Key facts
- Latvia's airBaltic filed for Chapter 11 bankruptcy protection in New York.
- The filing is part of a financial restructuring aimed at reducing the airline's debt.
- Air Baltic has secured a €350 million Debtor-in-Possession loan.
- The loan was arranged by Strategic Value Partners and includes lenders like Barclays and Morgan Stanley.
- The airline's operational flight business will continue uninterrupted during the restructuring process.
- The restructuring process is planned to conclude in June 2027.
Latvia's national airline, Air Baltic, has filed for Chapter 11 bankruptcy protection in New York. The move is part of a broader financial restructuring strategy designed to reduce the company's debt burden and realign its capital structure. The airline stated that its operational flight business will continue without interruption throughout the restructuring period, with all existing bookings, flight schedules, and customer services remaining valid.
To ensure liquidity and maintain ongoing operations, Air Baltic has secured a commitment for a Debtor-in-Possession (DIP) loan amounting to €350 million. This financing facility was arranged by the investment firm Strategic Value Partners and involves a consortium of international financial institutions, including Barclays, Hayfin Capital Management, Morgan Stanley, and Oaktree Capital Management. The loan carries a reference rate of SOFR plus an 8 percentage point margin, resulting in an effective interest rate of approximately 12%.
Andrejs Martinovs, Chairman of Air Baltic's Supervisory Board, explained that the decision to initiate Chapter 11 proceedings followed a thorough review of various options, with the primary goal of reaching reliable agreements with creditors and significantly reducing overall liabilities. The company's board has been instructed to ensure the continuous connectivity of Latvia and the Baltic states via air travel. The company expects to obtain the necessary court approvals to access the DIP funds in the coming days. The completion of the judicial restructuring process is anticipated by June 2027.