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AirBaltic Faces Funding Crisis: Stakeholders Hold Key
11 Sep
Summary
- AirBaltic requires €156 million for short-term operations.
- Airline seeks bondholder approval for €257 million debt raise.
- Fitch warns airline's options are limited without funding.
AirBaltic is facing a significant financial challenge, with Fitch Ratings estimating a need for €156 million in short-term funding to continue operations. The Latvian airline, majority-owned by the state, is in urgent discussions with its bondholders to approve a plan to raise as much as €257 million via new debt. A meeting originally scheduled for Friday was postponed to Tuesday to allow bondholders more time to review the resolution.
According to Fitch Ratings, securing stakeholder approval for this funding is critical for the airline's survival. AirBaltic had previously indicated financial distress in March due to a surge in jet fuel costs linked to the Iran war. The proposed new bonds would offer super-senior status for repayment, prioritizing collateral that includes aircraft and engines.
If successful, this short-term debt issuance would need to be followed by a sustainable long-term funding strategy and fleet reduction for the airline's survivability. Analysts note that the airline's all-leased fleet and high-interest bond debt have hindered its cash generation capabilities and past growth plans.
