Airlines

AirBaltic files for Chapter 11 protection to avoid bankruptcy

The Latvian airline, in which Lufthansa holds a 10 per cent stake, is the second carrier to buckle under the strain of soaring fuel costs

by Mara Monti

14 September 2026

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3' min read

Translated by AI

Versione italiana

3' min read

Translated by AI

Versione italiana

Following the US airline Spirit Airlines, another airline – this time a European one – has collapsed under the weight of fuel costs. Following weeks of discussions with investors to secure fresh funding, AirBaltic (in which Lufthansa holds a 10 per cent stake) has voluntarily decided to seek protection under Chapter 11 in the United States. The Latvian airline has therefore filed a petition with a New York court as part of a debt restructuring plan, whilst soaring fuel prices are adding further pressure to an already fragile sector.

The company has announced that it has secured a commitment for €350 million in financing from a group of creditors comprising Strategic Value Partners, Barclays, Hayfin Capital Management, Morgan Stanley and Oaktree Capital Management. The new funds will be used to ensure business continuity during the restructuring process.

AirBaltic explained that filing for Chapter 11 will allow the airline to benefit from protection from creditors whilst the terms of its debt restructuring are being negotiated. Flights will continue to operate as normal during the proceedings under the supervision of the court.

The impact of a doubling in jet fuel consumption

Compounding the situation is the rise in the cost of jet fuel, which, according to the source, has doubled as a result of the conflict between the United States and Iran. For the aviation sector, this is the most serious crisis since the pandemic, with operators that are most heavily indebted and most exposed to oil price volatility being particularly vulnerable.

AirBaltic, in which the Latvian state holds a majority stake, was already entering this new phase of restructuring with its financial position under pressure. In April, the government had granted the airline a loan of 30 million euros, whilst in the months that followed, rising fuel costs further eroded its liquidity. In 2025, the company carried approximately 5.2 million passengers, generating revenue of €779.3 million and a net loss of €44.3 million. It employs over 3,000 staff and operates a fleet of 54 Airbus aircraft; however, the new plan envisages a reduction to around 36 aircraft by the end of 2026. It operates over 80 routes across the Baltic states, Europe and the Middle East. In Italia, it serves, amongst others, Milan Malpensa, Rome, Naples, Turin, Verona, Pisa, Olbia and Catania.

The AirBaltic case forms part of a wider context of strain within the sector. It is the second airline to be affected by the war following the collapse, in May, of the US-based Spirit Airlines, which had failed to secure creditors’ support for a US government bailout plan.

Widespread difficulties

However, the difficulties are not limited to Europe and the United States. AirAsia, Southeast Asia’s leading low-cost carrier, is also seeking fresh capital to cope with rising fuel costs and heavy foreign exchange losses.

This new scenario thus brings two crucial factors back to the forefront of the aviation market: fuel costs and financial stability. Following the post-pandemic recovery in demand, airlines are once again having to contend with an external shock that risks squeezing margins and making it more expensive to finance their operations.

For AirBaltic, therefore, filing for Chapter 11 is a way of buying time and restructuring its debt, whilst for the sector as a whole it is a further sign of how quickly rising energy costs can turn into a liquidity crisis.

The key issue remains the cost of fuel. Oil prices have risen above the $100-per-barrel mark this week, driven by an increase in attacks in the conflict between the United States, Israel and Iran.

Bleak outlook for the sector

The industry is facing the prospect of capacity cuts and rising airfares. This was stated in recent days by the CEO of Ryanair, Michael O’Leary: “If oil prices remain high until next year, there will be a significant rise in airfares,” warned O’Leary.

The Irish airline has already begun to adapt to the new situation. At the start of the month, Ryanair reduced the number of flights scheduled for the winter season, with the aim of minimising losses and limiting its exposure to fuel costs not covered by hedging.

The decision also led to a revision of the passenger traffic target for the 2027 financial year: the target has been reduced to 214 million passengers, down from the 216 million previously stated.

The reduction in capacity could also help to support ticket prices should competitors also decide to respond to rising fuel costs by reducing supply.