airBaltic files for Chapter 11 bankruptcy protection

Latvian flag carrier airBaltic has filed for Chapter 11 bankruptcy protection as the airline seeks to restructure its finances.

airBaltic said Chapter 11 is a U.S. legal framework that allows companies to restructure their finances and raise capital while continuing day-to-day operations under the supervision of the U.S. Court. The airline said it is using the process to address its financial obligations and achieve a more sustainable capital structure.

The airline said the process will not affect passengers, with operations continuing as normal. Flights will operate as scheduled, while tickets and reservations will remain valid and customer service will continue as usual. Refunds, vouchers, gift cards and credits related to baggage or service claims will also be handled under existing policies. Passengers with upcoming travel do not need to take any action.

“We have carefully assessed the restructuring options available to the company, with one priority in focus, to give airBaltic the best possible basis to continue operating and to build a sustainable financial structure. Under court supervision and with protection from creditor claims, this process provides a clear framework and timetable for reaching agreements with creditors, including aircraft lessors and other stakeholders. At the same time, it allows the company to continue operating. That is the central priority set for the airBaltic Management Board, to keep flying and to maintain Latvia's connectivity. This process will of course require strict financial discipline, and the company will have to meet a number of important conditions along the way. Our aim is to complete the process with a financially stronger airBaltic and a substantially reduced level of obligations that the company can sustainably manage over the long term. We have a strong management team and experienced advisers with hands-on experience of implementing Chapter 11 processes. airBaltic is on the right track,” said Andrejs Martinovs, Chairman of the Supervisory Board, airBaltic.

airBaltic said it enters the Chapter 11 process with a commitment for EUR 350 million in new debtor-in-possession (DIP) financing, arranged by Strategic Value Partners as DIP Arranger, with Barclays, Hayfin Capital Management, Morgan Stanley and Oaktree Capital Management as additional lenders. The financing will provide liquidity and support operations during the Chapter 11 process.

The company will seek customary U.S. Court approval to access the financing in the coming days. Along with cash generated from ongoing operations, the financing is expected to provide sufficient liquidity for airBaltic to continue its operations during the Chapter 11 process.

“Our focus is on continuing to run the airline while implementing the changes set out in our new business plan. For our passengers, our operations continue as normal, the process does not affect their travel experience and is not noticeable to them, we are flying, selling tickets and planning our future schedule, with the same focus on safety and operational reliability. At the same time, we are taking the necessary steps to make airBaltic a more efficient and financially sustainable airline. This process allows us to continue that work while maintaining our day-to-day operations and serving our passengers and partners,” said Erno Hildén, President and Chief Executive Officer of airBaltic.

airBaltic will continue its day-to-day operations during the Chapter 11 process, with its existing Management Board and Supervisory Board remaining in place. The company will continue to meet its obligations to suppliers, service providers and other partners in the normal course of business.