flyLAL ceases operations
19-Jan-2009 |
Swiss Investment Fund SCH Swiss Capital Holdings AG did not fulfill it’s obligations under the agreement on the sale of 100% of flyLAL - Lithuanian Airlines shares. flyLAL - Lithuanian Airlines can not secure the continuity of it’s operations and satisfy the demands of it’s creditors and therefore decided to cease operations from 17-Jan-09 and not further increase the company’s losses and worsen the situation of airline’s creditors.
Signing the agreement on the sales of shares of flyLAL - Lithuanian Airlines, Swiss investment fund SCH Swiss Capital Holding AG confirmed it‘s intention to invest into Lithuanian airline however breached the contractual obligations by not transferring the agreed amount of funds in due time.
Vytautas Kaikaris, CEO of flyLAL - Lithuanian Airlines commented, “We decided that ceasing operations of flyLAL – Lithuanian Airlines is the only possible decision in the current circumstances. This decision is triggered by intention not to increase damages and worsen conditions of the airline’s creditors.”
flyLAL - Lithuanian Airlines AB initiated the procedure of contract termination on the sales of shares with SCH Swiss Capital Holding AG.
The last flight operated by flyLAL - Lithuanian Airlines departed from Amsterdam on 16-Jan-09 19:30 local time.
Unfair market conditions, record-high oil prices and low demand for winter season flights were the main reasons for airline’s business downturn. Another major factor was the current fleet, which did not correspond to the new market conditions – the load factor did not reach the targets, therefore flight operations only increased airline’s loss.
flyLAL - Lithuanian Airlines AB has sued Latvian airline “airBaltic” and Riga International Airport with the 200 M LTL claim for unfair competition. The court made a decision to arrest the assets of the mentioned companies. The financial situation of flyLAL – Lithuanian Airlines would change substantially if the claim is satisfied.
Vytautas Kaikaris also commented on the future outlook of the airline and said “Being the citizens of the Republic of Lithuania we are sure that only national carrier can secure the interests of the state itself. Therefore flyLAL - Lithuanian Airlines is open for further proposals, which can secure further direct flights from Vilnius to various destinations”.
flyLAL - Lithuanian Airlines will file for bankruptcy if no proposals for future airline development are received in the nearest days.
There are 360 employees currently working at flyLAL - Lithuanian Airlines. The official downtime will be announced for most of the employees after flyLAL – Lithuanian Airlines operations are suspended.
Vytautas Kaikaris on behalf of flyLAL - Lthuanian Airlines shareholders said, “We sincerely regret that the current situation has led to this painful decision and no other solution was found.”
(c) Centre for Asia Pacific Aviation. Date posted: 19-Jan-09
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flyLAL ceases operations 
