airBaltic gets extension to keep certain Lufthansa Group contracts
Latvian state-owned airline airBaltic, which is undergoing US Chapter 11 restructuring, has secured an extension to 10 November for taking over Lufthansa Group contracts. The condition is tied to its €350 million DIP financing.
Latvia's national airline airBaltic has received an extended deadline to keep in force certain cooperation contracts with Germany's Lufthansa Group. The deadline has moved from the indicative date of 14 October to 10 November this year. It is one of the conditions tied to financing the company receives while restructuring its financial obligations under the US Chapter 11 procedure.
What changed
The earlier deadline was set at 30 days after the Chapter 11 filing. airBaltic filed on 14 September this year. According to the document, a majority of the DIP lenders (those providing new financing to a company during restructuring) agreed to extend it. The Lufthansa Group has been informed.
Taking over the contracts is one of several restructuring milestones linked to the total of €350 million in DIP financing. Failing to meet them could affect the company's access to later tranches. Court filings show airBaltic asked for approval to assume a specific wet lease agreement with Austrian Airlines, part of the Lufthansa Group. Under such an agreement, one airline provides an aircraft, crew, maintenance and insurance to another.
Financing and process
airBaltic has received a binding commitment from lenders for up to €350 million. The first tranche of €140 million has been received, and €78.925 million of it will be used to buy out eight aircraft and seven engines. SVP arranged the financing, and it is backed by Barclays, Hayfin Capital Management, Morgan Stanley, Oaktree Capital Management and Strategic Value Partners. The interest rate is SOFR +8%, currently about 12%, with additional fees of up to €52.5 million. As a result, the earlier plan to raise up to €257 million from bondholders at a 25% annual rate will not go ahead. A bondholder group, the Ad Hoc Group, has filed objections in court to the DIP terms.
Chapter 11 shields the company from creditor claims until restructuring is complete. The company says flights and customer service continue as normal and existing tickets and bookings remain valid. The process ends with a reorganisation plan that the court must approve, and it could conclude in mid-2027.
Company figures
Last year the group's turnover rose 4.2% to €779.344 million, and its loss was €44.337 million, 2.7 times smaller than in 2024. It carried 5.2 million passengers. The Latvian state owns 88.37% of shares, Lufthansa 10%, Danish entrepreneur Lars Thuesen's Aircraft Leasing 1 1.62%, and others 0.01%.
