obligation while continuing operations. The company is expecting to emerge from Chapter 11 by around June 2027, so it’s anticipated to be a pretty speedy process.
The airline emphasizes that all flights are operating as scheduled, tickets and reservations remain valid, and passengers can continue to book and travel with the airline as usual. Furthermore, refunds, gift cards, and credits related to baggage or service claims, continue to be handled in line with existing policies. Passengers with upcoming travel do not need to take any action.
airBaltic has secured a commitment of EUR 350 million in new debtor-in-possession financing to provide liquidity and support operations during the Chapter 11 process. Here’s how Andrejs Martinovs, Chairman of the Supervisory Board of airBaltic, describes this:
“We have carefully assessed the restructuring options available to the company, with one priority in focus – to give airBaltic the best possible basis to continue operating and to build a sustainable financial structure. Under court supervision and with protection from creditor claims, this process provides a clear framework and timetable for reaching agreements with creditors, including aircraft lessors and other stakeholders.”
“At the same time, it allows the company to continue operating. That is the central priority set for the airBaltic Management Board – to keep flying and to maintain Latvia’s connectivity. This process will of course require strict financial discipline, and the company will have to meet a number of important conditions along the way. Our aim is to complete the process with a financially stronger airBaltic and a substantially reduced level of obligations that the company can sustainably manage over the long term. We have a strong management team and experienced advisers with hands-on experience of implementing Chapter 11 processes. airBaltic is on the right track.”
airBaltic is in a rough spot, but definitely has a future
airBaltic has historically been an incredibly well run airline. The CEO used to be Martin Gauss, but he was fired (which I found to be an odd decision), and he’s now CEO of Gulf Air. airBaltic operates an all-Airbus A220 fleet, and the airline had huge growth plans, and intended to acquire 100 of these aircraft.
For a long time, the idea was as follows:
- Latvia has convenient geography for connections in Northern Europe, as well as to Russia, etc.
- Latvia is part of the European Union, but airBaltic has a major cost advantage, given that Latvia is a bit cheaper than some other countries in the EU, so there was merit to the airline wet leasing its aircraft to other airlines
However, as you’d expect, the situation has evolved over time. With Russian airspace closed to airlines from the European Union, that has massively limited airBaltic’s potential route network, and particularly has limited the number of connecting itineraries the airline can sell. If the current conflict with Russia didn’t apply, it would be a totally different story at airBaltic.
While airBaltic continues have a robust wet leasing business, the issue is that most airlines looking to lease planes only need them in summer, and not winter, given that it’s when demand is highest. In early 2025, Lufthansa Group even bought a small stake in airBaltic, in part because of how much it values the wet lease agreements for subsidiaries like Lufthansa, SWISS, Brussels Airlines, etc.
But the issue is that summer-only wet leases need to be able to cover costs not just for summer, but also winter, since it’s not like airBaltic has anywhere to profitably fly those excess planes in winter.
What has really caused issues for airBaltic in recent times is the increase in fuel costs. Not only have fuel costs increases been particularly bad in Northern Europe, but it’s also tough to be a full service(ish) airline that exclusively has a regional network, given how robust ultra low cost carrier competition is in the region.
So weeks ago we learned about the carrier’s turnaround plan, which is what’s being pursued as part of this reorganization and Chapter 11 filing:
- airBaltic currently has a fleet of 54 Airbus A220-300s, and was planning on growing that fleet to 100 planes; however, the airline now plans to shrink instead, decreasing its fleet to just 36 planes by the end of 2026, before eventually increasing the fleet to around 40 planes by 2031
- The airline plans to largely maintain its scheduled capacity (since the airline does a lot of leasing out of aircraft — more on that below); available seat kilometers are expected to decline from 9.6 billion in 2026 to 8.7 billion in 2027, before gradually increasing to 10.5 billion by 2031
- airBaltic will continue to have a network heavily focused on Latvia, but rather than pursuing broad expansion, the airline will focus on deepening its presence in existing markets by increasing frequencies where demand and profitability are strongest
- airBaltic largely leasing out its aircraft to other airlines under a wet lease model (particularly Lufthansa Group carriers), but the airline plans to increasingly focus on year-round deployment with this strategy, to mitigate the seasonal issue
Bottom line
Latvian airline airBaltic has filed for Chapter 11 bankruptcy protection in the United States, as the company is obviously looking to get out of some of its debt and shrink. For now it should be business as usual, and airBaltic is expected to continue operating.
The company has secured financing to get through this process, and expects to emerge in well under a year, by June 2027. Given what we’ve known about airBaltic’s plans to restructure, it’s not surprising to see the airline also file for Chapter 11 bankruptcy protection.
What do you make of airBaltic filing for Chapter 11 bankruptcy protection?
I am not sure they were ever a particularly well run airline. They were always great at expanding in times of strong economic growth, but never great at managing times of austerity. A well run airline would actually be able ride out both.
The decision to order 100 A220 aircraft was a clearly not a well run business decision. But same as Norwegian Air Shuttles massive aircraft orders, a hope based decision rather than a strategic well founded decision.
Correct! The manager Gauss apparently was soo good that on the day of firing he jumped on a flight to MUC and never came back.
As an American of Latvian descent, I'm hoping they are able to survive and thrive.
Their only hope is to become Opa Lufty's newest flag carrier. They can get the 90% they don't own cheap. And then, if there's a God, MX can join them, so it'll be clear to everyone that Franco-Canadian Spaghetti-Os is the kiss of death.
I suspect they will survive but be in a very niche flag carrier perspective....the problem is a 100 aircraft carrier really is too much capacity for a country that is less than 2 million people.....lookat Finnair trying to fly out of other countries.
So thier exporting of flying really hasnt worked out especially when they arent linked to a larger alliance.
So im not surprised.
BT was never purely Latvian carrier, they always had entire Baltics as their home market and that's not a limit either. They have the entire EU as their playground. LHG also couldn't be as large as it is if it only flew out of Germany.
thats exactly my point....its tough to play in other countries despite being in the EU....would a base of KLM do well say in BCN?
AY tried ARN a few years back and it didnt go well....
so i see the same problem here.....i think they need a suitor....i would argue AY or AFKLM could be the best possible acquiorer.
Hope the pull is through. They are a great airline and I love their all A220 fleet many of which have starlink.
Not familiar with bankruptcy proceedings. Why are they filing in the US?
Very basic knowledge here.
Any company (even if not US registered/based) can file for bankruptcy in the US if they have any sort of operations in the US (something that might affect labour/employment)
Some Air Baltic A220 are produced in the US. Air Baltic also does a great deal of leasing and insurance with American companies.
Thai Airways previously filed for bankruptcy in the US on the grounds of their sole route to lax.
From what I understand, the US bankruptcy system is a bit more streamlined compared to other countries; especially with pre-arranged "debtor in possession" financing.
IIRC, Azul Brazilian Airlines filed for chapter 11 in the US in 2025.
Most of their financing arrangements are likely governed by US law + favorable bankruptcy regime in the US (note Chapter 11 is "bankruptcy protection", not "bankruptcy").
Bankruptcy proceedings in the US not only allow to continue operation (as it does in most countries), but also to honor previous obligations - aka tickets - which is not the case in most jurisdictions, but very damaging if not. So airlines try to find some legal reasons to file in the US and honor their sold tickets.
Another affliction for AirBaltic was the P&W GTF engine which grounded many airframes.
Hope Baltic addresses all its issues in this Chapter 11. Remember, Spirit went thru Chapter 11, but failed to properly address debt; therefore, it ended up filling Chapter 22 ( 11 x 2 = 22) and still went under.
If it's looking for more work, might re-arrange the seats in a few jets for charter work like JetBlue is doing...
Another affliction for AirBaltic was the P&W GTF engine which grounded many airframes.
Hope Baltic addresses all its issues in this Chapter 11. Remember, Spirit went thru Chapter 11, but failed to properly address debt; therefore, it ended up filling Chapter 22 ( 11 x 2 = 22) and still went under.
If it's looking for more work, might re-arrange the seats in a few jets for charter work like JetBlue is doing with two jets. Plenty of sports teams in Europa.
When it comes out of bankruptcy, might become a subsidiary of Der Kaiser. Just change the logo to Luft-Baltic. ==;-)
I love Air Baltic. Lots of factors are against them at the moment... but really hope they can pull through all of it. Terrific little airline.
I hope they can survive this.
I'm surprised BT has enough debt in the US to make this worthwhile. I'd assume most of their creditors are in the EU.
American debt restructuring process tends to be a lot more generous than European own.
Well had to cancel all my Europe plans for personal reasons or I would be flying them tomorrow.
Most of us want them to survive, but it's a really bad combination, in part due to: Russia (both loss of routes to/from there, and closed airspace due to that war), the Iran war also driving up fuel costs, P&W engine issues affecting their A220 fleet, and higher interest rates making refinancing a challenge. They'll either end up like Norwegian after its bankruptcy, or like Spirit. Hoping for the former; wishing them the best.
Air Baltic is a wonderful little airline and I hope they survive and prosper.
Losing Russia is bad, losing them and trying to sustain high fuel prices is 5x bad, not that it's something they can control. I really hope they survive, AirBaltic is cool, just struggling to see how it can work out unless something they cannot control suddenly changes in their favor.