airBaltic Files Chapter 11 as Iran War Costs Bite; €350M Financing Secured

Latvia’s airBaltic filed for Chapter 11 bankruptcy protection on September 14, 2026, becoming the second airline casualty linked to the Iran war after Spirit Airlines collapsed in May. The carrier secured €350 million in debtor-in-possession financing from Barclays, Morgan Stanley, and Oaktree to maintain operations during restructuring. airBaltic expects proceedings to conclude by June 2027, with all flights continuing as scheduled and existing tickets remaining valid.

Why airBaltic ran out of cash

The airline faced a perfect storm of crises over six years. The Iran war forced suspension of Russian, Belarusian, and Ukrainian routes, costing €46.4 million in 2022 passenger revenue alone. In March 2026, airBaltic suspended direct flights to Dubai until October due to the conflict. Simultaneously, Pratt & Whitney engine shortages kept aircraft grounded, with an average of 8.0 aircraft out of service during 2024. A €30 million state loan in April 2026 failed to stabilize the carrier as fuel costs surged from Middle East tensions.

Debt load and restructuring timeline

airBaltic enters Chapter 11 with €583.9 million in funded debt and €992.5 million in operating lease obligations. The airline carries €456.8 million in senior secured bonds due 2029 at a 14.5% interest rate. The Latvian government, which owns 88.37% of the carrier, provided €290 million in emergency equity in July 2020 and €104.4 million across 2021 and 2022 after COVID-19 losses of €527.8 million from 2020 to 2022. The airline expects Chapter 11 proceedings to complete by June 2027.

Operations and passenger impact

All 5.2 million passengers carried in 2025 and the airline’s 3,000 employees face no immediate disruption. Flights operate as scheduled, existing tickets remain valid, and new bookings are accepted. airBaltic operates an all-Airbus A220-300 fleet of 54 aircraft across more than 70 destinations, using Riga as a transit hub. The carrier supplies aircraft and crews to Lufthansa’s Swiss subsidiary under a wet lease arrangement. This partnership will not be affected by the bankruptcy proceedings.

Why Chapter 11 instead of other options

airBaltic rejected four alternative financing proposals, including a €257 million emergency bond backed by Polus Capital Management and Klirmark Capital that carried a punitive 25% interest rate. The airline also considered restructuring under English law, EU state aid, or Latvian insolvency proceedings. Chapter 11 provided the clearest path: court supervision protects the carrier from creditor claims while allowing operations to continue and creditor agreements to be negotiated under a fixed timetable. The airline is the second major carrier to use this process after SAS, United Airlines, and Delta.

Final Thoughts

airBaltic’s Chapter 11 filing reflects the Iran war’s toll on European aviation and supply chain fragility. With €350 million in financing and operations intact, the airline has a structured path to reduce its €583.9 million debt burden by mid-2027. Investors in regional aviation should monitor whether the restructuring succeeds or signals deeper sector stress.

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