VILNIUS - Owners of Lithuanian Airlines, the country's largest passenger carrier, announced that they were taking steps to sell a stake in the company to Swedish discount airline FlyMe Europe. The company's audit procedures are set for completion this week, after which the final draft agreement will be sealed, the Baltic News Service reported.
FlyMe Europe has already confirmed talks with LAL owners over scheduling and other terms for the purchase of a controlling stake in LAL.
"The meetings with FlyMe Europe representatives have been scheduled for the middle of this week. Perhaps there will be some news afterwards," said LAL board member Vaidas Barakauskas. He declined to provide details.
In February it was announced that FlyMe would initially buy 33 percent of LAL and gradually increase its ownership to 100 percent by 2009.
Lithuanian Airlines is 100 percent owned by LAL Investment Management, a company controlled by the information technology firm Fima and its partners. It bought the stake from the government last year, but since then has stumbled upon financial problems, most notably outstanding debt to Vilnius International Airport that had been accrued over previous years.
Fima and other investors have no experience in running an airline corporation and has been searching for a partner within the industry to rescue LAL. The carrier's market share is slowly declining in the face of aggressive competition, particularly from Latvia's airBaltic, which now accounts for 25 percent of passenger turnover in Vilnius.
In February, FlyMe Europe agreed to buy a stake in LAL, confirming plans to increase its holding in the Lithuanian air carrier to 100 percent by late February 2009.
The state carrier first intended to launch a directed share issue to FlyMe Europe, which would then grab 33 percent of the stock capital and votes.