Romanian airline AnimaWings filed for insolvency on September 30, two weeks after Latvia's flag carrier airBaltic sought US Chapter 11 protection, adding two more names to a long list of small Central and Southeast European airlines that have failed or are under severe pressure amid debt, engine problems and low-cost competition.

AnimaWings, part of Memento Group Holding, filed with the Bucharest Court after deciding to ground and phase out its six Airbus A220-300 aircraft because of recurring technical problems, HotNews reported. The six jets made up three-quarters of its eight-aircraft fleet, and the carrier has since suspended all flights until October 24, saying it plans to resume a simplified schedule with its two remaining Airbus A320s from October 25.

"The decision comes primarily as a result of recurring technical issues that have affected fleet availability, with subsequent impacts on our operational, commercial, and financial activities," the airline said in a note to customers.

The two airlines face overlapping pressures, but the causes are not identical. AnimaWings cited recurring technical issues with its A220 fleet; airBaltic cited industry-wide engine maintenance problems and rising fuel costs after the escalation in the Middle East. Yet demand is not the problem: passenger traffic at the region's airports is growing at double-digit rates in several countries, and much of it is being carried by Ryanair and Wizz Air.

airBaltic's debt pile

airBaltic had €503.3mn in liabilities and €855.6mn in operating lease obligations when it filed for Chapter 11 in New York on September 14, according to court declarations cited by Latvian news agency LETA on September 24. Its cash balance was just €1.13mn. The liabilities include €398.2mn of secured bonds carrying 14.5% interest and maturing in 2029, about €18.6mn owed on a Latvian government loan and €7.9mn to BluOr Bank.

Pratt & Whitney is airBaltic's largest unsecured creditor, with a claim of $66.5mn, and the airline had already blamed "industry-wide engine maintenance issues" for a net loss of €44.3mn in 2025, following a €118.2mn loss in 2024. It suspended plans for an initial public offering in March, warning it could need €100mn-150mn of extra funding to get through the coming winter.

Lenders led by Strategic Value Partners have committed up to €350mn in debtor-in-possession financing at SOFR plus eight percentage points, with fees of up to €52.5mn on top, and a final court hearing on the package is set for October 9. A group of existing bondholders has challenged the terms. airBaltic plans to cut its fleet from 54 to 36 aircraft by the end of the year and expects a court-approved reorganisation plan by mid-2027.

Political risk analyst Maximilian Hess called airBaltic's technical default "Europe's first major corporate casualty of the war against Iran" in an August 25 note, and warned that the EU's "one time, last time" principle on state rescue aid could make another conventional bailout difficult. Latvia, which owns 88% of the airline, already supported it in 2014 and with a €250mn recapitalisation in 2020.

AnimaWings' fast expansion

AnimaWings, founded in 2019 by brothers Cristian and Marius Pandel, had planned to expand its fleet to 14 aircraft by the end of 2027. Turnover more than doubled to €66.5mn in 2025, below the €90mn-100mn Marius Pandel had projected, while the company swung from a profit of about €400,000 in 2024 to a loss of more than €22mn.

As recently as September 28, Marius Pandel told HotNews the airline was in full swing with no plans to stop. In April, half its shares were to be taken over by BT Asset Management, part of the Banca Transilvania Financial Group, together with Winners Holding Investments and Evergent Investments.

The region's skies are littered with failed carriers. Romania's state-controlled Blue Air stopped flying in September 2022 with debts estimated at €230mn and was declared insolvent in March 2023; the European Commission later ordered Romania to recover €34mn in state aid. Air Moldova cancelled most of its flights in March 2023, when only one of its four aircraft was available.

Slovenia has had no flag carrier since Adria Airways collapsed in 2019; a government study put the cost of setting up a replacement at a minimum of €100mn. Albania's civil aviation authority suspended Air Albania's licence in December 2025 after Turkish Airlines moved to sell its 49% stake, leaving the country without a domestically registered passenger airline.

In Bosnia & Herzegovina, people previously involved with FlyBosnia have begun talks on reviving the carrier, which a Sarajevo court put into preliminary bankruptcy proceedings in 2023, broadcaster N1 reported on October 3, although no investors or business plan have been identified.

Budget carriers move in

Low-cost carriers pushing into the space. Ryanair has proposed investing $1.6bn across the Baltic states over five years, basing 16 aircraft in the region instead of seven and offering 11mn seats a year by 2031, Reuters reported in September. Riga will be its only Baltic market to grow this winter, with capacity up 6%, as airBaltic cuts routes.

In the Western Balkans, Ryanair opened a four-aircraft base in Tirana this year with 20 new routes, aiming to carry some 4mn passengers in Albania in 2026, and is flying a record schedule in Croatia with nine based aircraft and 118 routes. Hungary's Wizz Air opened a base in Podgorica in March with 17 new routes.

The budget airlines are not immune to the same pressures. Fitch Ratings said in August that Wizz Air and Turkey's Pegasus Airlines risked credit-rating downgrades as high jet fuel prices squeezed earnings, with EMEA airlines' second-quarter EBITDAR down by around a third on average. Budget carriers recouped only about a quarter of the fuel-cost increase through fares, the agency said, against far more for network airlines.

Meanwhile, traffic across the European airport network rose 3.9% y/y in July and 3.1% in August, accelerating from 1.3% in the second quarter, airport trade body ACI Europe said in its August traffic report on September 30.

Central and Southeast Europe led the growth. Among EU markets, airports in Slovakia posted the strongest August increase at 61%, followed by Slovenia at 19.3%, Estonia at 16.4% and Hungary at 13%. Outside the EU, traffic rose 34.8% in North Macedonia, 28.6% in Montenegro, 20.7% in Albania and 12.6% in Moldova. Bratislava, up 75.9%, and Podgorica, up 47.6%, were among the fastest-growing medium-sized airports in Europe.

ACI Europe expects that growth to come under pressure. "Looking ahead, the geopolitical energy shock is likely to put further pressure on both supply and demand. Airlines are already tightening capacity and increasing air fares to mitigate their rising jet fuel costs," director general Olivier Jankovec said.