VILNIUS - The privatization commission has approved a draft purchase agreement for Lietuvos Avialinijos (Lithuanian Airlines), the state-owned domestic carrier that was sold last month to a group of local investors. The deal now requires the government's approval to be finalized.
A three-company consortium consisting of Fima, Aurela and Tez Tour agreed to pay some 20 million litas (5.8 million euros) for the loss-making carrier and invest some 28 million litas in the company over the next couple years.
Although it failed to attract a major international carrier, the sell-off was largely considered a success since the final price was two times higher than the starting one. Lithuanian Airlines recorded a 9 million lita loss for 2004, and the airlines is slowly losing market share to rivals such as Latvia's airBaltic, which recently began offering flights out of Vilnius.
The relatively unknown Fima specializes in automated traffic control systems for Lithuanian companies, particularly Lietuovos Gelezinkeliai (Lithu-anian Railways). Last year the company saw its revenues surge 58 percent to some 90 million litas.
Fima is teaming up with Aurela, a local carrier, and Tez Tour, a major tour operator with Turkish capital, to turn around the faltering Lithuanian airliner.
Aurela operates a fleet of Boeing 737-300, YAK-42D and VIP-class eight-seat Hawker HS125-700 and offers charter flights to destinations in Europe, Asia and Africa. Tez Tour is an international tour agency offering travel packages to Turkey, Spain and Bulgaria.
This week it was announced that Fima has chosen two firms 's investment company ZIA Valda and construction company Garantas 's as partners for the privatization. In return for their cooperation, each of the firms will control 15 percent of LAL Investiciju Valdymas, the company established to buy the 100 percent stake in Lithuanian Airlines.
Vaidas Barakauskas, CEO of Fima, said that the consortium would target the discount flight market, though he stopped short of saying that investors would turn Lithuanian Airlines into a budget airline. He said they wanted to increase the airline's overall effectiveness by straightening out its finances, selling loss-making operations and offering new services.
