Just days after SCH Swiss Capital Holdings took over Lithuanian airline, flyLAL airline managers have decided to halt operations.
In a press release on the company's website, flyLAL said SCH "did not fulfil its obligations under the agreement on the sale of 100% of flyLAL shares. flyLAL can not secure the continuity of its operations and satisfy the demands of its creditors and therefore decided to cease operations from January 17th 2009."
Vytautas Kaikaris, CEO of flyLAL said, "Signing the agreement on the sales of shares of flyLAL-Lithuanian Airlines, Swiss investment fund SCH Swiss Capital Holding AG confirmed its intention to invest into Lithuanian Airlines. However, it breached the contractual obligations by not transferring the agreed amount of funds in due time.
"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."
The last flight operated by flyLAL-Lithuanian Airlines departed from Amsterdam on 16 January 2009.
The company, which has debts of Lt90 million ($35 million) also blamed what it called unfair market conditions, record-high oil prices and low demand for winter season flights which brought a downturn in demand. The company also said it was unable to achieve profitable load factors on its fleet of Boeing 737-300s/500s, 757s and Saab 2000s.
"Being the citizens of the Republic of Lithuania we are sure that only national carrier can secure the interests of the state itself," added Kaikaris. "Therefore flyLAL-Lithuanian Airlines is open for further proposals, which can secure further direct flights from Vilnius to various destinations."
The company says it will file for bankruptcy if no proposals for future airline development are received in the coming days. The halt in operations affects more than 29,000 passengers and the company's 360 staff.
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