AirBaltic goes bankrupt due to rising fuel prices amid the war in Iran

Latvian airline AirBaltic filed for protection under U.S. bankruptcy law on Monday as part of a restructuring process to reduce its debts, amid the pressure that the conflict in Iran is placing on the aviation sector. The proceedings are being conducted under the supervision of a court in New York, but the company says flights will continue as scheduled.

AirBaltic announced that tickets and reservations remain valid and that passenger services will not be affected during the restructuring. To support its operations, the carrier secured a €350 million financing commitment from creditors including Strategic Value Partners, Barclays, Hayfin Capital Management, Morgan Stanley, and Oaktree Capital Management.

The company is majority-controlled by the Latvian state, while the Lufthansa Group holds a minority stake. In July, Prime Minister Andris Kulbergs said that the government was negotiating with a strategic investor and that the main condition was retaining AirBaltic’s hub at Riga Airport.

The carrier is trying to obtain short-term financing to avoid default. Its financial situation has been aggravated by rising costs and delays in engine deliveries, which have kept several aircraft grounded. AirBaltic operates a fleet of 55 Airbus A220-300 aircraft and has repeatedly postponed its listing plans.