It was founded in June 1992, after the US-based private company Baltic International USA (BIUSA) failed to buy a part of the state-owned Latvian national airline Latavio.

[citation needed] The first Boeing 737-500 joined the fleet in 2003, and on 1 June 2004, Air Baltic launched services from the Lithuanian capital, Vilnius, initially to five destinations.

[7] The majority of the routes commenced from Tallinn were cancelled shortly after opening, leading to complaints from the Estonian Consumer Protection Department.

[8] In January 2009, SAS sold its entire stake in the company (47.2% of the airline) to Baltijas aviācijas sistēmas Ltd (BAS) for 14 million lats.

[9] In August 2011, airBaltic requested more than 60 million lats in capital as its losses continued to mount,[10] and suffered speculation about its financial position[11][12][13][14] and political scandals throughout 2011.

[15][16] In mid September 2011, the company announced plans to lay off around half its employees and cancel around 700 flights a month to avoid possible grounding.

The government of Latvia and BAS agreed to invest around 100 million lats in the airline's share capital in proportion to their stakes in airBaltic.

[25] The cost-cutting program, initiated by airBaltic which aimed to return to profitability in 2014, scored better than planned results in 2012, by narrowing its losses to €27.2 million, from €121.5 in 2011.

[26][27] The state's shareholding had been 99.8% since 30 November 2011, following the collapse of a bank linked with a finance package negotiated for the airline,[28][29] but on 6 November 2015, it was reported that the Latvian Cabinet of Ministers had approved plans to sell 20% of airBaltic to German investor Ralf Dieter Montag-Girmes for €52 million and agreed to invest a further €80 million in the airline.

The total of €132 million of fresh capital for the carrier is intended to spur its Horizon 2021 business plan and fleet modernisation.

[33] On 26 September 2017, airBaltic announced it would buy at least 14 additional CSeries aircraft from Bombardier before the end of 2018; it planned to switch to an all-CSeries fleet by the early 2020s.

airBaltic temporarily suspended operations on 17 March 2020 due to the coronavirus pandemic,[37] and flights only restarted on a limited basis from 18 May 2020.

[43][44] Then, in 2023, airBaltic forged a partnership with Starlink to offer unrestricted complimentary in-flight Wi-Fi in their routes, marking a pioneering move in Europe's aviation industry.

[47] In January 2025, airBaltic announced that it was facing disruptions due to Pratt & Whitney engine maintenance delays on its A220 fleet.

Despite these challenges and capacity constraints due to the wet-leasing of almost half of its fleet to the Lufthansa Group, airBaltic still maintains over 70 destinations.

The second generation livery also had a lime green wingtip and vertical stabiliser; however, the logo was changed to airBaltic.com, and the word airBaltic was painted on the engines, which were in their original metallic colour.

In December 2019, the rear fuselage below the vertical stabiliser was also painted in lime green, with the tail cone remained white.

In order to represent the three Baltic states, four of the A220s have been painted in a series of national flag liveries - one each for Estonia and Lithuania, two for Latvia.

This striking livery portrays an artistic depiction of a girl soaring through the clouds with long, flowing hair crowned by a traditional wreath and proudly featuring the Latvian flag.

The design also incorporates several other elements that are inspired by the rich heritage and nature of the Baltic region – a ladybug, a swallow, and a stork.