airBaltic secures bridge financing deal of up to €257 million at 25% interest

Latvia's national airline airBaltic has agreed with some of its existing bondholders and third-party financing providers on terms for bridge financing of up to €257 million. The funds are intended to strengthen the company's liquidity and provide resources needed to implement its new business plan.

The financing still requires approval from airBaltic's bondholders and shareholders. A bondholder meeting to review the proposal has been called for September 11. The airline says that once approvals and other conditions are met, €180 million is expected to become available shortly after bondholder consent, with a further €77 million becoming available once additional conditions are fulfilled. The bridge financing would be raised by issuing new bonds maturing on February 26, 2027, carrying an annual interest rate of 25%.

Investors and participation

The new, higher-priority "super senior" bonds, worth up to roughly €257 million, would be backed by London-based investment manager Polus Capital Management and Israel-registered investment firm Klirmark Capital 4. Existing bondholders, including the Latvian state, will have the option to participate proportionally in the new issue, though this is not mandatory. airBaltic supervisory board chairman Andrejs Martinovs said the 25% rate is the best currently available, as short-term bridge financing instruments tend to be more expensive than other financial tools, and the company's calculations show it can afford such a rate.

The raised funds are planned to refinance existing liabilities related to aircraft and engines, as well as cover recurring costs including repairs, maintenance and airport fees. The airline reiterated that its flight schedule will continue as planned during both the implementation and review of the bridge financing, with no disruptions expected for passengers.

Wider context

The bridge financing is part of broader measures to strengthen airBaltic's financial position. CEO Martin Gauss's successor, CEO Erno Hildén, said the funding would give the company the time and resources needed to carry out its revised business plan while continuing scheduled flights. The plan also envisions a longer-term recapitalization involving up to €225 million in new debt and €100 million in new equity, along with reducing the fleet to 36 Airbus A220-300 aircraft by the end of 2026, down from 54 currently, before gradually growing it to about 40 aircraft by 2031.

Latvia's president promulgated a law on August 25 allowing the government to participate in purchasing bridge financing bonds up to €30 million on identical terms with private investors, and to convert state-held bonds and loan claims into company equity. In 2025, airBaltic's revenue rose 4.2% to €779.3 million, while losses fell to €44.3 million.