Avia Solutions Group's outlook has been downgraded to negative from stable by Fitch Ratings.
The outlook revision reflects the “execution risk” surrounding the company's profitability recovery after a “challenging 2025", as well as a “fairly weak” headroom against fixed financial obligations.
The group sold its Smartlynx subsidiary to its management and a Dutch fund in October last year to consolidate its European air operator's certificates (AOCs). The group's Smartlynx Airlines Estonia and Smartlynx Airlines Malta brands will remain within the holding, but will be merged and rebranded under a single entity. The group aims to operate around 27-30 aircraft per AOC.
Avia said it recognised a €139 million provision in the fourth quarter of 2025 related to the group's credit exposure to Smartlynx.
“The business was sold at zero equity value, with lease debt of about €250 million remaining in the business,” said Fitch.
The division was sold largely due to its weakening operational and financial performance post-COVID, with MRO constraints on the narrowbody side causing disruptions.
While Fitch recognised that the sale reduced Avia's exposure to “an underperforming platform”, Avia now faces litigation and reputational risks as a result of Smartlynx's subsequent bankruptcy post-divestment.
“Avia has not reported any material adverse impact so far on its relationships with key suppliers or lessors, but legal or commercial consequences related to the transaction could still arise,” said Fitch.
The revised outlook also reflects the group's “complex structure” and uncertainty surrounding potential liquidity or profitability impact from the ongoing Middle East conflict.
Fitch affirmed the company's credit rating at BB.