Sept 14 (Reuters) – Latvia’s airBaltic voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code in New York, it said on Monday, as part of a restructuring to reduce debt as the Iran war piles stress on the airline sector.
AirBaltic said in a statement it had secured a commitment for €350 million ($405 million) in financing from lenders including Strategic Value Partners, Barclays, Hayfin Capital Management, Morgan Stanley and Oaktree Capital Management to support its operations during the restructuring.
The U.S. war with Iran has caused jet fuel prices to double, provoking the air travel industry’s worst crisis since the COVID-19 pandemic.
Investors and executives have warned for months that carriers with stretched balance sheets and higher exposure to the volatility in oil prices would be the hardest-hit by the conflict.
AirBaltic, which is majority owned by the Latvian government, said its decision aimed to gain protection from creditors as it negotiates a restructuring of its debt. Flights would operate as scheduled during the court-supervised process, it added.
It is now the second airline casualty linked to the war following the collapse in May of U.S. discount carrier Spirit Airlines, which had failed to secure creditor support for a U.S. government bailout plan.
On top of financial pressures that had already prompted a €30 million Latvian state loan in April, AirBaltic’s liquidity position deteriorated further in recent months due to increased fuel costs.
Other airlines like AirAsia, Southeast Asia’s largest budget carrier, are seeking fresh capital amid mounting financial pressure due to rising jet fuel costs and heavy foreign exchange losses.
($1 = 0.8653 euros)
(Reporting by Gianluca Lo Nostro in Gdansk, Andrius Sytas in Vilnius; Editing by Stine Jacobsen, Milla Nissi-Prussak and Joe Bavier)
