Latvia’s national airline airBaltic is seeking to terminate lease agreements for six Airbus A220-300 aircraft as part of its financial restructuring proceedings in the United States. The airline also anticipates further fleet reductions involving additional aircraft and surplus spare engines, according to documents filed with the US Bankruptcy Court for the Southern District of New York.
AirBaltic has asked the court for permission to reject the lease agreements for six aircraft and approve a procedure for returning them to their lessors. All six aircraft are Airbus A220-300 jets currently located at Riga Airport. The airline is requesting that the termination of its obligations under the leases take effect on 17 November this year. The application concerns aircraft registered as YL-CSI, YL-ABD, YL-ABE, YL-ABF, YL-BTC and YL-BTD.
According to LETA archives, airBaltic received aircraft YL-CSI in mid-June 2018, making it the ninth Airbus A220-300 in the airline’s fleet. Aircraft YL-ABD was delivered in late August 2021 as the airline’s 30th aircraft of this type, while YL-ABE arrived in mid-September 2021 as the 31st. Aircraft YL-ABF was delivered in early October 2021, becoming the 32nd Airbus A220-300 in the fleet. AirBaltic received aircraft YL-BTC and YL-BTD earlier this year. YL-BTC arrived in early February as the airline’s 53rd aircraft of this type, while YL-BTD was delivered in mid-February as the 54th.
In total, airBaltic has received three aircraft this year.
The court documents identify Wilmington Trust SP Services (Dublin) Limited as the lessor for all six aircraft. Companies belonging to the Azorra group are listed as additional notice recipients, along with Artemis Funding Limited in the case of one aircraft.
AirBaltic stated that before initiating its financial restructuring proceedings, it had conducted a comprehensive assessment of its long-term fleet
and equipment requirements together with its advisers. The assessment concluded that the six aircraft were no longer necessary for future operations and were no longer included in the airline’s fleet or business plans. Furthermore, the lease terms for these aircraft exceed current market rates for comparable aircraft.
In the present application, airBaltic is seeking permission to reject only the lease agreements for the six specified aircraft. If the airline subsequently decides to terminate additional aircraft or engine leases, it will need separate court approval. At the same time, airBaltic continues to assess its future fleet requirements and anticipates further reductions through the return of additional aircraft and associated equipment.
The airline also stated that, following the planned fleet reduction, it would no longer need all of its currently leased spare engines. AirBaltic currently operates 54 Airbus A220-300 aircraft, of which 46 are held under operating leases and eight are owned by the airline. The company also owns seven spare engines, while four spare engines are held under operating leases and three under finance leases.
Michael Cox, Chairman and Chief Executive Officer of airBaltic’s financial advisory firm Seabury Global Advisors, stated in a declaration submitted to the court that
Seabury had developed a new business plan together with airBaltic management and other advisers to stabilise the airline’s financial position.
The plan includes reducing surplus aircraft, securing concessions from key contractual partners and implementing a profitability improvement programme. Cox noted that implementing the business plan would also require a substantial injection of liquidity and recapitalisation of airBaltic’s balance sheet.
AirBaltic has also asked the court to approve a standardised aircraft return procedure. The airline argues that complying with the aircraft return conditions specified in the existing lease agreements would be excessively burdensome and has therefore proposed a simplified procedure.
Under the proposed arrangements, the aircraft and associated equipment would be made available to lessors in their current condition and location. AirBaltic would provide no representations or warranties regarding the condition of the equipment or the status of ownership rights associated with it. If the equipment were not airworthy or operational, the airline would not be required to repair it to an operational condition. Before physically returning the aircraft, airBaltic would retain the right to remove all equipment associated with Starlink, the satellite internet service operated by US space technology company SpaceX.
Lessors would be required to collect the relevant aircraft within 15 days of the court order authorising the rejection of the lease agreements.
After that period, the lessors would be responsible for the costs of storing, insuring and maintaining the aircraft. At the lessor’s request, airBaltic would cooperate in deregistering the aircraft and completing customs procedures for their removal from Latvia, with the associated costs borne by the lessor.
The court has not yet approved airBaltic’s application. A hearing is scheduled for the 17th of November at 10 a.m. New York time, corresponding to 5 p.m. Latvian time. Objections must be submitted by the 10th of November at 4 p.m. New York time, or 11 p.m. Latvian time.
As previously reported, the US Bankruptcy Court for the Southern District of New York approved airBaltic’s debtor-in-possession (DIP) financing structure of up to 350 million euros on the 19th of October and confirmed the transparency of the financing process.
The approved financing arrangement consists of an initial tranche of 175 million euros, a second tranche of up to 125 million euros and a third tranche of up to 50 million euros.
AirBaltic used 78.925 million euros from the first DIP financing tranche to buy out eight Airbus A220 aircraft and seven engines.
Overall, the airline has secured binding commitments from lenders to provide up to 350 million euros in new DIP financing to support its liquidity and operations during the Chapter 11 proceedings.
The financing was arranged by SVP, with commitments from Barclays, Hayfin Capital Management, Morgan Stanley, Oaktree Capital Management and Strategic Value Partners. The interest rate is SOFR plus eight percentage points, currently equivalent to approximately 12%. The financing arrangement also includes additional fees of up to 52.5 million euros.
Previously, airBaltic had planned to raise up to 257 million euros from bondholders at an annual interest rate of 25%, but that financing plan will no longer be implemented. Chapter 11 protection shields airBaltic from creditor claims while its financial obligations are being restructured.
The airline has also stated that flights and customer services will continue as normal.
All flights will operate according to the planned schedule, existing tickets and reservations remain valid, and passengers can continue purchasing tickets and travelling with airBaltic as usual. A reorganisation plan requiring court approval will be developed as part of the Chapter 11 proceedings. The process is expected to conclude around mid-2027.
AirBaltic Group’s revenue increased by 4.2% last year compared with 2024, reaching 779.344 million euros. Meanwhile, the group’s losses totalled 44.337 million euros, approximately 2.7 times lower than in 2024. The airline carried 5.2 million passengers in 2025, representing a 1% increase compared with the previous year. Last summer, Germany’s national airline Lufthansa became a shareholder in airBaltic.
Currently, the Latvian state owns 88.37% of airBaltic’s shares, Lufthansa holds 10%, and Aircraft Leasing 1, owned by Danish businessman Lars Thuesen, holds 1.62%. The remaining 0.01% belongs to other shareholders. The company’s share capital amounts to 41.819 million euros.