Roundup: Lithuanian airline Air Lituanica grounded due to financial problems

Air Lituanica, the Lithuanian airline founded here, ceased its operations on Friday due to financial difficulties.

"Airline management, acting responsibly and seeing risk not to fulfill commitments for the passengers, is stopping all regular flights and will make efforts so that travelers are affected as less as possible," the company said in a statement.

Air Lituanica cancelled all its flights as from Saturday. The company still operated flights to and from Amsterdam, Paris and Tallinn on Friday.

A solution for some passengers was found, the company noted.

"Air Lituanica agreed with AirBaltic that all passengers with Air Lituanica tickets for cancelled flights between May 22 and May 29 will be rebooked on AirBaltic flights to their origin destinations," it said in a statement.

AirBaltic is a Latvian airline operating in Latvia, Lithuania and Estonia.

"We will rescue the stranded passengers in the first days following the suspension of (Air Lituanica) flights and will offer special rescue fares for customers booked for flights later in the summer," Martin Gauss, AirBaltic's chief executive officer, was quoted as saying in a separate statement.

"Furthermore, today's event in Vilnius is a strong signal that the three Baltic countries should take a common approach to their aviation, to best support travellers, new economic activity, and new jobs," he added.

Air Lituanica stressed all passengers have guaranteed flights with the Latvian company for the next eight days.

However, it has yet to be determined who will carry passengers travelling after May 29. Air Lituanica promised to provide a solution to this by next Monday at the latest.

"If there will be no agreement (for rebooking with AirBaltic) all passengers are entitled for full refunds and guarantees by European law and the Montreal convention," Air Lituanica said.

Remigijus Simasius, mayor of Vilnius, said he learned Air Lituanica was close to bankruptcy one month ago when he came into office after mayoral elections earlier this spring.

"The company's financial liabilities exceeded its assets by more than three times, it is the main reason why no private investors agreed to get involved in joint activities," Simasius told reporters on Friday.

However, Rimantas Sinkevicius, Lithuania's transport minister, said the collapsing company could have been saved by an investor.

"We hoped that the company would manage to find investors, to cooperate with other Baltic countries and develop these activities," Sinkevicius was quoted as saying by BNS news agency.

"Unfortunately, the investor has not been found and the markets of the three Baltic countries have not been integrated," he added.

According to Simasius, the Lithuanian government refused to financially support the airline. Vilnius municipality, the main Air Lituanica stockholder, suffered about 10 million euro (about 11 million U.S. dollars) yearly loss due to the company's situation, the mayor said.

Simasius did not dismiss the possibility of an official investigation into the airline activities.

"The main thing is rather the beginning of the company, not the end; this is where we should look for the reasons why the company is dead today," he noted.

Air Lituanica was established in 2012 at the initiative of the then-Vilnius mayor Arturas Zuokas. It is the second Lithuanian air carrier to cease operations. Defunct privately-owned flyLAL-Lithuanian Airlines grounded all flights early in 2009 also due to financial troubles. Endit