airBaltic has unveiled a far-reaching new business plan aimed at restoring its financial health, including a one-third reduction of its Airbus A220-300 fleet, a more concentrated network centred on Riga, increased reliance on ACMI operations and a major recapitalisation. The Latvian carrier stresses that its current flight schedule and passenger bookings remain unaffected.
The plan, approved by airBaltic’s Supervisory Board, marks a sharp change from the expansion strategy pursued by the airline in recent years. Instead of moving towards a fleet of around 100 aircraft and rapidly expanding its network, airBaltic says its new priority will be “financial stability first, growth second“.
The announcement also puts the recently revealed route and frequency reductions in Lithuania and elsewhere into a much broader perspective. These are not simply routine seasonal adjustments but part of a fundamental reshaping of airBaltic’s business.
Perhaps the most striking element is the planned reduction of airBaltic’s all-Airbus A220-300 fleet.
The airline currently has 54 aircraft but expects to operate only around 36 A220-300s by the end of 2026, a reduction of approximately one third. The fleet would then grow only very gradually, reaching around 40 aircraft by 2031.
This represents a dramatic reversal of airBaltic’s previous strategy, under which the airline envisaged eventually operating around 100 A220s.
The reduction does not necessarily mean that 18 aircraft will simply disappear from the fleet through immediate disposals. The eventual figure can be reached through a combination of aircraft returns, changes to leasing arrangements, deferred or cancelled deliveries and other fleet-management measures.
Nevertheless, the target makes clear that airBaltic intends to become a considerably smaller airline, at least in terms of the number of aircraft under its control.
Interestingly, airBaltic believes that scheduled capacity can remain relatively stable despite having far fewer aircraft. This is to be achieved through higher aircraft utilisation and a more efficient network.
The new strategy also answers an important question about airBaltic’s future network.
Riga will unequivocally remain the airline’s principal hub.
Rather than spreading capacity broadly across the Baltic region, airBaltic intends to concentrate on routes where demand and profitability are strongest, increasing frequencies in successful markets instead of continuously adding new destinations.
The airline’s other bases will remain, but their role appears set to become more selective, concentrating on carefully chosen point-to-point routes.
That could have important consequences for Vilnius and Tallinn in particular.
Recent reductions announced in Lithuania – together with cuts elsewhere in the network – now appear to be the first visible consequences of this strategy. Routes unable to produce satisfactory returns will face greater scrutiny as aircraft are concentrated on services offering stronger demand and margins.
The figures underline the scale of the adjustment.
Scheduled capacity, measured in available seat kilometres (ASKs), is expected to fall from approximately 9.6 billion in 2026 to 8.7 billion in 2027, a reduction of around 9%.
Capacity would subsequently recover gradually, reaching approximately 10.5 billion ASKs in 2031.
In other words, airBaltic is planning a genuine contraction in scheduled flying next year before cautiously rebuilding the network.
At the same time, airBaltic intends to strengthen its ACMI activities, under which it supplies aircraft, crews, maintenance and insurance to other airlines.
This is increasingly important to understanding the company’s strategy.
Rather than operating every available aircraft within its own network and assuming the commercial risk of filling the seats, airBaltic can place capacity with partner airlines under longer-term contracts.
The revised plan envisages stronger year-round ACMI partnerships, reducing one of airBaltic’s longstanding structural problems: the extreme seasonality of aviation demand in the Baltic region.
During summer, airBaltic can profitably deploy large amounts of capacity across its own network. During the Baltic winter, however, demand falls significantly while aircraft ownership, leasing, staffing and other fixed costs remain.
More year-round ACMI flying should therefore provide steadier revenues while reducing the financial impact of that seasonal imbalance.
It also further develops airBaltic’s increasingly close commercial relationship with major European airlines, particularly Lufthansa Group carriers.
Fleet and network changes form part of a broader efficiency programme intended to generate approximately €45 million in recurring annual benefits.
Most of this is expected to come from lower operating costs, although airBaltic also expects additional revenue opportunities.
Management describes the objective as creating a “structurally lower cost base”.
That wording is significant. It indicates that the airline is not treating its current difficulties as a temporary liquidity problem that can simply be solved by obtaining another loan. Management now accepts that the underlying economics of the business must change.
The most urgent problem remains liquidity.
airBaltic says it intends to raise €225 million in interim financing to cover its near-term requirements while the broader restructuring is implemented.
That financing has not yet been secured.
It would be backed by the collateral package already securing airBaltic’s 2029 Senior Secured Notes and requires approval from relevant stakeholders and bondholders.
This is an important qualification to the reassuring statement that operations are continuing normally.
There is currently no suggestion that airBaltic is about to stop flying, and the company explicitly says that tickets, bookings and scheduled services remain unaffected. However, completion of the financing plan is clearly important to the airline’s ability to put its restructuring on a sustainable footing.
The longer-term recapitalisation is even more significant.
airBaltic proposes raising up to €225 million in new debt and €100 million in new equity.
At the same time, part of its existing 2029 Senior Secured Notes would be converted into shares in the airline. The remaining portion would be replaced with reduced new debt of up to €125 million.
Selected other balance-sheet obligations could also partly be converted into equity.
In practical terms, airBaltic is asking creditors to participate directly in repairing the company’s balance sheet rather than simply providing additional loans on top of its existing debt.
The airline’s 2029 bonds are particularly burdensome because they carry a very high 14.5% annual coupon, reflecting the financial risk investors perceived when they were issued in 2024.
Bondholders therefore have considerable influence over whether the restructuring can proceed.
A reconvened vote on required resolutions is scheduled for 17 August, with further votes expected afterwards.
The contrast with airBaltic’s previous ambitions could hardly be greater.
The business plan prepared for its anticipated stock-market flotation envisaged continuing passenger growth, expansion throughout the Baltic region and eventually a fleet of around 100 aircraft.
The IPO was intended to provide capital supporting that expansion.
Instead, weaker-than-anticipated demand growth, geopolitical instability, higher operating costs and continuing Pratt & Whitney engine availability problems have fundamentally changed the assumptions behind that strategy.
The revised plan effectively acknowledges that the previous growth trajectory is no longer financially sustainable.
The airline that once intended to operate around 100 aircraft is now planning around 40 by 2031.
Despite the retrenchment, airBaltic expects revenues eventually to resume growing.
Revenue, which stood at €779 million in 2025, is projected at approximately:
The more important improvement, however, is supposed to come from profitability.
EBITDAR – earnings before interest, tax, depreciation, amortisation and aircraft rental costs – is forecast to rise from €143.9 million in 2025 to approximately €192 million in 2027, €243 million in 2029 and €300 million by 2031.
The corresponding EBITDAR margin is expected to reach 25–29%.
Most dramatically, net leverage is projected to fall from 8.94 times EBITDAR in 2025 to approximately 4.8 times after the recapitalisation at the end of 2026, then 2.4 times in 2029 and 1.6 times in 2031.
These are targets rather than guarantees. Achieving them depends not only on successful implementation of the cost reductions but also on fuel prices, demand, financing conditions, aircraft availability and the willingness of investors and creditors to support the restructuring.
The announcement therefore represents considerably more than a new round of cost cutting.
It amounts to a fundamental change in airBaltic’s strategy.
For much of the past decade, airBaltic presented itself as an ambitious pan-Baltic growth carrier, building one of Europe’s largest Airbus A220 fleets, expanding from Riga, Tallinn and Vilnius and ultimately preparing for an IPO.
The new airBaltic will be more conservative.
Riga will be the centre of gravity; fleet growth will give way to fleet reduction; marginal routes will give way to stronger frequencies on profitable markets; ACMI flying will become more important; and balance-sheet repair will take precedence over expansion.
That also helps explain the route cuts now emerging from Lithuania and elsewhere.
Further network rationalisation would hardly be surprising. With scheduled capacity due to fall by around 9% in 2027 and the fleet expected to shrink by approximately one third by the end of this year, airBaltic will inevitably have to make choices about where its aircraft can most profitably be deployed.
For passengers, however, the distinction between the current schedule and the future network is important.
airBaltic explicitly states that it continues to operate normally and that existing tickets, bookings and passenger services are unaffected by today’s announcement. The restructuring concerns the airline’s future size, financing and network configuration rather than an immediate suspension of operations.
The critical next step will now come from airBaltic’s creditors.
The proposed €225 million interim financing has not yet been agreed, while the broader recapitalisation requires bondholder support and additional new debt and equity investors.
The business plan therefore provides a route towards financial stability – but airBaltic still has to secure the money required to follow it.
There are three particularly important points behind the rather reassuring wording of airBaltic’s press release summarised above.
First, the 36-aircraft figure changes the picture completely. Going from 54 aircraft to approximately 36 by year-end is not normal fleet optimisation. It is a very substantial right-sizing exercise. Combined with the fall in scheduled ASKs from 9.6bn to 8.7bn next year, it provides strong evidence that the Lithuanian cuts are part of a wider network contraction.
Second, the financing language deserves attention. airBaltic says it “plans to secure” €225 million of interim financing; it does not say that financing has been secured. Likewise, the subsequent €225 million of debt and €100 million of equity are proposals. The recapitalisation also requires existing creditors to accept some debt being converted into equity. That makes the 17 August bondholder vote genuinely important. Latvian Public Media had already reported that the government viewed creditor decisions as critical to airBaltic’s future.
Third, the strategic reversal is remarkable. As recently as its Q3 2025 reporting, airBaltic was still discussing the path towards a 100-aircraft fleet, albeit acknowledging that the timetable could be delayed by at least two years because of financing and the postponed IPO. Today’s plan envisages only around 40 aircraft in 2031.
One nuance we would watch carefully: the statement that airBaltic will have only 36 aircraft by the end of 2026 needs clarification as to how the reduction of 18 aircraft will actually be achieved—lease returns, disposals, delivery cancellations/deferrals, or another mechanism. That could itself become an important follow-up story.
This post was published on 11 August 2026 14:59
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