Latvia's airBaltic faces a critical week as the loss-making national airline seeks creditor concessions, €225mn in bridge financing and fresh equity to avoid what Prime Minister Andris Kulbergs calls the worst-case scenario – insolvency, Latvia’s national broadcaster LSM.lv reported on August 17.

The outcome matters far beyond the airline: airBaltic is estimated to generate 1.5-2% of Latvia's GDP, while a radical restructuring could eliminate hundreds of jobs.

Latvian Television's De Facto reported on August 16 that creditors were due to meet on August 17 to consider allowing airBaltic to defer two consecutive interest payments and add them to its debt principal. The first payment, worth just under €14mn, was due on August 14.

The reconvened meeting requires participation by only 25% of bondholders after an earlier meeting failed to reach the 75% quorum.

"There is a last chance to really save airBaltic. It is the last chance left. I want this government to do everything possible so that we see airBaltic flying in the future," Kulbergs told De Facto.

airBaltic last week unveiled a restructuring plan involving a one-third reduction in its fleet, concentration on more profitable routes and extensive cost cuts. The aviation union estimates up to 30% of the airline's more than 3,000 employees could lose their jobs.

The carrier also needs €100mn in new equity, while part of its existing bond debt could be converted into shares.

"Financial restructuring consists of two major components. The first is to improve profitability. airBaltic must become profitable in the long term, otherwise it will not be an attractive investment target. This is followed by strengthening the balance sheet. Currently, one of our main priorities is to secure temporary financing of €225mn," CEO Erno Hilden said, LSM.lv reported.

Investor confidence has deteriorated sharply. Existing airBaltic bonds have lost around 80% of their value since the start of 2026, while their price fell another 42.1% between August 10 and 14.

The Latvian government has meanwhile given conceptual approval to extending repayment of a €30mn state loan until December 31 and potentially buying up to €30mn of new bridge-financing bonds alongside private investors on identical terms. Parliamentary approval is required, LSM.lv reported.