The US Bankruptcy Court for the Southern District of New York on Monday approved the release of the remaining 35 million euros under the first tranche of debtor-in-possession (DIP) financing for Latvia’s national airline airBaltic, company representative Augusts Zilberts told the LETA news agency.
The airline had already received 140 million euros, and the latest court decision means that the entire first financing tranche of 175 million euros has now been approved.
Zilberts explained that DIP financing is a form of lending designed to support a company’s day-to-day operations and maintain liquidity while it restructures its financial obligations.
The total planned financing package amounts to up to 350 million euros, with subsequent tranches becoming available gradually, subject to additional conditions and the necessary court approvals.
During Monday’s hearing, the court also considered other matters related to the restructuring process.
It approved the airline’s continued use of its existing European bank accounts and payment systems, as well as the engagement of necessary legal and financial advisers. These decisions are intended to ensure that airBaltic can maintain uninterrupted daily operations while continuing its financial restructuring. According to the court’s interim order, the first DIP financing tranche amounts to 175 million euros out of the total planned 350 million euros.
Access to the subsequent 125 million euros and 50 million euros tranches will depend on further court decisions and compliance with restructuring conditions. The airline must also meet minimum liquidity requirements established under the DIP financing agreement.
After receiving the first tranche, airBaltic must maintain a minimum cash balance of 10 million euros. Following the second tranche, the minimum required cash balance will increase to 20 million euros.
Within 80 days of initiating the Chapter 11 proceedings, or by early December 2026, airBaltic must sign non-disclosure agreements (NDAs) with at least two potential equity investors.
Within 100 days, approximately by the 23rd of December, the airline must reach agreements with its aircraft lessors, Pratt & Whitney, Airbus and Lufthansa.
It must also submit a performance improvement plan demonstrating how the company intends to improve operational efficiency and reduce costs. In addition, airBaltic must submit a reorganisation plan within the same 100-day period, providing for the full repayment of the DIP financing.
As previously reported by LETA, airBaltic has initiated a restructuring of its financial obligations under Chapter 11 of the US Bankruptcy Code. The airline has secured binding commitments from lenders to provide up to 350 million euros in new DIP financing to support liquidity and operations throughout the restructuring process.
Of the 140 million euros already received, airBaltic used 78.925 million euros to purchase eight aircraft and seven engines.
The financing was arranged by Strategic Value Partners (SVP), with funding commitments from Barclays, Hayfin Capital Management, Morgan Stanley, Oaktree Capital Management and Strategic Value Partners. The interest rate is set at SOFR plus eight percentage points, currently equivalent to approximately 12%. However, the financing arrangement also includes additional fees of up to 52.5 million euros.
As a result, the airline will no longer pursue its previous plan to raise up to 257 million euros from bondholders at an annual interest rate of 25%.
Meanwhile, the Ad Hoc Group of bondholders and individual private bondholders have filed objections with the court concerning the DIP financing terms and their potential impact on the security backing existing bonds.
Chapter 11 proceedings provide airBaltic with protection against creditor claims while it restructures its financial obligations.
The company has emphasised that flights and customer services will continue as normal. All flights are expected to operate according to the published schedule, existing tickets and reservations remain valid, and passengers can continue purchasing tickets and travelling with airBaltic as usual.
The restructuring process is expected to result in a formal reorganisation plan, which will require court approval. The airline currently expects the proceedings to conclude around mid-2027. In 2025, airBaltic Group’s revenue increased by 4.2% compared with 2024, reaching 779.344 million euros.
The group’s losses amounted to 44.337 million euros, approximately 2.7 times lower than in 2024.
The airline carried a total of 5.2 million passengers in 2025, representing an increase of 1% compared with the previous year.
In the summer of 2025, German airline Lufthansa became a shareholder in airBaltic.
The Latvian state currently holds 88.37% of the airline’s shares, while Lufthansa owns 10%.
Aircraft Leasing 1, a company owned by Danish businessman and financial investor Lars Thuesen, holds 1.62%, with the remaining 0.01% belonging to other shareholders.
The company’s share capital amounts to 41.819 million euros.