Why airBaltic’s Chapter 11 plan could reshape more than 3,000 aviation jobs

Latvian flag carrier airBaltic has opened negotiations with employee representatives over potential workforce reductions as its Chapter 11 restructuring moves from a balance-sheet exercise into a broader operational overhaul that could reshape staffing, aircraft deployment and one of the airline’s fastest-growing business lines.

Chief Executive Officer Erno Hilden said the airline was discussing possible job reductions with unions, although no final number had been determined. The consultations include alternatives such as part-time arrangements, while discussions over the criteria for any collective redundancies were still continuing. The development comes immediately after airBaltic voluntarily entered Chapter 11 proceedings in the United States to restructure financial obligations while continuing normal flight operations.

The workforce implications could become substantial because airBaltic employs more than 3,000 people and is simultaneously preparing to reduce its Airbus A220-300 fleet from 54 aircraft to approximately 36 by the end of 2026. The airline is also reassessing its aircraft, crew, maintenance and insurance leasing business, commonly known as ACMI or wet leasing, even though that activity had been one of its major growth areas as recently as 2025.

That combination makes airBaltic a particularly significant workforce story. The airline is not simply trying to negotiate lower interest costs while leaving its operating model unchanged. It is considering how many aircraft it should operate, how much flying it should conduct for other airlines, how many employees the smaller organisation requires and how much financial improvement can realistically be extracted from the restructuring.

Why is airBaltic considering workforce reductions during its Chapter 11 restructuring?

The most immediate explanation is that the airline intends to become materially smaller.

airBaltic currently operates 54 Airbus A220-300 aircraft but expects to reduce that fleet to approximately 36 by the end of 2026. A reduction of 18 aircraft represents roughly one-third of the present fleet and inevitably changes the number of pilots, cabin crew, maintenance employees, operational planners and support staff required to run the business.

The restructuring plan reportedly includes returning about 20 surplus aircraft and renegotiating aircraft leasing commitments. For an airline, fleet size is one of the most important drivers of employment because aircraft only generate revenue when they are crewed, maintained, scheduled, dispatched and supported. A permanently smaller fleet normally requires a correspondingly smaller operating infrastructure unless the company expects utilisation of the remaining aircraft to increase sharply.

Hilden has nevertheless indicated that airBaltic is attempting to evaluate alternatives before determining the final number of redundancies. Union representatives have discussed possibilities including part-time work, indicating that some reductions in labour capacity might be achieved without eliminating every affected position outright. Negotiations remained unresolved when the restructuring discussions became public.

That uncertainty makes it premature to publish a specific airBaltic layoff number. What is already clear is that workforce reduction has formally entered the restructuring agenda, and the airline’s shrinking fleet provides an operational reason why its current staffing level may no longer fit the business it expects to run after Chapter 11.

How serious are airBaltic’s financial problems despite record revenue?

The airline’s difficulty is not the absence of passenger demand.

airBaltic generated €779.3 million of revenue during 2025, an increase of 4% and the highest annual revenue in its history. It carried 5.2 million passengers on its own network, also a record, while the total number of flights operated increased 7% to 78,400.

Yet stronger revenue did not translate into sustainable bottom-line profitability. airBaltic reported a €44.3 million net loss for 2025. That was a major improvement from the €118.2 million loss recorded in 2024, but the company remained loss-making even before the severe fuel-price and geopolitical pressure that subsequently pushed the airline towards Chapter 11.

Adjusted EBITDAR fell to €143.9 million from €184.2 million a year earlier, while the corresponding margin dropped to 18.5% from 24.6%. The improvement in the reported net loss was also supported by €67.7 million of foreign-exchange gains arising largely from the revaluation of US-dollar liabilities, meaning the headline improvement did not entirely reflect stronger underlying operations.

Those numbers expose the central problem. airBaltic had achieved record passenger volumes and revenue, but its capital structure and operating costs remained vulnerable enough that a new external shock could quickly overwhelm the progress.

That shock arrived through sharply higher aviation fuel costs associated with the conflict involving the United States and Iran. Reuters reported that jet-fuel prices had approximately doubled during the crisis, placing severe pressure on airlines that had limited fuel-price protection. airBaltic was particularly exposed because its fuel position was substantially less hedged than some larger European rivals.

How much debt is airBaltic trying to restructure?

The Chapter 11 case addresses a capital structure that had become increasingly difficult to sustain.

Reuters reported approximately $583 million of debt alongside around €106 million of outstanding taxes and other fees. airBaltic had also been trying to deal with €398.2 million of senior secured bonds due in 2029, with the restructuring expected to convert at least part of those obligations into equity.

Before entering Chapter 11, airBaltic attempted to obtain approval for approximately €257 million of additional super-senior financing, but that effort failed to produce a workable solution. Latvia subsequently provided a €30 million loan, although restrictions around additional government support limited the extent to which the state could simply continue injecting capital.

The company has now secured approximately €350 million of debtor-in-possession financing to support operations during the restructuring, subject to court approval. The financing carries a reported interest rate of about 12%, underscoring how expensive emergency capital can become for a distressed airline.

airBaltic expects Chapter 11 to provide a single court-supervised framework for dealing with international financing agreements, creditors and aircraft-leasing obligations. Hilden has stressed that the process is intended to reorganise the business rather than liquidate it and that scheduled flights are expected to continue.

The proposed timetable would take the airline through restructuring by around June 2027. That gives management only a limited period to renegotiate liabilities, resize the fleet, resolve workforce questions and demonstrate that the reorganised carrier can generate materially stronger cash flow.

Why is airBaltic reconsidering a wet-lease business that grew strongly in 2025?

One of the more surprising elements of the restructuring is the focus on airBaltic’s ACMI operation.

Under an ACMI agreement, an airline supplies another carrier with an aircraft, crew, maintenance and insurance. The customer effectively purchases flying capacity rather than leasing only an aircraft. For airBaltic, the model offered a way to generate revenue from aircraft beyond its own scheduled Baltic network.

The business had been expanding rapidly. airBaltic operated approximately 30,100 ACMI flights during 2025, up 15% from 26,200 in 2024. Its annual report also showed that ACMI production measured in block hours rose 12.5%, although currency movements meant the corresponding euro revenue increase was more modest.

Management had previously expected further aggressive expansion. Before the latest crisis, airBaltic projected ACMI capacity would grow approximately 30% to 40% during 2026, alongside an 8% to 10% increase in scheduled flying.

That strategy is now being reconsidered.

Hilden has identified the wet-lease operation as an important part of the restructuring discussions, meaning airBaltic may no longer pursue the same scale of ACMI flying it once planned.

The change matters for employment because wet leasing is labour intensive. The business requires not only aircraft but complete operating crews and associated technical support. If airBaltic reduces the number of aircraft allocated to ACMI customers, employee requirements can decline even if the airline protects most of its core Baltic route network.

There is also evidence that the economics had already become less predictable. airBaltic said its 2025 results were hurt by weaker-than-expected monetisation of ACMI capacity during November and December after Southern Hemisphere cooperation projects were delayed.

What was previously seen as an important diversification engine may therefore be subjected to much stricter profitability tests during Chapter 11.

Why does cutting the fleet from 54 aircraft to 36 fundamentally change airBaltic?

airBaltic has spent years building its identity around the Airbus A220-300.

The airline became the world’s largest operator of the aircraft type and had reached a 51-aircraft fleet by the end of 2025 before subsequent deliveries lifted the current total to 54. The A220 strategy helped airBaltic simplify fleet operations around a single aircraft family while connecting relatively small Baltic markets with destinations across Europe and beyond.

Yet fleet expansion also increased the financial obligations tied to aircraft ownership and leasing. When demand, aircraft availability and fuel economics work as planned, additional aircraft can drive revenue growth. When external conditions deteriorate, the same fleet becomes a source of fixed financial commitments.

airBaltic also suffered from Pratt & Whitney engine availability problems that restricted the number of aircraft it could consistently deploy. Management had expected those issues to improve during 2026 and originally planned substantial capacity expansion as aircraft returned to service.

The Chapter 11 plan now reverses that trajectory.

Reducing the fleet to roughly 36 aircraft does not necessarily imply that airBaltic will abandon its Baltic network. Instead, management appears to be seeking a smaller base from which the airline can preserve strategically important connectivity without carrying enough surplus aircraft and associated costs to destabilise the company during another external shock.

That trade-off is particularly important because airBaltic operates in relatively small home markets. Latvia, Lithuania and Estonia cannot provide the same domestic passenger volumes available to carriers based in Germany, France, Spain or the United Kingdom.

Wizz Air Chief Executive Officer Jozsef Varadi has argued that airBaltic’s previous scale was difficult to sustain given Latvia’s market size and its geopolitical exposure. Wizz Air itself said it was not interested in acquiring airBaltic.

What does Lufthansa’s 10% stake mean during the restructuring?

airBaltic remains overwhelmingly state controlled.

The Latvian government owns approximately 88.37% of the airline, while Deutsche Lufthansa holds a 10% stake. airBaltic originally emerged in 1995 as a joint venture involving Latvia and Scandinavian Airlines, but its ownership structure changed substantially over subsequent decades.

Lufthansa’s position is strategically interesting because the German aviation group invested in airBaltic before the current restructuring, potentially giving the Latvian airline a stronger commercial relationship with one of Europe’s largest airline groups.

However, Lufthansa has not indicated that it intends to solve the current crisis by substantially increasing its ownership. Reuters reported that airBaltic continues to seek a strategic investor as part of its longer-term solution.

Chapter 11 could change the ownership structure significantly if creditors exchange debt for equity. Existing shareholders can experience dilution when liabilities are converted into new ownership interests, meaning the percentages held before restructuring may not necessarily resemble the final capital structure.

For employees, the eventual ownership outcome matters because a strategic airline investor, financial creditor or state-controlled structure could produce very different priorities around route growth, aircraft utilisation and future hiring.

Could airBaltic’s restructuring protect jobs by making the airline sustainable?

The immediate workforce discussion naturally centres on potential redundancies, but the alternative to restructuring could be considerably more damaging if the airline cannot finance operations.

airBaltic employs more than 3,000 people and plays an outsized role in air connectivity for Latvia and the wider Baltic region. It carried 5.2 million passengers on its own network during 2025 and operates more than 70 destinations connecting Baltic airports with major European and international markets.

Chapter 11 provides management with an opportunity to reduce liabilities while flights continue. The objective is not to close the airline but to emerge with a cost base and capital structure capable of surviving periods of weaker demand or elevated fuel prices.

That does not diminish the consequences for employees whose jobs may disappear. It does, however, explain why management and unions are debating alternatives such as part-time arrangements rather than treating headcount reduction as an isolated cost target.

The key measure will be the €44 million of annual profit improvement that airBaltic is reportedly seeking from the restructuring. Achieving that level of recurring improvement will probably require contributions from several areas, including aircraft leases, financing costs, fleet utilisation, labour productivity and the scope of the ACMI business.

If the required savings can be obtained primarily through financing and fleet restructuring, the final workforce reduction could remain comparatively limited. If those measures prove insufficient, labour costs may become a larger component of the recovery plan.

What should airBaltic employees and the aviation industry watch next?

The first issue is the outcome of the union consultations.

No reliable final layoff number exists yet, and airBaltic has not announced a company-wide percentage target for workforce reduction. That distinction should remain central to coverage because negotiations over part-time employment and dismissal criteria could materially change the number of people who ultimately leave.

The second milestone is fleet restructuring. Returning or otherwise removing roughly 18 aircraft would provide much clearer evidence of the airline’s intended long-term operating size. The mix between scheduled flying and ACMI operations will then reveal where airBaltic expects the remaining aircraft and employees to generate the strongest returns.

The third is financing. A €350 million debtor-in-possession facility can keep the company operating through restructuring, but emergency financing at a high interest rate is a bridge rather than a permanent business model. airBaltic ultimately needs a sustainable post-bankruptcy capital structure capable of supporting the airline without repeated state or creditor intervention.

The final question is whether a strategic investor emerges. A financially stronger airline partner could potentially provide capital, network integration and commercial opportunities, while a creditor-led restructuring could place greater emphasis on debt recovery and profitability.

airBaltic entered 2026 expecting higher capacity, more ACMI flying and continued expansion of an Airbus A220 fleet that had helped make it the dominant carrier in the Baltic region. Only months later, that strategy is being rewritten.

The airline is now preparing to operate fewer aircraft, restructure hundreds of millions of euros of obligations and negotiate with employees over potentially painful reductions. Yet its flights continue, its passenger base remains substantial and its 2025 revenue demonstrated that there is genuine commercial demand for the network.

The outcome will therefore depend less on whether airBaltic can attract passengers and more on whether it can create an organisation whose fleet, workforce and debt load are appropriate for the volatile economics of a relatively small European airline.

For more than 3,000 airBaltic employees, that distinction is becoming very real. Chapter 11 may provide the mechanism that keeps the carrier flying, but the company that eventually emerges from restructuring is increasingly unlikely to have the same aircraft footprint, workforce structure or growth strategy as the airline that entered 2026.