AirBaltic Files for Chapter 11 Bankruptcy in New York as Iran War Costs Bite
Latvia's national carrier airBaltic has voluntarily filed for Chapter 11 bankruptcy protection in New York, becoming the latest airline casualty of the economic fallout from the U.S. war with Iran. The airline announced the filing on Monday, September 14, 2026, as part of a financial restructuring aimed at reducing its substantial debt burden
Financial Pressures and Restructuring Plan AirBaltic has secured a commitment for €350 million (approximately $405 million) in financing from a consortium of lenders, including Strategic Value Partners, Barclays, Hayfin Capital Management, Morgan Stanley, and Oaktree Capital Management. The funding carries an interest rate of approximately 12% and remains subject to court approval, according to CEO Erno Hilden.
The airline reported approximately $583 million in funded debt and finance lease liabilities, along with €106 million owed in payroll taxes and airline taxes and fees. AirBaltic's 2025 revenue stood at around €779 million.
CEO Hilden stated that the company is targeting €44 million in annual profit improvements and is engaging with stakeholders to agree on sustainable terms.
Operational Continuity and Workforce Adjustments AirBaltic has confirmed that flights will operate as scheduled throughout the court-supervised process, which is expected to conclude by June 2027. However, the carrier is in talks with labour unions regarding a workforce reduction, which Hilden described as a "natural conclusion to the existing capacity reduction plans". The airline currently employs more than 3,000 people.
The biggest operational changes will involve downsizing the airline's wet lease business, which leases aircraft and crews to other carriers.
Fleet and Order Cancellations AirBaltic will use the bankruptcy proceedings to cancel or defer outstanding deliveries on a $3.5 billion order for 40 additional Airbus aircraft, as well as $106.7 million worth of aircraft engines from Pratt & Whitney. The airline currently operates a fleet of approximately 50 Airbus A220-300 planes.
Ownership and Political Context AirBaltic is majority-owned by the Latvian government, with Germany's Lufthansa holding a 10% minority stake. Latvian Prime Minister Andris Kulbergs said the Chapter 11 proceedings were initiated after bondholders holding over 70% of the debt value opted for liquidation instead of supporting the company's restructuring plan.
"I view this solution as one of the best options for ensuring airBaltic's viability, as it provides the necessary tools and time to implement the restructuring plan," Kulbergs said. He added that the government continues to seek a strategic investor as the airline reduces its fleet and reorganises its obligations.
The Prime Minister also noted that by April, airBaltic had "burned through" €380 million raised via bonds issued in 2024, and a €30 million emergency government loan ran out in June. "Serving Baltic and Latvian routes requires only 30 aircraft, not 100," he stated.
Industry Context The U.S. war with Iran has caused jet fuel prices to double, sparking the air travel sector's worst crisis since the COVID-19 pandemic. AirBaltic is the second airline casualty linked to the conflict, following the collapse of Spirit Airlines in May 2026.
CEO Hilden, who previously led Scandinavian airline SAS through its Chapter 11 proceedings from 2022 to 2024, said airBaltic is "targeting the same process".
How BalticDealHub.ee can help find investors As airBaltic seeks a strategic investor and support for its restructuring, our platform, BalticDealHub.ee, can help the airline, the Latvian government, creditors and their advisers reach potential investors. BalticDealHub.ee is a Baltic-focused investment and deal-flow platform that can assist with identifying strategic and financial investors — including aviation funds, private equity, family offices, infrastructure investors, sovereign wealth funds and regional industrial partners — preparing teaser and information materials, arranging confidential introductions, coordinating due diligence, and structuring co-investment or recapitalisation solutions. Any rescue would still depend on airBaltic’s stakeholders, creditors, the Latvian government and court approval, but BalticDealHub.ee can serve as an additional channel to broaden the investor search and support a viable future for the airline.
