AirBaltic Files Chapter 11 as Iran War Costs Bite

Latvia's AirBaltic filed for US Chapter 11 restructuring on September 14, with flights continuing as the Iran war's doubled jet fuel prices strain the sector.

Latvia's AirBaltic voluntarily filed for protection under Chapter 11 of the US Bankruptcy Code in New York on September 14, 2026, lodging the petition with the Southern District of New York bankruptcy court along with its AirBaltic Training and Baltic Cargo Center subsidiaries, Aviation Week reports. The airline said flights, ticket sales and schedule planning continue as normal during the court-supervised process, and its management and supervisory boards remain in place.

AirBaltic is a majority state-owned flag carrier that had been growing for a decade, so a bankruptcy filing marks a sharp reversal rather than a slow decline. According to Reuters reporting carried by KSL News and Euronext, Latvian Prime Minister Andris Kulbergs said the proceedings began only after bondholders holding more than 70% of the debt opted for liquidation instead of backing a planned €257 million super-senior debt raise. Reuters also notes it is the second airline casualty linked to the Iran war, after Spirit Airlines collapsed in May.

Reuters reports the US war with Iran has doubled jet fuel prices, sparking air travel's worst crisis since the COVID-19 pandemic, and AirBaltic's court filing cited 'acute financial stress due to a combination of financial and geopolitical factors.' The filing shows about $583 million in funded debt and finance lease liabilities plus €106 million owed in payroll and airline taxes, against 2025 revenue of around €779 million. Aviation Week's Fleet Discovery database counts 56 A220s, only 15 owned, with DAE and German Operating Aircraft Leasing the most exposed lessors at seven aircraft each.

AirBaltic has committed to €350 million (about $405 million) of new debtor-in-possession financing at roughly 12% interest, subject to court approval. Aviation Week reports the lenders and Reuters reporting carried by Euronext names them as Strategic Value Partners, Barclays, Hayfin Capital Management, Morgan Stanley and Oaktree Capital Management. Together with cash from ongoing operations, the airline says the financing should provide sufficient liquidity to keep operating through the Chapter 11 process.

The stakes reach beyond the airline itself: Chairman Andrejs Martinovs said a central priority is maintaining Latvia's connectivity while 'substantially' reducing obligations, according to Aviation Week. Reuters reporting via KSL News says AirBaltic will use bankruptcy to cancel or defer deliveries on a $3.5 billion Airbus order for 40 more planes and $106.7 million of Pratt & Whitney engines, and plans workforce adjustments among more than 3,000 staff. Latvian Prime Minister Kulbergs argued that serving Baltic routes requires only about 30 aircraft, not 100.

The restructuring is expected to be completed around June 2027, and CEO Erno Hildén told a press conference the airline is targeting the same Chapter 11 process he led at SAS from 2022 to 2024, Reuters reports. He said the company is looking at €44 million in annual profit improvement and told Reuters he sees 'a bright future' after executing the new business plan. The Latvian government, per Reuters, continues to seek a strategic investor while the airline downsizes its fleet and wet-lease business.