US court approves airBaltic's DIP financing structure of up to €350 million
A US bankruptcy court in New York has issued a final order approving up to €350 million in financing for Latvia's airline airBaltic. Part of the money depends on further conditions and a separate hearing on 17–18 November.
The US Bankruptcy Court for the Southern District of New York has issued a final order approving the structure of new DIP financing of up to €350 million for airBaltic, the Latvian state-controlled airline. DIP, or debtor-in-possession, financing is money that lets a company keep operating during Chapter 11, the US insolvency regime that shields a company from creditor claims until its debt restructuring is completed. The order does not mark the end of that process or of the airline's reorganisation.
How the funding is divided
The mechanism has three tranches: €175 million first, up to €125 million second and up to €50 million third. The court had already allowed €140 million of the first tranche in an interim order; the remaining €35 million can be received once the final order takes effect and the conditions of the DIP agreement are met. Payment of the second and third tranches, up to €175 million in total, depends on meeting the agreement's conditions and restructuring milestones, and on a separate court decision on collateral priority, known as the "Priming Order". A hearing on that matter is scheduled for 17 and 18 November.
Court findings and bondholder objections
The court found that the financing was chosen in a competitive process, that its terms and fees are fair and reasonable, and that negotiations were held in good faith. The fees in the agreement were also approved, including commitment, upfront and exit fees and a minimum return payment. Earlier, the "Ad Hoc Group" of holders of 2029 bonds objected, arguing the process was not competitive enough and that it had an alternative financing offer. The bondholders also object to any reduction of their collateral priority in favour of DIP lenders; the court has not yet decided that question.
Lenders and terms
The financing was organised by SVP, and the commitments come from 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. From the first tranche, airBaltic spent €78.925 million to buy out eight Airbus A220 aircraft and seven engines.
The company says flights and customer service continue as normal and existing tickets and bookings remain valid. The process could end in mid-2027 with a court-approved reorganisation plan. The Latvian state owns 88.37% of the shares and Lufthansa 10%.
