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Finnair To Buy Stake In Lithuanian?

Mon Dec 23, 2002 6:44 pm

From Helsingin Sanomat,

Finnair considers acquisition of Lithuanian Airlines

Finland's national carrier Finnair plans to explore whether the state-owned Lithuanian Airlines (LAL) might be a suitable acquisition target. According to the Finnair VP, Corporate Communications Christer Haglund, it would be unwise to draw any conclusions beyond a general interest in LAL, since privatisation of the airline would only begin sometime next year.
"The sale of an airline is a lengthy process. Hence it would be premature to say anything more on the matter as yet", Haglund commented on Thursday.

Finnair has worked together in a code-sharing capacity with the Lithuanian company since 1999. LAL is not a member of the OneWorld alliance, but Finnair has similar bilateral cooperative agreements with a number of other airlines.
At the present time, Finnair does not have any minority holdings in other airlines. Aero, which flies to and from Estonia, is a Finnair subsidiary (see linked article). Finnair regards the Baltic States as a part of its own home market. The establishment of Aero in 2001 was characterised as part of Finnair's commitment to raising its Baltic profile.
According to the Reuters news agency, the joint-Nordic SAS (Scandinavian Air Services) is not currently interested in buying a piece of Lithuanian Airlines.

The Lithuanian government reported on Wednesday that it plans initially to put up 34% of LAL for sale by public tender in January, with a deal expected to be reached by late summer. Within the space of two years, the buyer must then raise its stake to 66% by buying new shares. The price for the entire 66% stake would be a minimum of 12.3 million litas, or slightly less than EUR 3.6 million.
For the Lithuanians, the moves are seen as a means of ensuring that LAL is able to preserve its position as the Baltic States join the EU in 2004. The state would retain a 34% holding in the enterprise.
LAL has a fleet of seven aircraft, including four Boeing 737s. Last year the company posted a loss of 33.4 million litas, but the expectation in 2002 is for a profit of around 20 million litas, or just under EUR 6 million.