Air Baltic seeks Chapter 11 protection in US court

Air Baltic has filed for Chapter 11 bankruptcy protection in the United States. The Latvian carrier says the voluntary filing is meant to let it reorganise its operations and its financing.

The airline is mainly owned by the Latvian government and has been losing money. It has already set out a new business plan that involves shrinking its fleet as it tries to return to profit. Its finances have been politically sensitive and have been debated in parliament, including a recent discussion about further emergency funding.

Air Baltic said all flights are still running and passengers can keep booking as normal. The filing was made with the bankruptcy court for the Southern District of New York, and the carrier expects the process to finish by June next year.

Andrejs Martinovs, who chairs the supervisory board, said the filing shields the company from creditor claims and sets a defined framework and timetable for reaching deals with creditors, among them the lessors of its aircraft. He added that the process will demand tight financial discipline and that the company must meet a series of conditions along the way.

The airline says it has lined up a commitment for €350 million, about $405 million, in new debtor-in-possession financing to keep it liquid and support operations during the proceedings. Lenders include Oaktree Capital Management, Morgan Stanley, Barclays and Hayden Capital Management, with an interest rate of roughly 12%. Air Baltic said it expects formal US court approval to draw on the funding within days, and that the money will be topped up by cash the airline generates itself.