VILNIUS - Less than two weeks after the sale of Lietuvos Avialinijos (Lithuanian Airlines) was announced, two potential investors have reportedly obtained tender documents from the property fund, the first step in participating in the privatization.
On April 13 Novaturas, the largest tour operator in the Baltics, announced it intended to bid for Lithuanian Airlines (LAL), while Baltic News Service reported that Scandinavian Airlines (SAS) said it also planned to bid for the 100 percent stake.
It was unclear what chances Novaturas, which has no experience in managing an airline, would have in the tender.
Kestutis Liutkus, Novaturas' marketing director for the Baltics, said that the company's shareholders had decided to acquire a set of public tender documents and appointed a working group to prepare an application to the tender commission. He said the company intended to hire consultants from Western Europe.
"The principal reason behind our decision is to preserve the originality and traditions of the national air carrier. Our company operates in all three Baltic countries and has plans to expand LAL's operations in the Estonian and Latvian markets," said Liutkus.
Importantly, Novaturas is now LAL's biggest customer. If its bid is successful, the agency wants to assume a leading position in the Baltic air travel market. Novaturas, which last year boosted sales 42 percent to 74 million litas (21.5 million euros), is currently exploring the possibility of opening new routes from Riga and Tallinn.
A SAS bid, meanwhile, would constitute a logical continuation of the Scandinavian carrier's domination of the local air travel market. It owns 49 percent of airBaltic, Latvia's national airline, and has an equal equity interest in Estonian Air. The company has repeatedly expressed interest in boosting its stakes in these two companies, and just last week Vice President Gunnar Reitan told the Aripaev business daily that it would "seriously consider" purchasing the state's holding in Estonian Air.
SAS was close to purchasing a 34 percent stake in LAL in 2003, but it eventually pulled out of the bidding. At the time analysts speculated that Lithuania's State Property Fund had placed a shoddy deal on the table and SAS had chosen to walk out.
This time, however, the state is putting its entire stake on the block.
The government hopes to receive at least 9.3 million litas (2.7 million euros) from the sale. Bidding ends May 2.
Though LAL's passenger turnover is undergoing a boom, the company continues to pile up losses and is facing stiffer competition. Last year airBaltic began making flights out of Vilnius International Airport, and discount carrier Ryanair is waiting in the wings for an offer from Lithuanian officials.
LAL posted a loss of 3.5 million litas on sales of 95.4 million litas in the first half of 2004. Full-year financials are to be announced at the end of the month.
The air carrier handled 100,700 passengers in the first quarter of 2005, a rise of 58.8 percent year-on-year. The national airline operated a total of 1,233 flights in the first quarter, up by 34.3 percent year-on-year.
"This year we expect passenger numbers to reach more than half a million. We intend to start selling air tickets online this summer," said Dalijus Zebrauskas, LAL's sales and marketing director.
Animal-rights activists said they are outraged by the image of a "bloody bull fight" in LAL's advertisement for flights to Spain. Chairman of the Lithuanian Animal Care Association, Benas Noreikis, dispatched a letter to general manager Vidas Zvinys expressing his sorrow over the fact that the company is propagating "barbaric, cruel treatment of animals." According to Noreikis, the LAL ad pictures a red cloth in the hands of a matador and essentially "invites our public to fly the national carrier's planes to Barcelona and enjoy this bloody show."
Protectors of animals' rights are asking LAL to discontinue the advertisement and to "stop ruining the international image of the republic and abide by the principles of ethics."
Giedrius Sniukas, who is in charge of the LAL's press relations, told the Baltic News Service that "the company would consider the letter." "We do not agree with the statements laid down in Noreikis' letter, as we are advertising for flights to Barcelona and nothing else," he said.
