FlyLAL declares bankruptcy

Jan 23, 2009
TBT Staff

VILNIUS - FlyLAL, the Lithuanian flagship airline, has been forced to declare bankruptcy.

The ailing airline has struggled with debt for months. After the government refused to nationalize the company, it came to an agreement with a Swiss holdings company to buy the airline. That deal also fell through when the company failed to deliver a promised loan.

"Yes it has been very tough - all this week we have been trying to help our customers. We couldn't help them financially, but we have passed on information to other airlines and we have asked them to accept their tickets," FlyLAL CEO Vytautas Kaikaris told The Baltic Times.

KLM will offer a 40 euro discount for FlyLAL customers to Amsterdam, and they will also accept existing FlyLAL tickets.

Kaikaris said that the airline would be shut down, but other parts of the company -- including FlyLAL Techniks and Grounds Services -- would continue with regular operations.

"The other parts of the company will go on and lead a normal business life - they will look for normal paying customers, maybe from Russia, which we were using before and not paying for. For FlyLAL Techniks, it can only be good now," he said.

Kaikaris said SAS will step in to fill the gap in the market, offering flights from Vilnius using Estonian Air.

"SAS are now in a strong bargaining position to get the discounts from Vilnius Airport, which we could never get. Its  like that how the foreign companies get it, but the local ones do not," the FlyLAL CEO said.

In December the shareholders of FlyLAL offered a 51 percent stake in the company to the state for a symbolic price of 1 litas and asked for state guarantees for a 30 million litas (8.7 million euro) loan. However, the Transport Ministry refused to aid the carrier.

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