FlyLAL sold to Swiss holding company

  • 2009-01-14
  • By TBT staff and wire reports

BOUGHT OUT: The flagship Lithuanian carrier was forced to sell 100 percent of its shares to a Swiss company after the government refused a nationalization deal.

VILNIUS - The shareholders of Lithuania's flagship airline, FlyLAL 's Lithuanian Airlines, have signed an agreement to sell 100 percent of the company to SCH Swiss Capital Holding after announcing financial difficulties at the end of 2008.

The Baltic News Service reported that shareholders who privatized the company for 25.6 million litas (7.42 million euros) in 2005 would now be forced to settle for a 2.5 million litas payment for their investment.
"We considered different scenarios for flyLAL to continue operations and searched for potential investors to support the business plan prepared for the future. The negotiations with the Swiss investment fund started at the end of last year," FlyLAL CEO Vytautas Kaikaris said in a press release.
"The investors conducted a thorough analysis of the situation in the aviation market and business prospects of flyLAL 's Lithuanian Airlines. We can assure our passengers and partners that flyLAL continues its operations as usual," he said.

SCH Swiss Capital Holding is expected to close the deal by Jan. 23. FlyLAL intends to cooperate with Vilnius Airport, to which it owes about 20 million litas, based on a short-term agreement by that date.
The Swiss investment fund is taking FlyLAL over as a strategic investor and the carrier will continue its development as a European regional air company, a FlyLAL statement quoted SCH Swiss Capital Holdings chairman and CEO Jan-Erik Jansson as saying.
A plan for the company's reorganization and specific future activities would be worked out during the next several weeks, he added.

In line with the agreement, SCH Swiss Capital Holding will purchase all FlyLAL shares from four Lithuanian companies 's including 40.73 percent from ZIA Valda, 27.15 percent from Indeco: Investment and Development, 22.63 percent from Sanitex and 9.49 percent from VA REALS.
The Swiss company's investments into the aviation business, as published on its Web site, include the aircraft leasing company Alpina Aircraft Leasing and the ground services provider Alpina Air Maintenance.
SCH Swiss Capital Holdings, which introduces itself as an industrial holding, was established in the Bahamas in 1977. In 2003 the headquarters of the company were moved to the U.K. and in 2008 to Switzerland.

TAKING OFF
FlyLAL, which operates in Vilnius, Riga, Tallinn and Palanga, reported a 61 percent increase in total passenger numbers to 874,000 for 2008.
The airline performed 4,759 regular flights and 1,130 charter flights during the year.
The average load factor for all flights rose to 71 percent last year, up from 67 percent in 2007. The load factor for regular flights alone was also up 63 percent from 59 percent.
FlyLAL said it was the number one airline at Vilnius International Airport last year, with a 35 percent share of the airport's total passenger traffic.

LOSSES
Despite record passenger numbers, FlyLAL reported losses of around 100 million litas for 2008 and approached the Lithuanian government with an offer to buy the controlling share of the company for a token 1 litas.
The government, however, denied the proposal because it identified that all assets had been moved out of the company and all debts moved in from other parts of the FlyLAL group, which include a pilot school and ground services.

"All assets have been moved to other companies and they offer to the state a very strategically important company but together with such huge financial losses. It is disgraceful, to say the least," Transport Minister Eligijus Masiulis said.
The government was offered 51 percent of the company for the symbolic price of 1 litas and asked for state guarantees for a 30 million litas loan.