airBaltic's largest unsecured creditor is Pratt & Whitney with USD 66.5 million claim

RIGA - The largest unsecured creditor of Latvia’s national airline, airBaltic, is aircraft engine manufacturer Pratt & Whitney, with a claim of USD 66.518 million, according to airBaltic’s filing with the United States Bankruptcy Court for the Southern District of New York (the U.S. Court).

The filing indicates that airBaltic has an estimated 10,001 to 25,000 creditors, while the approximate value of its assets ranges from USD 1 billion to USD 10 ten billion, and the approximate amount of liabilities ranges from USD 1 billion to USD 10 ten billion.

The application was filed by airBaltic and its subsidiaries, Air Baltic Training and Baltijas Kravu Centrs.

The airBaltic filing includes a list of creditors holding the 30 largest unsecured claims.

According to these data, airBaltic owes USD 66.518 million Pratt & Whitney; USD 42.432 million to the Latvian Environment, Geology, and Meteorology Center, USD 20.067 million to the Latvian government (Ministry of Transport, and USD 15.428 million to the State Revenue Service (VID).

In turn, the airline's obligations to Riga Airport total USD 9.071 million; to the European Organization for the Safety of Air Navigation (Eurocontrol) USD 5.589 million; to the Netherlands-registered energy company Shell Energy Europe USD 5.439 million; to the Ireland-registered aircraft leasing company Macquarie Aircraft Leasing Services USD 4.671 million; to the Ireland-registered trust and financial services provider Wilmington Trust SP Services USD 3.359 million; and to Airbus Flight Hour Services, a company within the Airbus Group, USD 3.282 million.

The claims of the remaining creditors, meanwhile, are smaller than USD 3 million each.

LETA reported, airBaltic, has voluntarily initiated a U.S. Chapter 11 process to restructure its financial obligations while continuing its operations. At the same time, the airline has secured a binding commitment from financiers to provide EUR 350 million in new financing to strengthen the company’s liquidity and operations at an interest rate of approximately 12 percent.

Consequently, the previous plan to raise up to EUR 257 million at an annual interest rate of 25 percent from bondholders will not be implemented.

The airline indicates that Chapter 11 protection shields airBaltic from creditors’ claims until the restructuring of its liabilities is completed.

Chapter 11 is a well-established U.S. legal framework, recognized internationally and used regularly by U.S. and international airlines, that allows companies to restructure their finances and raise capital while continuing day-to-day operations under the supervision of the U.S. Court. airBaltic is using this process to address its financial obligations and achieve a more sustainable capital structure. airBaltic notes that Chapter 11 is not the legal equivalent of the Latvian legal protection process.

The company also reports that flights and customer service will continue as usual. All flights will operate according to the scheduled flight plan; existing tickets and reservations remain valid, and passengers can continue to purchase tickets and travel with airBaltic as before.

The airline states that airBaltic has received a binding commitment from financiers to provide EUR 350 million in new financing to ensure the company’s liquidity and operations during the Chapter 11 proceedings (debtor-in-possession, or DIP, financing).

The financing was arranged by Strategic Value Partners and funded by Barclays, Hayfin Capital Management, Morgan Stanley, Oaktree Capital Management and Strategic Value Partners, to provide liquidity and support operations during the Chapter 11 process. The interest rate is SOFR + 8 percent (i.e., approximately 12 percent).

The company tentatively plans to complete the Chapter 11 proceedings by June 2027, subject to the necessary U.S. Court approvals and other conditions of the proceedings.

The restructuring process is taking place under the supervision of the United States Bankruptcy Court for the Southern District of New York (the U.S. Court).

The company will seek customary U.S. Court approval to access this financing in the coming days. Together 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.

During the Chapter 11 proceedings, airBaltic will continue its day-to-day operations, and the company’s current management board and supervisory board will continue to fulfill their duties. The company will continue to meet its obligations to suppliers, service providers, and other business partners in the usual course of business.

As previously reported, under the previous plan, airBaltic bondholders were expected to meet on Tuesday, September 15, to decide on the terms of bridge financing of up to EUR 257 million at a 25 percent interest rate.

airBaltic indicated at the time that it had reached an agreement with certain existing bondholders and third-party financing providers on the terms of bridge financing of up to EUR 257 million; however, approval from airBaltic’s bondholders and shareholders is still required to receive the planned financing.

The airBaltic board has approved a business plan that initially called for raising EUR 225 million in interim financing to improve liquidity, using the existing collateral package for the 2029 senior bonds.

In the long term, the company is expected to be recapitalized with more than EUR 225 million in new debt and EUR 100 million in new equity, while a portion of the existing 2029 bonds will be converted into company equity, with the remainder replaced by new, smaller debt of up to EUR 125 million.

In August, airBaltic bondholders approved the capitalization of the interest payments on the next two bond maturities, as well as several other measures that provide the airline with additional flexibility in implementing its revised business plan.

Bondholders supported the capitalization of interest payments due on August 14 and November 14 of this year, adding them to the principal amount of the bonds rather than paying them in cash. A decision was also made to grant a temporary exemption from minimum liquidity requirements through November 2026.

The airBaltic group’s revenue last year increased by 4.2 percent compared to 2024, totaling EUR 779.344 million. Meanwhile, airBaltic group’s losses last year totaled EUR 44.337 million, which is 2.7 times less than in 2024. The airline carried a total of 5.2 million passengers in 2025, which is 1 percent more than in 2024.

Last summer, Germany’s national airline, Lufthansa, became a shareholder in airBaltic. Currently, the Latvian government owns 88.37 percent of airBaltic’s shares, Lufthansa holds 10 percent, the company Aircraft Leasing 1, owned by Danish businessman Lars Thuesen, a financial investor, holds 1.62 percent, and 0.01 percent is held by other shareholders. The company’s share capital is EUR 41.819 million.