airBaltic secures €350m DIP financing from SVP, Barclays, Hayfin, Morgan Stanley and Oaktree

Latvia’s airBaltic has entered US Chapter 11 proceedings with a commitment for €350m of debtor-in-possession financing, giving the airline a new liquidity bridge as it restructures its financial obligations while continuing to operate.

Strategic Value Partners is arranging the DIP facility, with funding also coming from Barclays, Hayfin Capital Management, Morgan Stanley and Oaktree Capital Management. The airline said the financing carries interest of SOFR plus eight percentage points, which it put at approximately 12%.

The facility remains subject to customary US court approval. airBaltic said it expects the new capital, together with cash generated from ongoing operations, to provide sufficient liquidity during the restructuring process.

For working-capital and alternative-credit markets, the financing is a significant example of lenders putting substantial new money into a business after the commencement of formal restructuring proceedings.

DIP financing is designed to keep a company operating while creditor claims and existing liabilities are dealt with through the Chapter 11 process. In airBaltic’s case, maintaining liquidity is particularly important because aircraft leases, fuel, airport services, maintenance and other operating costs continue even while the capital structure is being renegotiated.

The company said suppliers and service providers will continue to be paid in the ordinary course. It expects flights, reservations and customer services to continue without interruption.

Aircraft lessors will be among the stakeholders watching the process closely. Singapore-listed Avation, which leases four Airbus A220 aircraft to airBaltic, said it understands that the airline intends to continue paying rent and maintenance reserves and does not currently expect a material short-term financial impact.

The restructuring nevertheless moves a substantial group of financing and lease obligations into a court-supervised process. airBaltic said Chapter 11 will allow it to address creditor claims and contractual commitments while seeking a more sustainable capital structure.

The airline is 88.37% owned by the Latvian state, while Lufthansa owns 10%.

airBaltic is targeting completion of its restructuring by around June 2027. Until then, the €350m DIP commitment becomes a central source of liquidity supporting continued operations while negotiations with bondholders, aircraft lessors and other creditors proceed.