The Latvian national airline airBaltic has received the first tranche of financing amounting to €140 million as part of the Chapter 11 financial restructuring process. More than half of these funds are planned to be allocated for the repurchase of aircraft and engines, which will then serve as collateral for the new loan.
The Latvian national airline airBaltic, in accordance with the decision of the Bankruptcy Court for the Southern District of New York, has received the first tranche of financing amounting to €140 million, confirmed Augusts Zilberts, the company's head of public and political relations, to the LETA agency.
Previously, the airline reported that the funds raised would be used to ensure the continuous operation of airBaltic and to implement the financial restructuring process. The financing, along with cash flow from core operations, is intended to cover the company's needs during the Chapter 11 procedure.
More than half of the first tranche — €78.925 million — is planned to be allocated for the repurchase of aircraft and engines. According to the temporary court ruling, these funds will be used to fully repay obligations to Export Development Canada and Axiom Baltic Services, with a total amount of €71.666 million plus accrued interest, fees, and other payments.
After the debt is repaid, eight Airbus A220-300 aircraft, seven Pratt & Whitney spare engines, an Airbus A220 flight simulator, as well as spare parts, trademarks, real estate, hangars, training infrastructure, accounts receivable, and other company assets will be used as collateral for new debtor-in-possession (DIP) financing.
airBaltic's Chief Financial Officer Vitolds Yakovlev also confirmed earlier that more than €70 million of the first tranche will be specifically directed towards the repurchase of eight aircraft and seven engines.
In total, the airline has secured commitments for €350 million in new DIP financing to ensure liquidity and continue operations during the restructuring period. The financing is organized by Strategic Value Partners, with funds provided by Barclays, Hayfin Capital Management, Morgan Stanley, Oaktree Capital Management, and Strategic Value Partners. The interest rate on the loan will be SOFR + 8%, which currently corresponds to approximately 12% per annum, in addition to additional fees.
According to the temporary court order, the total amount of the first tranche is €175 million. Of this, €140 million has already been transferred to the company, while the remaining €35 million will be paid after the final court decision. If the restructuring goals are successfully met, airBaltic will be able to receive an additional €125 million in the second tranche and €50 million in the third.
The final court hearing to approve the full package of DIP financing is scheduled for October 9.
As previously reported, airBaltic began restructuring its financial obligations under the American Chapter 11 procedure. In this regard, the company abandoned its previous plan to raise up to €257 million from bondholders at an interest rate of 25% per annum. Meanwhile, a group of owners of some secured bonds, the Ad Hoc Group, is contesting the scheme for providing new financing in court.
The airline emphasizes that the Chapter 11 procedure allows it to continue operations while simultaneously protecting the company from creditor claims until the restructuring is completed. Flights are operating as usual, the schedule has not changed, and all previously purchased tickets and reservations remain valid.
The restructuring process is expected to be completed by mid-2027.
According to last year's results, the turnover of the airBaltic group increased by 4.2% to €779.344 million, while losses decreased by 2.7 times to €44.337 million. In 2025, the airline transported 5.2 million passengers, which is 1% more than the previous year.
Currently, 88.37% of airBaltic's shares are owned by the state of Latvia, 10% by the German airline Lufthansa, 1.62% by Aircraft Leasing 1 of Danish entrepreneur Lars Tussent, and the remaining 0.01% by other shareholders. The company's authorized capital amounts to €41.819 million.
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