airBaltic plans major fleet cut to 36 aircraft by end of 2026 amid financial challenges
Latvian flag carrier airBaltic has been in a rough financial spot for some time, and in recent weeks there has been talk of the airline potentially needing to suspend operations due to running out of cash. The airline has now unveiled a new business plan, intended to strengthen its long term sustainability. This is actually a pretty radical transformation, so expect a lot of things at the airline to change… particularly, its network! First let's talk about what's changing, and then we'll talk about how airBaltic got into this situation in the first place. airBaltic unveils updated, long term business plan airBaltic's supervisory board has just approved the carrier's updated business plan, which is intended to strengthen the company's long term competitiveness, establish a sustainable capital structure, support future development, and maintain reliable connectivity for Latvia and the wider region. Here's what will be changing, summarized as succinctly as possible: airBaltic currently has a fleet of 54 Airbus A220-300s, and was planning on growing that fleet to 100 planes ; however, the airline now plans to shrink instead, decreasing its fleet to just 36 planes by the end of 2026, before eventually increasing the fleet to around 40 planes by 2031 The airline plans to largely maintain its scheduled capacity (since the airline does a lot of leasing out of aircraft — more on that below); available seat kilometers are expected to decline from 9.6 billion in 2026 to 8.7 billion in 2027, before gradually increasing to 10.5 billion by 2031 airBaltic will continue to have a network heavily focused on Latvia, but rather than pursuing broad expansion, the airline will focus on deepening its presence in existing markets by increasing frequencies where demand and profitability are strongest airBaltic largely leasing out its aircraft to other airlines under a wet lease model (particularly Lufthansa Group carriers), but the airline plans to increasingly focus on year-round deployment with this strategy, to mitigate the seasonal issue To fund these changes, airBaltic is seeking 225 million EUR in interim financing, intended to bridge the company to a permanent financing solution. The company is also seeking 100 million EUR of new capital. Here's how Erno Hildén, airBaltic's CEO, describes this updated strategy: "Every successful airline must continuously adapt to a changing market. Thus, this business plan is about making disciplined choices that strengthen airBaltic's long-term competitiveness while preserving what matters most – reliable connectivity and operations, together with financial sustainability. It provides a stronger foundation for the company's future and positions us to create long-term value for our customers, partners and Latvia." airBaltic's fleet will shrink to just 36 planes How airBaltic has found itself in such a tough spot airBaltic has historically been an incredibly well run airline. The CEO used to be Martin Gauss, but he was fired (which I found to be an odd decision) , and he's now CEO of Gulf Air . airBaltic operates an all-Airbus A220 fleet, and the airline had huge growth plans, and intended to acquire 100 of these aircraft. For a long time, the idea was as follows: Latvia has convenient geography for connections in Northern Europe, as well as to Russia, etc. Latvia is part of the European Union, but airBaltic has a major cost advantage, given that Latvia is a bit cheaper than some other countries in the EU, so there was merit to the airline wet leasing its aircraft to other airlines However, as you'd expect, the situation has evolved over time. With Russian airspace closed to airlines from the European Union, that has massively limited airBaltic's potential route network, and particularly has limited the number of connecting itineraries the airline can sell. If the current conflict with Russia didn't apply, it would be a totally different story at airBaltic. While airBaltic continues have a robust wet leasing business, the issue is that most airlines looking to lease planes only need them in summer, and not winter, given that it's when demand is highest. In early 2025, Lufthansa Group even bought a small stake in airBaltic , in part because of how much it values the wet lease agreements for subsidiaries like Lufthansa, SWISS, Brussels Airlines, etc. But the issue is that summer-only wet leases need to be able to cover costs not just for summer, but also winter, since it's not like airBaltic has anywhere to profitably fly those excess planes in winter. What has really caused issues for airBaltic in recent times is the increase in fuel costs. Not only have fuel costs increases been particularly bad in Northern Europe, but it's also tough to be a full service(ish) airline that exclusively has a regional network, given how robust ultra low cost carrier competition is in the region. Unfortunately for airBaltic, shrinking probably is the right choice here. That way the airline can focus its network on routes that are actually profitable, and on top of that, can be more selective about wet leasing, to airlines that actually value having planes on a year-round basis. airBaltic will shrink its wet lease operations Bottom line airBaltic has been on the brink of collapse in recent months, and the company's board has approved a new business plan, which will include some major changes. The most significant change is that the carrier's fleet will go from 54 planes to 36 planes by the end of the year. Then by 2031 the fleet will grow to 40 planes, compared to the planned 100 planes. With this downsizing, airBaltic also plans to increasingly focus on its most profitable routes, so expect some network cuts. We'll also see reductions to the carrier's wet leasing operations, as the airline tries to secure year-round deals, rather than just seasonal deals. What do you make of these airBaltic updates?