airBaltic hires UK law firm Fladgate for fleet contract restructuring

Latvia's national airline airBaltic and two companies involved with it in a joint Chapter 11 process (a US bankruptcy protection regime that shields a company from creditor claims while it restructures) have filed a notice with the US Bankruptcy Court for the Southern District of New York. It proposes adding the London-based law firm Fladgate LLP to the list of legal advisers, to help restructure aircraft and engine leasing and financing arrangements.

The notice was filed on 3 November. Under the adviser-retention procedure approved by the court on 22 October, the addition will be treated as approved if no objections arrive within ten calendar days. Objections may be submitted until 13 November; if they are raised and cannot be resolved, the court will have to decide the matter.

Scope of work

According to a declaration filed with the court, Fladgate will advise on amendments to lease agreements, deferral of payments or other obligations, and restructuring of aircraft and engine financing. It will also advise on "power by the hour" arrangements, where payments depend on actual use of an aircraft or engine, such as flight hours or cycles.

The firm will also cover the application of the Cape Town Convention and its Aircraft Protocol, an international framework governing how rights in aviation assets, including airframes and engines, are registered and enforced. Its tasks include legal support in talks with lessors, secured creditors, trustees and original equipment manufacturers.

Fees

Fladgate is designated a Tier 1 service provider. Once approved, the companies may pay it up to US$150,000 a month, averaged over three months, without a separate fee application to the court; expenses are not included. On the day the process began, none of the three companies owed the firm anything.

The court filings name no specific aircraft or engines and give no details of deals already reached with lessors or financiers.

Background

On 19 October the court approved airBaltic's debtor-in-possession (DIP) financing structure of up to €350 million. From the first tranche the airline used €78.925 million to buy out eight Airbus A220 aircraft and seven engines. Flights continue as scheduled and existing tickets remain valid. The process may conclude in mid-2027.