AirBaltic Restructures: To Reduce Airbus A220 Fleet by One-Third and Refocus Network on Riga
Latvian flag carrier airBaltic has unveiled a revised business plan marking a major redesign of its operational and financial ambitions. Operating under the priority motto of “financial stability first, growth second,” the airline will downsize from its current fleet of 54 aircraft to a trimmed-down fleet of approximately 36 aircraft by year-end. From that baseline, it foresees gradual growth to reach 40 units by the end of the decade, formally discarding its previous target of operating 100 aircraft by 2030.
This adjustment comes in response to substantial shifts in the global operating environment. According to the airline, the core assumptions outlined for its projected Initial Public Offering (IPO)—which anticipated sustained passenger and ticket revenue growth in the Baltic region and Europe—were impacted by a moderation in demand, rising costs driven by geopolitical uncertainty in Ukraine and the Middle East, and prolonged availability constraints surrounding Pratt & Whitney engines, which limited the deployment capacity across its fleet.
- Year-end fleet: Reduction from 54 to 36 aircraft.
- Long-term target: Gradual growth to 40 aircraft by the end of the decade (compared to 100 aircraft previously projected).
- Recurring annual benefit: Generation of approximately €45 million, primarily through cost efficiencies.
Financing Structure and Capital Instruments
To address its short-term liquidity needs, airBaltic is seeking to secure €225 million in interim financing. This bridge loan will be backed by assets that currently secure bonds maturing in 2029, which the airline values at €506 million on a going-concern basis.
The scheme is designed to serve as a bridge toward a permanent recapitalization that will encompass:
- Up to €225 million in new debt.
- €100 million in new equity capital.
- The conversion of a portion of existing bonds into equity, replacing the remainder with up to €125 million in reduced debt.
None of these financing transactions have been completed yet. Implementation remains subject to stakeholder agreements, bondholder resolutions, and regulatory approvals, with a reconvened bondholder vote scheduled for August 17.
This financial restructuring follows a warning issued in July by rating agency Fitch Ratings, which pointed to a “higher probability of default in 2026” and a “high likelihood” of debt restructuring or default without additional external funding. Although the Latvian government granted a short-term loan of €30 million in April, authorities have emphasized the need to bring in a strategic commercial investor. The Latvian state currently holds an approximate 88% stake in the company, while Lufthansa Group holds a 10% interest.
Network Redesign: A Hub-Centric Focus on Riga
Riga International Airport (RIX) will remain airBaltic’s primary hub under a demand-driven strategy that prioritizes frequency and depth in consolidated markets over the aggressive addition of new destinations.
Under the revised operational blueprint:
- Secondary bases will offer select point-to-point services.
- Tactical and seasonal flights will be utilized to maximize aircraft utilization rather than to drive long-term expansion.
- Main bases in Tallinn (Estonia), Vilnius (Lithuania), and Tampere (Finland) will be maintained, alongside its winter seasonal bases in the Canary Islands (Spain).
This pivot stands in sharp contrast to previous expansion efforts. During the northern summer of 2026, the carrier offered 4.45 million scheduled seats (+5.1% year-over-year) across 122 routes. Out of Riga specifically, outbound capacity rose 4.7% to 1.7 million seats across 73 destinations, accounting for 63.9% of all scheduled outbound capacity in Latvia.
However, across the three Baltic states combined (Latvia, Lithuania, and Estonia), despite offering 2.55 million seats (+4.6%), airBaltic’s combined market share fell slightly from 38.8% to 37.5% amid accelerated growth from low-cost competitors such as Wizz Air.
Capacity Trends, ACMI Leasing Model, and Financial Outlook
The plan projects an initial pullback in capacity. Available Seat Kilometers (ASK) on scheduled services will decrease by 9.4%, from 9.6 billion in 2026 down to 8.7 billion in 2027, before gradually recovering to reach 10.5 billion ASKs by 2031.
Push Toward the ACMI Model
To mitigate fixed-cost overhead during the winter season, reduce seasonal volatility, and inject fleet flexibility, airBaltic will increase its Aircraft, Crew, Maintenance, and Insurance (ACMI) wet-lease operations. The carrier already acts as a capacity provider for Lufthansa Group, operating 21 aircraft on its behalf during the summer of 2026.
“Every successful airline must continuously adapt to a changing market. Therefore, this business plan is about making disciplined decisions that strengthen airBaltic’s long-term competitiveness while preserving what matters most: reliable connectivity and operations, alongside financial sustainability.”
— Erno Hildén, President and Chief Executive Officer (CEO) of airBaltic.
Financial Projections (2026–2031)
- Revenue: On the top-line front, capacity contraction will cause an initial revenue drop from approximately €900 million in 2026 to €800 million in 2027, before rebounding toward €1 billion by 2031.
- EBITDAR: Meanwhile, Earnings Before Interest, Taxes, Depreciation, Amortization, and Aircraft Rent (EBITDAR) project an upward trajectory: rising from €158 million in 2026 to €192 million in 2027, eventually reaching €300 million by 2031.
airBaltic has stressed that this restructuring process does not impact its ongoing operations: published flight schedules, passenger bookings, and service delivery continue to proceed as planned.
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