> ## Content Index > Fetch the complete content index at: https://www.thecontrail.org/llms.txt > Use this file to discover other available public pages before exploring further. # Latvia's Airline Bought 54 of One Plane. Then the Engines Broke - URL: https://www.thecontrail.org/airbaltic-chapter-11-bankruptcy-a220/ - Published: 2026-09-15T23:00:35.000Z - Updated: 2026-09-16T13:31:26.000Z - Description: One aircraft type, one certified engine, and no fuel hedge. Flying a single plane type saves money right up until the engine maker has a problem. - Author: Zachary Benitez - Tags: News, airBaltic A New York bankruptcy judge gave Latvia's national airline permission on Tuesday to draw nearly $162 million in emergency financing, overruling objections from its own bondholders. That decision clears airBaltic to keep flying while it restructures. airBaltic filed for Chapter 11 on September 14 in the US Bankruptcy Court for the Southern District of New York, along with its training arm and its cargo handling subsidiary. Flights are operating normally. Tickets, reservations, vouchers and loyalty benefits all remain valid. Restructuring is expected to complete by around June 2027\. If you're booked on airBaltic, nothing you need to do has changed. I'm more interested in why a Latvian airline ended up in a New York courtroom, and which two decisions put it there. --- ## One creditor explains a lot of this Reporting on the court documents indicates Pratt & Whitney is airBaltic's largest external unsecured creditor, with a claim of around $66.5 million. Read that again. Pratt & Whitney's durability problems helped ground this fleet, and it now sits near the front of the queue among creditors the airline can't fully pay. The carrier operates an all-Airbus A220-300 fleet, 54 aircraft as of the filing. Its PW1500G is the only engine certified for that aircraft. From 2022 onward, a shortage of spare PW1500G engines tied to Pratt & Whitney's powder metal issues kept airBaltic aircraft out of service. There was no fallback available. I don't think that reflects bad management so much as how the airline was built. --- ## Single-type fleets are usually the smart answer Flying a single aircraft type is standard industry thinking, and for good reasons. One type means one pilot training pipeline, one spares inventory and one maintenance program. Ryanair built an empire on 737s and Southwest on the same idea. Riga went all-in on the A220-300 and planned to reach 100 of them by 2030. airBaltic · A220-300 fleet ### From 100 aircraft to 36 One airframe, one certified engine, and no fuel hedge either. Previous planTarget for 2030 100 At the filingSeptember 2026 54 End of 2026August business plan 36 By 2031Gradual recovery 40 Bars scaled to the 100-aircraft target Why one aircraft type became the problem The **PW1500G is the only engine certified for the A220-300**. From 2022, a shortage of spare engines tied to Pratt & Whitney's powder metal issues kept aircraft out of service. An airline with several aircraft types grounds part of its operation and flies the rest. An all-A220 operator grounds a share of everything it owns, with no other type to move the flying onto and no other engine approved for the wing. **airBaltic also hadn't hedged its fuel** when prices roughly doubled this year. Two unhedged bets running at the same time, during an engine shortage and a war. Chapter 11 will be used to cancel or indefinitely defer 40 firm A220-300 orders carrying more than $3.5 billion in list-price commitments, plus roughly $106.7 million of undelivered Pratt & Whitney engines. Twenty surplus aircraft are also going back to their lessors, with rent reductions sought on others. Figures as reported. contrail.travel What nobody prices properly is that flying one type is also putting everything in one basket. A mixed-fleet carrier with an engine problem grounds part of its operation and flies the rest. An all-A220 operator with a PW1500G problem grounds a proportion of everything it owns, with no other type to shift flying onto and no alternative engine certified for the airframe. That's the thing I'd take away from this filing. Single-type isn't wrong as a strategy, but it converts a supplier's problem directly into an existential one, and the supplier doesn't share the downside. --- ## It wasn't only engines Three shocks stacked up over six years, on top of debt taken on to fund pre-pandemic growth. Growth on that scale was financed partly by a bond issued in 2019\. It later issued senior secured notes due 2029 carrying 14.5% interest, with about €380 million outstanding. In August, bondholders approved changes to those terms. Interest payments were deferred and the minimum cash the airline had to keep on hand was temporarily waived. Then Russia's invasion of Ukraine in 2022 forced permanent suspension of Russian, Belarusian and Ukrainian routes and pushed remaining flying onto longer, costlier routings. Suspending Russia and Ukraine alone cut 2022 passenger revenue by an estimated $46.4 million. And this year, fuel. Jet fuel prices roughly doubled after the outbreak of the US and Iran war, in what's been described as the worst crisis for the sector since the pandemic. It hadn't hedged. Most airlines buy fuel forward at a fixed price precisely so a spike can't wipe out a year, and airBaltic had no such protection in place when prices climbed. So there were two unhedged bets running at once. One aircraft type with one certified engine, and fuel bought at whatever the market charged. Either alone is survivable. Both together, during an engine shortage and a war, is how you end up in a courtroom. Even so, 5.2 million passengers in 2025 on €779.3 million of revenue produced a €44.3 million net loss. --- ## What Chapter 11 actually buys them Two things, mainly. Cash. There are commitments for €350 million in debtor-in-possession financing at roughly 12% interest, subject to court approval. Lenders include Strategic Value Partners, Barclays, Morgan Stanley and Oaktree. SOFR plus eight percent is the rate, which currently works out around 12%. Put that next to what came before it. On September 3, airBaltic had announced a €257 million interim financing deal that reporting put at 25% interest. Getting to roughly 12% through bankruptcy rather than 25% outside it is the clearest available measure of how bad the alternative looked. Bondholders didn't want it. A group of them, including the Israeli investment firm Klirmark Capital, had negotiated the earlier proposal. They objected to parts of the DIP package, arguing they faced losing the value of their collateral. They asked the judge to delay it and preserve their right to challenge the terms later. He overruled them and let airBaltic draw the money. airBaltic · the cost of money ### Twenty-five percent outside, twelve inside What the airline was offered before filing, against what a judge approved on September 15. September 3, before filing 25% €257 million interim deal Announced with an initial €180 million tranche, at a rate reporting put at 25% Approved September 15 \~12% \~$162 million released First draw against a €350 million commitment at SOFR plus 8%. Arranged by Strategic Value Partners, with Barclays, Hayfin, Morgan Stanley and Oaktree Who's owed, and the debt behind it Pratt & WhitneyReported largest external unsecured creditor **$66.5m** Senior secured notes due 2029Carrying 14.5% interest. Terms amended in August to defer interest **€380m** 2025 net lossOn €779.3m of revenue and 5.2m passengers **€44.3m** A group of bondholders including Klirmark Capital objected to parts of the financing package, arguing they faced losing the value of their collateral, and asked the judge to delay it. He overruled them. Restructuring is expected to complete by around June 2027\. Figures as reported; the Pratt & Whitney claim comes from coverage of the petition rather than the docket. contrail.travel Second is the ability to walk away from commitments. The airline intends to use the process to cancel or indefinitely defer 40 firm A220-300 orders carrying more than $3.5 billion in list-price obligations, plus roughly $106.7 million of undelivered Pratt & Whitney engines. Five other routes were considered first, among them a UK restructuring, EU state aid and Latvian insolvency proceedings. Ultimately the board concluded the DIP money was only available through Chapter 11. Twenty surplus aircraft are also going back to their lessors and reduce the rent on others. That's the 100-aircraft plan being formally abandoned in court. An August business plan already cut the fleet to 36 aircraft by the end of this year, recovering to around 40 by 2031\. Riga had once intended to reach 100 jets and list on a stock exchange. From 100 to 36\. That is the size of the reversal. --- ## Why New York It's a fair question, a state-controlled Latvian airline using US bankruptcy law. airBaltic says it chose Chapter 11 because its financial obligations are international in nature and the process is well established. Scandinavian Airlines restructured this way in 2022 and Brazil's GOL filed in 2024, so there's a well-worn path. In practical terms, Chapter 11 offers restructuring tools and interim financing mechanisms that European insolvency regimes generally don't, and foreign airlines have used it before for exactly that reason. Latvia's government holds a controlling stake, reported at 97.97%, and Lufthansa Group took a 10% minority position in 2025\. Latvian officials have said the government continues to look for a strategic investor while the restructuring runs. Whether one appears is the question that decides what airBaltic looks like in 2028.