Lithuanian leisure carrier Small Planet Airlines UAB has filed for a restructuring process under the Lithuanian law.
The carrier said despite 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 (Poland) and Small Planet Airlines GMBH (Germany)”.
The Polish and German companies both filed for a restructuring earlier this autumn, after failing to manage rapid growth and increasing costs.
Because of restructuring proceedings in Germany and Poland, the Lithuanian entity will have to write-off unpaid amounts for the services, rendered to its sister companies, and expects restructuring will help to decrease its excess infrastructure.
The company said it needs time to pay off the liabilities it has been exposed to due to restructuring proceeding in Poland and Germany: Small Planet Airlines UAB has previously issued guarantees and joint liabilities to the suppliers of Small Planet Airlines Sp and Small Planet Airlines GmbH, enabling suppliers to request from the Lithuanian company to repay the debts of the Polish and German companies.
The restructuring process will have no effect on Small Planet Airlines UAB flights from Lithuania and foreign bases due to long-term agreements with tour operators, and it will continue its operations as planned and without a negative impact on passengers.
Small Planet Airlines Lithuania chief executive officer, Kristijonas Kaikaris said: “There is a major difference between restructuring in Polish and German companies, and in Lithuania.
“Small Planet Airlines in Poland and Germany were loss-making companies, whereas Small Planet Airlines Lithuania 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 profit.”
He added: “For the restructuring to be successful in Germany and Poland, finding a new investor is vital, whereas Lithuanian company can survive without it. However, we are leaving this option on the table and having talks with potential investors since 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.”
Small Planet Airlines UAB earned profit in 2015 and 2017, of €4.5 million and €2.3 million before tax, respectively. Flying 32 per cent more passengers this summer compared to the same period in 2017, the company expects its revenue to reach €122.7 million by the end of 2018, a one-fifth year-on-year rise.
Small Planet Airlines UAB aircraft fleet will consist of eight Airbus A320s, two of which will fly from Vilnius, one from Billund, two from Vietnam with a new partner Bamboo Airways, and two from Cambodia in cooperation with Small Planet Airlines Co. Ltd, a local leisure carrier operating under Small Planet Airlines brand. The last aircraft will be dedicated for standby and used in cases of delays.