airBaltic Survives the Vote. The Hard Part Starts Now.

More than 25% of outstanding bond principal was represented at the reconvened meeting yesterday — clearing the quorum bar that an August 3 vote failed to meet — and over 75% of those who voted approved a narrow set of amendments: the August 14 and November 14 interest payments get added to bond principal instead of paid out in cash, plus a temporary waiver of minimum liquidity requirements through November 14. The bigger ask — converting part of the €380 million in 2029 bonds into equity, alongside €225 million in new interim financing and €100 million in fresh equity — wasn't even on yesterday's agenda. That's still a separate, unresolved negotiation. Who's Paying Bondholders are absorbing the immediate cost. Deferring cash interest and waiving liquidity protections isn't free — the bonds were already trading around 31 cents on the euro as of May, pricing in serious distress before this vote even happened, and Fitch noted the rate applied to the deferred August payment stepped up to 16.5%, from a 14.5% base coupon, due to a reserve shortfall. Latvia is the other payer: the state already bought €50 million of the original 2024 bond issuance directly, and is now committing to further loans and equity injections while insisting on keeping at least a 25%-plus-one blocking stake regardless of how the cap table shakes out. Latvia's sovereign capacity to absorb airline losses is not comparable to Gulf state ownership — this is a small economy with real fiscal limits. What Bondholders Actually Get Nothing concrete yet, beyond runway. The equity-conversion terms that would compensate bondholders for the deferral haven't been finalized — that's the negotiation still ahead. What they've bought, for now, is a functioning airline rather than a defaulted one, and time for the larger restructuring to get negotiated properly instead of collapsing under an August cash crunch. Who's Losing: Airbus This is the number that matters most outside Latvia. airBaltic's A220-300 fleet is being cut from 54 to 36 aircbalticaft by the end of this year — a full abandonment of the airline's long-stated ambition to reach 100 jets by 2030, with only gradual regrowth to 40 aircraft projected by 2031. airBaltic is one of the most visible all-A220 operators in the world; this is a real, material hit to the A220 program's growth story, from a customer that's been part of the program's flagship marketing since the type was still called the C Series. The contrast happening in parallel makes the point sharper: BermudAir is expanding with the same A220 at the same moment airBaltic retreats from it. Same aircraft, opposite trajectories — a reminder that this is airBaltic's balance sheet problem, not evidence of anything wrong with the airplane itself. Where do these ex-airBaltic A220s go? With their engines fixed they represent useful, and fuel-efficient lift. Such a large number also impacts new A220 sales. The A220 secondary market is thin enough that 18 additional airframes will move the needle on new sales The Engine Problem Behind the Balance Sheet Problem [caption id="attachment_77086" align="aligncenter" width="299"] GTF[/caption] The root cause traces straight back to the Pratt & Whitney GTF reliability crisis this publication has tracked all summer, from JetBlue to airBaltic itself. Up to 13 airBaltic aircraft were grounded simultaneously at points over nearly three years of GTF inspection and repair work. By most accounts the engine problem itself is now nearly resolved. The balance sheet damage it left behind is not — this restructuring is a lagged financial consequence of a technical problem that's already largely fixed, which is worth remembering before assuming airBaltic's troubles reflect something currently wrong with its operation today. The Numbers Behind the Urgency Negative equity stood at €249.3 million as of March 31. Current liabilities exceeded current assets by €415.1 million. Unrestricted cash: just €15.6 million. The restructuring plan projects €45 million in annual savings from the smaller, more concentrated operation — real money, but a fraction of the hole the balance sheet is currently in. One More Thread to Watch airBaltic is also shrinking its ACMI wet-lease business as part of this plan — the same business that had Lufthansa's brand flying on airBaltic aircraft and crew, and which we flagged yesterday as accounting for over 14% of airBaltic's 1Q revenue. A smaller ACMI operation means a smaller version of exactly the Lufthansa dependency we described. It's worth watching whether Lufthansa needs to backfill that capacity itself, or absorbs a smaller Baltic connectivity footprint as part of airBaltic's new "financial stability first, growth second" posture. Bottom Line Yesterday's vote kept airBaltic solvent past a cash crunch it couldn't have survived otherwise. It didn't fix the airline. The real restructuring — equity conversion, the €225 million interim financing, the €100 million equity raise — is still ahead, unresolved, and still requires bondholders and new investors to agree to terms nobody has confirmed yet. What's already certain is the Airbus impact: 18 fewer A220s flying for airBaltic by year-end than were flying in January, and a growth story that's been pushed out past 2031 for an airline that once talked about reaching 100 jets by 2030.

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