AirBaltic wins initial court approval in Chapter 11 restructuring (updated)

Deutsche Lufthansa AG

16/09/2026 10:05

Recasts to change sourcing and add details from airBaltic's statement in paragraphs 1, 3, 4 and 6.
US court approves airBaltic's Chapter 11 filing
Airline can access first tranche of €350 million in debtor-in-possession financing
AirBaltic plans fleet reduction, cost cuts in sweeping restructuring
Some bondholders file motion against financing package
By Gianluca Lo Nostro
Sept 16 (Reuters) - A U.S. bankruptcy judge has approved Latvian carrier airBaltic's requests to continue operating under Chapter 11 bankruptcy proceedings and access the first tranche of financing, the airline said on Wednesday.
AirBaltic, majority-owned by the Latvian government, voluntarily filed for protection under Chapter 11 on Monday as it seeks to cut its debt pile after the Iran war increased financial pressure.
The United States Bankruptcy Court for the Southern District of New York approved the relief sought in the airline's customary "first day" motions, airBaltic said in a statement.
The court also approved the company's debtor-in-possession financing on an interim basis, allowing the Latvian flag carrier to immediately access €140 million ($162 million) from the wider €350 million package.
In the coming months, airBaltic is expected to negotiate with bondholders, aircraft lessors and other creditors as it works toward a formal reorganisation plan, which will require separate court approval before the company can exit Chapter 11.
The airline has said it aims to complete the process by around June 2027, with a reduced fleet and lower operating costs as part of its longer-term business plan. The court approval allows airBaltic to run scheduled flights uninterruptedly, honour bookings and pay staff as well as suppliers.
     
BONDHOLDERS OBJECT TO FINANCING DEAL 
However, a group of holders of airBaltic's 14.5% secured bonds due in 2029 filed a limited objection on Tuesday, seeking to delay the approval of the financing package.
The group, which includes Israeli investment firm Klirmark Capital, had negotiated a proposal with airBaltic before the company filed for Chapter 11.
The bondholders have asked the court to delay parts of the financing and preserve their rights to challenge the terms at later hearings, according to the court filing.
The airline had planned to seek approval for an interim financing package under UK restructuring law, but opted for a U.S. filing instead, supported by the Latvian government.
     The U.S. process has been widely used by airlines because it allows carriers to continue operating while reducing debt, and offers a framework for complex cross-border restructuring involving international creditors.
Under the Chapter 11 process, airBaltic is seeking to return 20 surplus aircraft to lessors and reduce rents on other aircraft in its fleet.
The carrier had previously aimed to have an expanded fleet of 100 jets and pursue a stock market listing, but the wars in Ukraine and the Middle East undermined those plans.
     
($1 = 0.8666 euros)

(Reporting by Gianluca Lo Nostro; Editing by Stine Jacobsen, Terje Solsvik and Milla Nissi-Prussak)
((gianluca.lonostro@thomsonreuters.com))