Key facts
- Air Baltic filed for Chapter 11 bankruptcy protection in New York.
- The airline is discussing workforce reductions with labor unions.
- Air Baltic secured a €350 million Debtor-in-Possession loan.
- The restructuring aims to reduce debt and capacity.
- Operations will continue uninterrupted during the proceedings.
- The restructuring is expected to conclude by June 2027.
Latvia's national airline, Air Baltic, has filed for Chapter 11 bankruptcy protection in New York as part of a financial restructuring aimed at reducing its debt pile and capacity. The airline's CEO, Erno Hilden, stated that talks are underway with labor unions to agree on workforce adjustments, a move he described as a "natural conclusion" to plans for reducing capacity.
Air Baltic filed for protection under the U.S. Bankruptcy Code on Monday, seeking to restructure its debt and avoid creditors amid a sector-wide crisis. Hilden, who previously guided Scandinavian Airlines through a similar process, assured that operations would continue uninterrupted during the Chapter 11 proceedings. The "wet lease" business, where Air Baltic loans planes and crew to other carriers, is expected to see the biggest changes.
Dace Kavasa, chairperson of the Latvian aviation union, confirmed that consultations are ongoing regarding collective dismissals and "alternative employment solutions," such as part-time roles. She noted significant disagreements on proposed dismissal criteria and expressed hope for constructive decisions by the end of the week. The airline has secured a commitment for a €350 million Debtor-in-Possession (DIP) loan, arranged by Strategic Value Partners, with lenders including Barclays and Morgan Stanley. The loan carries a margin of 8 percentage points over SOFR. Air Baltic expects court approval to access these funds soon, with the judicial restructuring process anticipated to conclude by June 2027.