Lithuanian Airlines to sell subsidiaries, hires agent

  • 2004-01-08
  • From wire reports
VILNIUS - Lithuania's state-owned airline Lietuvos Avialinijos (Lithuanian Airlines, or LAL) has announced the sale of its Kaunas-based subsidiary, Lietuva (Lithuania) Airline, and that it intended to promote its corporate image by hiring the advertising agency Adell Saatchi & Saatchi to run marketing campaigns.

LAL representatives said they began selling dossiers on the privatization of 100 percent stake in the regional carrier on Jan. 5. Dossiers will be on sale until Jan. 19, while offers from buyers who meet prequalifying criteria will be accepted by Jan. 23.

The initial price for Lietuva, which has debts in excess of 20 million litas (5.8 million euros), has been pegged at 715,000 litas.
The Scandinavian air carrier SAS, which withdrew from the tender on privatization of a 34 percent stake in LAL last year, has already confirmed its intentions to participate in the Lietuva tender.
In September 2003 SAS purchased a 49 percent stake in Estonian Air, and it also owns 47 percent in Latvia's airBaltic.
Lietuva offers regular routes to Hamburg, Oslo, Bilund and Malme from Kaunas and Palanga airports. The passenger market of the air company covers the regions of Kaunas and Klaipeda.
LAL has also ruled to divest holdings in two other affiliates, a 50.8 percent in Aero-Chef-LAL, the food supplier for LAL flights, and a 52 percent in the travel agency Aviaturas ir Partneriai.
Shareholders of the two affiliates may use the right of first purchase to acquire the holdings.
By signing a contract with Adell Saatchi & Saatchi, LAL will try to boost revenues and profits. The company reported losses of 3.7 million litas in the first half of 2003.
"This is a contract of indeterminate duration. It will be automatically renewed at the end of each year if the parties wish to do so," said Audrius Savickas, director of Adell Saatchi & Saatchi.
He said the value of the contract had not been set, adding that the advertising agency will operate under a business plan that is being prepared by LAL.
The air carrier is expected to become one of Adell Saatchi & Saatchi's biggest customers.
Adell Saatchi & Saatchi posted revenues of 4.2 million litas for the year 2002. Savickas said they did not anticipate any major growth in revenues this year.
The ad agency's major customers include Lietuvos Telekomas, Lithuania's largest telecommunications company, and Kalnapilis-Tauras Group, one of the country's leading beer producers.
Savickas said the company's major project in 2003 was the pension reform promotion campaign carried out for the country's social security program and the Labor Ministry. The Lithuanian government allotted 500,000 litas to finance the campaign, which was aimed at raising public awareness of the new cumulative pension system.