airBaltic files for U.S. Chapter 11 protection amid Iran war aviation crisis

Riga, Latvia. airBaltic voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code in New York on Monday as it seeks to restructure its debt and withstand a deepening aviation-sector crisis linked to the Iran war. The airline said flights would continue as scheduled during the court-supervised process, which it expects to complete by June next year.

Financing commitment

airBaltic said it had secured a commitment for €350 million ($405 million) in financing from lenders including Strategic Value Partners, Barclays BARC.L, Hayfin Capital Management, Morgan Stanley MS.N and Oaktree Capital Management.

Chief executive Erno Hilden told a press conference that the funding, carrying an interest rate of about 12%, was subject to court approval.

“In the coming months we will engage with all our stakeholders to agree on sustainable terms,” Hilden said, adding that the company was targeting an annual profit improvement of €44 million.

Debt and financial pressure

The airline’s board said in a bankruptcy court filing that airBaltic had been experiencing acute financial stress because of a combination of financial and geopolitical factors.

airBaltic reported approximately $583 million in funded debt and finance lease liabilities. It also owes €106 million in payroll taxes, airline taxes and fees, according to the filing.

The airline’s revenue in 2025 was approximately €779 million.

Sector-wide crisis

The U.S. war with Iran has caused jet fuel prices to double, triggering the air travel sector’s worst crisis since the COVID-19 pandemic. Investors and executives have warned that carriers with stretched balance sheets risk collapse.