VILNIUS - The current agreement to sell Lithuanian Airlines to Sweden's FlyMe Europe may fall through, as the owners of the former have expressed dissatisfaction with the terms offered. Arunas Griskenas, the airline's CEO, said the terms offered by FlyMe Europe did not meet LAL's expectations and obligations under the privatization agreement. "In spite of the financial interests of the privately owned Lithuanian Airlines, the airline has to meet its obligations to the state. We cannot ignore them," Griskenas said in a statement.
"Therefore, we do not rule out canceling the negotiation agreement and putting the negotiations on hold for an indefinite period of time, unless the Swedes agree to improve the terms of their offer and of the share acquisition procedure," he added.
LAL Investment Management, the sole owner of Lithuanian Airlines, has proposed managing the airline on its own. The company had earlier announced itself as only a financial investor.
FlyMe Europe previously announced its intention to buy a 33 percent stake in LAL and later increasing its interest to 100 percent over the next several years.
The agreement that entitles the Swedish airline to purchase a stake in LAL has been extended until May 15.
LAL, which is the country's biggest air carrier, ended 2005 in the red after posting losses of over 9 million litas (2.6 million euros) for 2004. It has not yet published its final results for 2005.
The airline hopes to return to profit by the end of this year. Together with its technical department, it expects to achieve a net profit of at least 8 million litas in 2008 and raise it to at least 11 million litas in 209.
On May 12 the company announced that its average passenger load factor rose by 9.5 percent year-on-year in the first four months of this year to 62.6 percent. The strongest growth in load factor was registered on flights to London, up 36 percent to 60.2 percent, and Amsterdam, up 30.5 percent to 61.6 percent.
"Ever since the privatization, we have taken efforts to normalize our financial flows and ensure more efficient operations. Our efforts have started to produce results," Griskenas was quoted as saying. He said that, as a result of reorganization, the number of flights declined by some 16.3 percent during the four months to 1,385, but the average number of passengers increased.
LAL Investiciju Valdymas is controlled by the Lithuanian electronic and engineering solutions company Fima and its partners, Garantas and ZIA Valda.
FlyMe is a Swedish discount airline that began flying routes throughout Sweden in March 2004. In March 2006 it began regular flights to 11 European cities.