Lithuania refuses nationalization offer

2008-12-23
TBT Staff in cooperation with BNS

VILNIUS - The Lithuanian government has refused a proposal put forward by flyLAL, the country's flagship airline, to nationalize the company by accepting a 51 percent stake for the symbolic sum of 1 litas.

The group of businesses that put the proposal forward had also asked for a state-guaranteed loan of 30 million to 35 million litas (8.78-10 million euros) that would be used to reorganize the company.

"The situation has become critical due to a shortage of funds," Gediminas Ziemelis, an indirect shareholder of FlyLAL, said at a news conference.

Transport Minister Eligijus Masiulis said at a news conference, however, that he would not assume responsibility for the troubles of the company.

FlyLAL's shareholders have also proposed a package of measures to help put the financially-troubled airline back on track.

The shareholders said that FlyLAL's debts not backed by assets were running at 89 million litas (EUR 25.8 mln), including around 47.5 million litas owed by the airline to its owners.

It is estimated that FlyLAL's bankruptcy would slice a billion litas off the country's gross domestic product annually and would cost the state around 30 million litas in lost tax revenue.