VILNIUS - Discussions about privatizing Lithuanian Airlines, the state's flagship carrier, have been going on for months. Words were finally put into writing on March 9 when the government approved a privatization program, setting the initial price at 9.3 million litas (2.7 million euros).
The plan stipulates that potential buyers - who will take 100 percent of the company's shares - will have to invest at least 10 million litas in stock capital over a period of two years, and retain at least 80 percent of current employees for a year, the government's press office said.
"Compared with the earlier draft program, timeframes have changed and the requirement for retaining jobs has increased (from 70 percent)," said Povilas Milasauskas, general manager of the State Property Fund.
"The requirement for the company to carry on its functions as a national carrier for two years after a sale agreement has been signed, as provided for in air transportation agreements, has been removed," he said.
In late February, the government had temporarily suspended consideration of the program.
Economy Minister Viktor Uspaskich then proposed lifting the minimum revenue threshold for potential buyers. He argued that the annual revenue requirement of 15 million litas was too low, given that LAL's credit obligations alone amounted to around 70 million litas.
In the end, however, the approved program's revenue requirement stopped at 15 million litas.
Public tender documents will be available for purchase from Apr. 4 to May 2. Bids will be accepted on May 4 and 5.
The government's attempts to sell LAL go back for years, and until now, have resulted in failure. The state missed its closest chance in spring 2003, when a 34 percent stake fell through after Scandinavian carrier SAS, the only potential buyer, decided to pull out.
In early January, the initial price of 100 percent in Lithuanian Airlines was valued at 9.3 million litas, after the Privatization Commission approved the program. The price was worked out by State Property Fund appraisers.
Authorities then planned to privatize the company in two stages, first by selling 34 percent and then by making a second share issue.
The flagship airline is to announce its 2004 performance results in April. It posted a loss of 3.5 million litas for the first half of 2004 with revenues of 95.4 million litas. The company has an authorized capital of 9.606 million litas, and is 100 percent state-owned.
