airBaltic Chapter 11 Restructuring
Latvian airline airBaltic files for Chapter 11 bankruptcy protection to restructure debt.
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Key Points
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airBaltic chose a U.S. Chapter 11 proceeding partly because the framework can centralize cross-border creditor negotiations and facilitate the restructuring of aircraft leases and contracts often governed by U.S. law.
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The company’s restructuring plan was developed by Seabury Securities with the involvement of Barclays, Hayfin Capital Management, Morgan Stanley, Oaktree Capital and Strategic Value Partners.
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airBaltic CEO Erno Hilden had previously managed SAS’s restructuring under Chapter 11 together with Seabury Securities consultants, giving the carrier’s leadership prior experience with the process.
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The bondholder vote on the proposed €257 million emergency financing was postponed from September 11 to September 15 to give creditors more time to review the draft resolution and submit voting instructions.
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The €350 million debtor-in-possession financing commitment was provided by a group of funds, including Strategic Value Partners, Barclays, Hayfin Capital Management, Morgan Stanley and Oaktree Capital Management.
Latvia's national airline airBaltic filed for Chapter 11 bankruptcy protection in U.S. court to restructure its debt while keeping flights running. The airline secured €350 million in financing to support operations during the court-supervised process. Market Screener reports that flights, reservations, and employee jobs will remain unaffected as the carrier reorganizes.
Why airBaltic Chose U.S. Bankruptcy Court
airBaltic picked Chapter 11 partly because it centralizes creditor negotiations across borders. The process also lets the airline renegotiate aircraft leases and contracts governed by U.S. law. CEO Erno Hilden has done this before — he restructured Scandinavian Airlines under Chapter 11 with help from Seabury Securities, the same firm advising airBaltic now.
A €350 Million Lifeline From Investment Funds
airBaltic secured €350 million in debtor-in-possession financing from a group of major funds. The backers include Strategic Value Partners, Barclays, Hayfin Capital Management, Morgan Stanley, and Oaktree Capital Management. This money keeps the airline operating while it restructures. The same group of investors helped design the restructuring plan with Seabury Securities.
Bondholders Reject Emergency Loan Terms
Before filing for bankruptcy, airBaltic pursued a €257 million emergency loan from Latvia at 25% interest. LSE reported that bondholders postponed their vote on this deal from September 11 to September 15 to review it further. Latvian officials saw the high-interest loan as only temporary. The bankruptcy filing lets the airline restructure without relying on such costly debt.
Operations Continue During Court Process
The airline says all flights will operate normally during bankruptcy. Customers' tickets stay valid, reservations remain intact, and customer service continues. Market Screener noted that employee jobs are protected as well. The Chapter 11 process lets airBaltic renegotiate contracts and debt while passengers and staff see no disruption.
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