Air Baltic Files for Chapter 11 Bankruptcy Amid Jet Fuel Price Crisis

Air Baltic, majority-owned by the Latvian government, has proactively filed for Chapter 11 bankruptcy protection in a New York bankruptcy court. The move is part of a restructuring process aimed at reducing the company's debt, against the backdrop of an escalating severe economic crisis hitting the industry due to the conflict involving Iran.

The military confrontation led to a doubling of jet fuel prices, creating the most severe crisis in the aviation industry since the COVID-19 pandemic. Air Baltic, which has suffered from heavy debt, continuous financial pressure, and received a 30 million euro emergency loan from the Latvian government last April, is experiencing a severe liquidity crunch due to dramatic price hikes and is seeking protection from creditors while reinventing itself.

Despite the court filing, the company moved quickly to reassure passengers, clarifying that flights will continue to operate as scheduled during the supervised process. Simultaneously, Air Baltic announced it has reached a 350 million euro (approximately 405 million dollar) financing agreement with an international lender group, including giants such as Barclays and Morgan Stanley, which will help maintain ongoing operations during the corporate turnaround.

Air Baltic is the second airline to face bankruptcy proceedings due to the economic pressures of the fighting, following the May collapse of American low-cost carrier Spirit Airlines. Now, other aviation giants worldwide, including AirAsia, are urgently seeking new capital raises to survive soaring fuel costs and heavy losses.