Air Baltic Corporation AS (hereinafter – airBaltic or the company), the national airline of Latvia and leading carrier in the Baltic States, today announces that airBaltic and certain of its subsidiaries have voluntarily initiated proceedings under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the “U.S. Court”).
Chapter 11 is a well-established U.S. legal framework, recognised internationally and used regularly by U.S. and international airlines, that allows companies to restructure their finances and raise capital while continuing day-to-day operations under the supervision of the U.S. Court. airBaltic is using this process to address its financial obligations and achieve a more sustainable capital structure.
The process will not affect passengers and operations will continue as normal. Flights will operate as scheduled, tickets and reservations will remain valid, and customer service will continue as usual. Refunds, vouchers, gift cards and credits related to baggage or service claims will continue to be handled in line with existing policies. Passengers with upcoming travel do not need to take any action.
Andrejs Martinovs, Chairman of the Supervisory Board of airBaltic: “We have carefully assessed the restructuring options available to the company, with one priority in focus – to give airBaltic the best possible basis to continue operating and to build a sustainable financial structure. Under court supervision and with protection from creditor claims, this process provides a clear framework and timetable for reaching agreements with creditors, including aircraft lessors and other stakeholders. At the same time, it allows the company to continue operating. That is the central priority set for the airBaltic Management Board – to keep flying and to maintain Latvia’s connectivity. This process will of course require strict financial discipline, and the company will have to meet a number of important conditions along the way. Our aim is to complete the process with a financially stronger airBaltic and a substantially reduced level of obligations that the company can sustainably manage over the long term. We have a strong management team and experienced advisers with hands-on experience of implementing Chapter 11 processes. airBaltic is on the right track.”
New Financing to Support Ongoing Operations
airBaltic enters the Chapter 11 process with a commitment for EUR 350 million in new debtor-in-possession (DIP) financing arranged by Strategic Value Partners as DIP Arranger and with Barclays, Hayfin Capital Management, Morgan Stanley and Oaktree Capital Management as additional lenders, to provide liquidity and support operations during the Chapter 11 process.
The company will seek customary U.S. Court approval to access this financing in the coming days. Together with cash generated from ongoing operations, the financing is expected to provide sufficient liquidity for airBaltic to continue its operations during the Chapter 11 process.
Erno Hildén, President and Chief Executive Officer of airBaltic: “Our focus is on continuing to run the airline while implementing the changes set out in our new business plan. For our passengers, our operations continue as normal – the process does not affect their travel experience and is not noticeable to them – we are flying, selling tickets and planning our future schedule, with the same focus on safety and operational reliability. At the same time, we are taking the necessary steps to make airBaltic a more efficient and financially sustainable airline. This process allows us to continue that work while maintaining our day-to-day operations and serving our passengers and partners.”
Employees, Suppliers and Partners
airBaltic will continue its day-to-day operations during the Chapter 11 process, with the existing Management Board and Supervisory Board remaining in place. The company will continue to meet its obligations to suppliers, service providers and other partners in the normal course of business.
About Chapter 11
The U.S. Chapter 11 process is a well-established and flexible framework for court-supervised financial reorganisation, including for businesses with operations and stakeholders across multiple jurisdictions. It offers companies time and flexibility to restructure debt and other obligations, address contractual commitments and raise specialised financing, all while continuing to operate as usual.
The process has previously been used by major international airlines including SAS, United Airlines, Delta Air Lines, GOL and American Airlines. For airBaltic, whose primary financing arrangements, creditors, aircraft leases and other significant obligations are international in nature, Chapter 11 provides an established framework for addressing these matters in a single court-supervised process.
