AirBaltic files for Chapter 11 bankruptcy as Iran war costs bite
Latvia's airBaltic voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code in New York, it said on Monday, as it seeks to restructure its debt pile and survive a deepening sector-wide crisis brought on by the Iran war.
Latvia's national carrier airBaltic has filed for Chapter 11 bankruptcy protection in the United States, citing the financial impact of the ongoing war with Iran. The airline seeks to restructure its debt and navigate the sector-wide crisis caused by soaring jet fuel prices. According to airBaltic, it has secured a €350 million ($405 million) financing commitment from lenders including Strategic Value Partners, Barclays, Hayfin Capital Management, Morgan Stanley, and Oaktree Capital Management, which is subject to court approval.
CEO Erno Hilden stated that the company aims to improve profitability by €44 million annually. The restructuring process, overseen by the court, is expected to conclude by June of next year. AirBaltic currently has $583 million in funded debt and finance lease liabilities, along with €106 million in payroll taxes and other fees.
The airline's 2025 revenue is approximately €779 million. Despite being majority-owned by the Latvian government and holding a 10% minority stake from Germany's Lufthansa, bondholders with over 70% of the debt value opted for liquidation instead of a proposed €257 million debt raise. Latvia's Prime Minister Andris Kulbergs views this bankruptcy solution as the best option to ensure airBaltic's viability, as it provides time to implement the restructuring plan.
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