Following the restructuring already announced for its German and Polish businesses, now it will undergo the process at home in Lithuania.
The Lithuanian leisure carrier Small Planet Airlines has today revealed further changes with the upcoming winter season – this time in its central business.
“Despite a successful and profitable operational performance, it was a vital step for the company to protect its business from the negative impact of the financial difficulties in Small Planet Airlines Sp. z o. o. (Poland) and Small Planet Airlines GmbH (Germany),” the Vilnius-based company explains in a statement.
The Polish and German companies filed for restructuring earlier this autumn after failing to manage their rapid growth and increasing cost burden.
Now, because of the proceedings in Germany and Poland, the Lithuanian entity will have to write off unpaid amounts for services rendered to its sister companies.
Small Planets says it expects the restructuring being embarked on at home “will help to decrease its excess infrastructure”.
The company also needs time to pay off the liabilities it has been exposed to due to the restructuring proceedings in Poland and Germany, as Small Planet Airlines in Lithuania had previously issued guarantees and joint liabilities to its subsidiaries’ suppliers.
Debts swamp profit
Small Planet Airlines insists that the restructuring process will have no effect on its flights from Lithuania and its bases abroad, and that on the basis of long-term agreements with tour operators it will continue its operations as planned and without a negative impact on passengers.
“There is a major difference between the restructuring in the Polish and German companies, and in Lithuania,” says Small Planet Airlines CEO Kristijonas Kaikaris.
“Small Planet Airlines in Poland and Germany were loss-making companies, whereas Small Planet Airlines Lithuania has continued to operate successfully this year – we expect our operational profit to reach €3.4 million by the end of 2018. However, the debts accumulated due to the situation in Germany and Poland will be greater than the profit.”
He adds: “For the restructuring to be successful in Germany and Poland, finding a new investor is vital, whereas the Lithuanian company can survive without it. However, we are leaving this option on the table and are having talks with potential investors since an additional financial injection would allow Small Planet Airlines Lithuania to go through the restructuring easier and faster. We believe restructuring will allow us to soften the potential negative impact for the Lithuanian company and continue its flight operations successfully into the future.”
For the upcoming winter season, the number of Lithuanian passengers transferred should reach 100,000, the airline says. The Lithuanian Small Planet Airlines fleet will consist of eight A320s, two of which will fly from Vilnius, one from Billund, two from Vietnam with new partner Bamboo Airways and two from Cambodia. The latter planes “will be dedicated for standby and used in cases of delays,” the company says.