SmartLynx Airlines Grounds European Fleet After $277M Bankruptcy Filing Amid Avia Solutions Restructuring

On November 14, 2025, the skies over Europe went quiet for SmartLynx Airlines — its entire European fleet grounded, engines cold, as the Latvian ACMI specialist entered legal protection. The move came just weeks after the airline was sold by its former parent, Avia Solutions Group, to its own management team and a Netherlands-based investment fund. The sudden halt wasn’t due to a crash or scandal, but a slow, grinding collapse under $277 million in debt — most of it owed to the very company that just sold it. What happened wasn’t a surprise to those watching the ACMI market; it was the inevitable end of a model that once thrived on pandemic-era chaos and now struggles to survive in a world where demand has normalized and margins have vanished.

From Record Highs to Legal Protection

Just a year earlier, SmartLynx Airlines was riding high. In 2024, it operated more than 68,000 flights, carried over 10 million passengers, and maintained a fleet of 68 aircraft. It flew for major carriers like easyJet, Air Transat, and Turkish Airlines, filling gaps when airlines needed extra capacity. But behind the numbers, cracks were forming. Aircraft deliveries from Airbus were delayed. Fuel prices stayed stubbornly high. And as travel demand settled back to pre-pandemic levels, the surge in ACMI contracts dried up — leaving SmartLynx with parked planes and mounting bills.

The final blow came when Latvia’s tax authority demanded payment on overdue taxes. With no cash to cover it, SmartLynx Airlines Latvia filed for bankruptcy protection on October 28, 2025. The court gave the airline until February 28, 2026, to submit a recovery plan — a lifeline, not a rescue. "A corporate recovery plan is necessary so that we can implement changes within the company while ensuring business continuity," said Edvins Demeņus, CEO of SmartLynx Latvia. His tone was calm, but the reality was grim: eight of its eleven A320-200s were already grounded, and the lone A321 freighter was sitting idle.

The Split That Broke the Back

Here’s the twist: SmartLynx Airlines Latvia wasn’t sold because it was failing — it was sold just before it failed. In late October 2025, Avia Solutions Group transferred ownership to an internal management group and a Dutch private equity fund. The timing was suspiciously precise. By offloading the Latvian entity, Avia avoided inheriting its debt — but the debt didn’t disappear. It simply moved. According to ch-aviation, the $277 million obligation was still owed to Avia Solutions Group, effectively turning the buyer into a debtor to its own former owner.

"It’s a classic case of liability isolation," said one European aviation analyst, speaking anonymously. "Avia got out cleanly. SmartLynx Latvia got the planes, the employees, and the bills — but no breathing room."

Meanwhile, Avia Solutions Group — headquartered in Vilnius, Lithuania — was busy doing the opposite. CEO Jonas Janukenas announced a sweeping restructuring: consolidating its six European Air Operator Certificates (AOCs) into three brands, cutting underperforming operations, and shifting focus to Asia Pacific and Latin America, where demand remains more stable year-round. "We’re optimizing for sustainability, not just scale," Janukenas said. The company now operates 187 aircraft across 11 AOCs globally, with strong footholds in Brazil, Indonesia, and Thailand — markets less dependent on European seasonal peaks.

The ACMI Model Under Siege

SmartLynx’s collapse isn’t an isolated event. It’s a symptom of a broader industry crisis. The ACMI model — where airlines rent entire aircraft with crew, maintenance, and insurance — exploded during the pandemic. Airlines that couldn’t fly their own planes turned to ACMI providers to keep routes alive. But now, with carriers like Ryanair and easyJet bringing their fleets back online, the demand for leased aircraft has plummeted. Supply has outpaced demand. And with Airbus still struggling to deliver new A320s on schedule, many ACMI operators are stuck with aging planes they can’t replace.

"The golden age of ACMI was 2021 to 2023," said a former director at a major European lessor. "Now, it’s a bloodbath. Margins are down 40% from their peak. Some operators are flying planes just to cover parking fees."

SmartLynx Airlines Malta, still owned by Avia, continues to operate — nine A320s, three freighters, and two B737-8s. But even there, change is coming. The freighters are being retired. The B737s will be transferred to sister airline Ascend Airways. And SmartLynx Airlines Estonia and Malta are set to merge, though the new brand and retained AOC remain undisclosed.

What’s Next for SmartLynx and the Industry

By February 28, 2026, the Latvian court will decide whether SmartLynx’s recovery plan is viable. Will it shed its remaining A321 freighters? Will it sell off parked aircraft? Will it pivot entirely to charter flights for tour operators? The answers will determine whether the company survives as a shadow of its former self — or disappears entirely.

Avia Solutions Group, meanwhile, is betting big on its non-European operations. Its strategy now hinges on balancing seasonal European demand with year-round traffic in emerging markets. It’s a smarter, leaner model — but one that leaves behind workers, customers, and communities that relied on SmartLynx’s operations in Riga and beyond.

For passengers who booked flights through ACMI partners, the disruption has been minimal. Most airlines simply switched to other lessors. But for the 800+ employees of SmartLynx Latvia, the future is uncertain. Some may be absorbed by Avia’s remaining European operations. Others may find work with new ACMI startups — if they can find them.

The story of SmartLynx isn’t just about a failed airline. It’s about how quickly the aviation industry can turn from boom to bust — and who gets left holding the bag when the music stops.