Swiss firm buys troubled Lithuanian airline flyLAL

flyLAL, the former state carrier of Lithuania, has been sold to Swiss Capital Holdings, the group based in Zurich, Switzerland. 

In a statement, flyLAL, whih has been seeking a buyer for many months, said: “The contract for the acquisition of 100% of the shares of flyLAL was signed on January 9, 2008. The contract will come into force on January 23, 2009.” 

The company’s statement did not give details of the sum involved or the terms of the sale contract.  

However, the Lithuanian news portal Delfi quoted sources as having told it that flyLAL was sold to the Zurich-based firm for $1 million. Apart from this, the portal said, 1 million euros would be paid by Swiss Capital Holdings to Vilnius International Airport, to which flyLAL is in debt.  

flyLAL, also known as Lithuanian Airlines and LAL, is based in Vilnius, the capital of Lithuania. It operates domestic and international scheduled services and  its main base is Vilnius International Airport. 

In the statement, flyLAL said that its goal was to maintain the carrier’s status as a regional airline.

flyLAL is the market leader in Lithuania, the Baltic state with a population of 3.4 million. The airline has been in the red despite its passenger numbers having risen by 52% in 2008.  

The government of Lithuania has blamed tough competition from airBaltic, the national airline of neighbouring Latvia, as well as the effects of high fuel prices and the global financial slump for the financial crisis in flyLAL. (Ryanair, based in Dublin, Ireland, and also the biggest low-cost carrier in Europe, is also a competitor for flyLAL in Latvia and Lithuania). 

Eligijus Masiulis, Transport Minister of Lithuania, told reporters after the sale of flyLAL was sealed: “I hope that the sale will help keep flyLAL in the air and that new investments will provide an impetus for future operations.” 

flyLAL, which was privatised in 2005, posted a loss of 8.1 million litai (2.35 million euros) in 2007 on revenues of 262.9 million litai.  

The debts of flyLAL at present amount to around 89 million litai.  

As a part of its bid to cope with the financial problems, flyLAL had, at the beginning of 2009, suspended direct flights to France, Italy and Turkey.  

In December 2008, the airline had sought aid from the government of Lithuania, proposing to sell the government a 51% stake for a symbolic 1 litas, but Lithuania’s Transport Ministry had rejected the proposal.