Latvia’s national airline airBaltic said this Monday it and certain subsidiaries had voluntarily filed for Chapter 11 bankruptcy protection in the United States, seeking to restructure its finances while continuing to operate flights as normal.
The carrier, which describes itself as the leading airline in the Baltic states, said the proceedings were initiated in the U.S. Bankruptcy Court for the Southern District of New York.
The restructuring is intended to give airBaltic a framework to negotiate with creditors, including aircraft lessors and other stakeholders, while protecting the airline from creditor claims during the process.
“Under court supervision and with protection from creditor claims, this process provides a clear framework and timetable for reaching agreements with creditors,” Andrejs Martinovs, Chairman of airBaltic’s Supervisory Board, said in a statement.
The airline said the process would not affect passengers or its day-to-day operations. Flights are expected to operate as scheduled, while tickets and reservations will remain valid.
Customers with upcoming travel do not need to take any action, airBaltic said. Refunds, vouchers, gift cards and credits related to baggage or service claims will continue to be handled under existing policies.
New financing
airBaltic said it had entered the Chapter 11 process with a commitment for €350 million (US$407 million) in new debtor-in-possession, or DIP, financing.
The financing has been arranged by Strategic Value Partners, acting as DIP arranger, with Barclays, Hayfin Capital Management, Morgan Stanley and Oaktree Capital Management participating as additional lenders.
The company said it would seek approval from the U.S. court to access the financing in the coming days.
Combined with cash generated by its ongoing operations, the new funding is expected to provide sufficient liquidity for airBaltic to continue operating throughout the Chapter 11 process.
The airline said its objective was to emerge from the restructuring with a stronger financial position and a substantially reduced level of obligations that it can manage over the long term.
Martinovs said the process would require “strict financial discipline” and that airBaltic would have to meet a number of conditions during the restructuring.
“The central priority set for the airBaltic Management Board – to keep flying and to maintain Latvia’s connectivity,” Martinovs said.
The Chapter 11 filing comes as the carrier seeks to address its financial obligations while maintaining its role as a key link between Latvia and the wider Baltic region.
The company said it had a strong management team and experienced advisers with direct experience of Chapter 11 proceedings.
