Latvia-based AirBaltic has filed for Chapter 11 bankruptcy protection.
The Riga-based airline will continue normal operations during the restructuring, it said, and entered bankruptcy voluntarily with the long-range objective of achieving a stronger capital position with a lower cost structure.
AirBaltic flies a fleet of 54 Airbus A220-300s to more than 70 destinations across Europe, the Middle East and North Africa. The airline is majority-owned by the Latvian state. Lufthansa Group owns a 10% stake.
The company said it has secured a commitment of 350 million euros (about $404 million) in financing at an interest rate of approximately 12% arranged by the private global investment firm Strategic Value Partners.
"We have carefully assessed the restructuring options available to the company, with one priority focus -- give AirBaltic the best possible basis to continue operating and to build a sustainable financial structure," company chairman Andrejs Martinovs said in prepared statement. "Under court supervision and with protection from creditor claims, the process provides a clear framework and timetable for reaching agreements with creditors, including aircraft lessors and other stakeholders."
The Chapter 11 filing comes with jet fuel prices in Europe and across the globe once again sharply spiking as escalated fighting in the Strait of Hormuz, the Red Sea and on the Arabian Peninsula are further impeding fuel supply routes.
According to IATA, European jet fuel averaged $4.58 per gallon for the week ending Sept. 11, up 6.8% from the previous week, 18.5% from the previous month and 111.2% year over year.
AirBaltic's business has also been substantially impacted by the Ukraine war over the past four and a half years.
Prior to Russia's invasion of Ukraine, the carrier flew to four Ukraine destinations and two in Russia.