VILNIUS - Lithuania's privatization commission on Jan. 6 approved a new plan for selling the country's flagship carrier, one that is mindful of the factors that led to a failed sale attempt in 2003.
The starting price for 100 percent of Lietuvos Avialinijos (Lithuanian Airlines, or LAL) was set at 9.3 million litas (2.7 million euros), down considerably from the 12.3 million the government had hoped for two years ago when the only bidder, Scandinavia's SAS, suddenly dropped out of the process.
Antanas Malikenas, director at the State Property Fund, the government's privatization arm, said the price was drawn up by in-house appraisers who factored in major corporate changes in 2004 at the carrier.
"Compared with the condition of LAL at the time of the first privatization tender, the carrier has already split off almost all its subsidiaries, including the profitable ones," he told the Baltic News Service.
Pursuant to sale conditions, potential buyers must meet European and trans-Atlantic airline criteria, have annual sales of at least 15 million litas per year in 2001 - 2003 and prove their financial resources to meet all commitments.
The buyer shall also retain at least 70 percent of LAL's employees for one year after the deal.
Malikenas said that the purchase/sale agreement for 100 percent in the carrier should be concluded by the end of June, and that potential buyers' applications would be accepted on March 23-24. The bid review process will begin on the morning of March 24.
The previous tender for the national carrier provided for a two-stage sale, with the first stake of 34 percent going to the highest bidder and then another 66 percent several months later to the same investor.
The authorities then planned to privatize the company in two stages, first by selling a 34 percent stake and then by placing a new share issue amounting to 66 percent of capital that would have been subscribed by the investor.
SAS, which owns 47 percent of airBaltic, initially placed a bid but then backed out. Company officials refused to explain the reasons behind the decision, though independent analysts at the time speculated that privatization authorities had done themselves a disservice by placing too many conditions on the sale and thereby restricting the pool of potential bidders.
As a result, Lithuanian Airlines has been struggling to compete in an increasingly competitive market, particularly after the appearance of discount fliers such as Ryanair and easyJet on the Baltic market.
LAL reported operating revenues of 95.4 million litas for the first half of 2003, a rise of 2.7 percent in year-on-year terms. The carrier trimmed its interim losses by 5.4 percent to 3.5 million litas.
