Market conditions prompt reductions and a delay to the proposed privatisation now seems inevitable (286 words)

Published: 10/22/2001

In response to the current market conditions, Lithuanian Airlines (LAL) is making cuts to flights and to personnel. Stasys Jarmalavicius, Managing Director of the national air carrier, says that, from the beginning of November, the company will reduce flights from 10 flights a week to Amsterdam (for transit to US flights) to seven. It will also lay off 10.5% of its 950 employees. The company does not currently plan any further changes to its winter schedule, but Jarmalavisius admits that the number of redundancies could increase. The lay-offs are primarily related to the decision to stop some non-core activities and reflect the 6.8% fall in the number of tickets sold in the first 10 days of October. LAL has been operating at a loss since the start of this year and has already dismissed 128 employees. In the first half of 2001, the company lost 8.23 m litas ($2.057 m). The State Property Fund of Lithuania, which had scheduled the airline for sale, is currently looking for an advisor to advise on a suitable timetable, but it now seems probable that LAL will go the way of neighbouring Estonian Air, where privatisation has been suspended given the current climate. Lithuania has also announced that it is tightening its security regime for airlines and airports, with an expanded no-fly zone over Lithuania's Ignalina nuclear plant. Immediately after 11th September 2001, Lithuania extended a five-kilometre no-fly zone to 10 kilometres. Lithuania also requested Belarus to set up a no-fly zone in an area adjacent to Ignalina, since the plant is just three kilometres from the border between the two countries.

Article ID: 2847