Air Baltic seeks bond restructuring amid credit rating downgrade

Air Baltic is seeking to restructure its bond terms to alleviate increasing financial pressure. The airline has requested investor consent to modify its August 2029 bond agreement, proposing to capitalize interest payments due in August and November rather than paying them in cash. Other requested changes include modified rules for calling investor meetings and a suspension of the requirement to maintain at least 25 million euros in free cash.

Standard & Poor's has downgraded Air Baltic's credit rating to CCC-, warning of a potential default in the coming weeks. The airline faces significant liquidity challenges driven by rising fuel costs and high debt loads. It is estimated that the company requires between 120 million and 170 million euros in additional capital.

While the Latvian government has provided previous support, including a 30 million euro loan, S&P analysts suggest the likelihood of further state intervention is low. The airline has engaged Seabury Securities LLC to explore financial improvements, including debt restructuring and attracting new capital.