At SmartLynx Airlines, a collective dismissal is effectively taking place, disguised as a 'mutual agreement' - union 0 9

According to her, the union represents both the flight attendants of SmartLynx Airlines and office staff, but the exact number of members is not disclosed.

According to the information available to the union, on Monday, November 24, a meeting of SmartLynx Airlines employees took place, during which they were informed that they could sign a mutual agreement to terminate their employment. The document provides for the payment of wages for the worked period up to November 24, as well as compensation for unused annual paid leave.

"Usually, such agreements contain a clause about dismissal with severance pay and other compensations, but in this case, there is none," noted Kavaša.

The agreement states that the employer may lack the financial resources for immediate payment of compensation for unused leave and that it is considering initiating insolvency proceedings.

"The employer has already signed these agreements, expecting unconditional consent and signatures from employees," Kavaša said.

Thus, in her opinion, employees who sign such agreements find themselves in an unfavorable situation, as they lose the compensations and legal protections provided by Labor Law.

Moreover, employees were not informed about what actions they need to take in order to subsequently claim payments provided for by the Law on the Protection of Employees' Rights in the Event of Employer Insolvency. Some employees find themselves in particularly vulnerable positions, as their work visas are tied to their employment contracts, and they are currently receiving conflicting information about their rights and duration of stay in Latvia, the union explained.

Kavaša also noted that most stewards and pilots of SmartLynx worked not under employment contracts but under so-called service contracts through various agencies.

"These are the two most vulnerable groups, who are entitled to nothing, except for those who had real employment contracts. Official contracts were held by over 300 employees; the others, who actually provided the flights, are not included in the list of those to be dismissed," she emphasized.

According to her, by signing the agreement, the employee agrees to all its terms, while all information about employment relationships is defined as commercial confidentiality, which does not comply with the Law on the Protection of Commercial Secrets and worsens the employee's position in the context of Labor Law.

The union considers it unacceptable that employees are not paid all due amounts, and part of them will likely have to be requested in accordance with the procedures established by insolvency laws.

Kavaša reminded that Labor Law provides for consultations in the event of restructuring and obliges the employer to inform and consult with unions to eliminate legal uncertainty and ensure employees' rights in case of bankruptcy. However, according to her, the company has never fulfilled this obligation.

In this regard, the union urges employees to be aware of their rights and to make thoughtful and informed decisions about terminating employment in a situation where no other options are foreseen due to the company's suspension of operations.

Former Minister of Transport Talis Linkaits previously stated to LETA that the cessation of SmartLynx Airlines' operations on Monday, November 24, and the change of owners before filing for creditor protection raises many questions. He emphasized that the circumstances under which the company ceased operations should be assessed by creditors, and if necessary, claims should be made against the previous shareholders.

"It is obvious that there is an attempt to separate the bad airline from the good ones — to bankrupt one part so that the others can continue to operate," Linkaits commented.

Transport Minister Aitis Švinka stated in an interview on the Latvian Television program 'Morning Panorama' on November 26 that the issue has been under consideration for several weeks.

"Yes, this is concerning. We are using all legal tools to monitor this process and to ensure special attention from the responsible institutions," he noted.

Meanwhile, representatives of SmartLynx Airlines Latvia denied in a conversation with LETA that the cessation of operations is a pre-planned scheme. According to them, over the past two years, more than 100 million euros have been invested in SmartLynx enterprises under the management of previous owners. The new owners had specific development plans that could not be realized for various reasons.

As previously reported, on October 22 of this year, SmartLynx Airlines announced a change of ownership. The new owners are the CEO of SmartLynx Airlines Edvins Demenjus (5%), CFO Mindaugas Kazakavicius (5%), and the Dutch investment fund Stichting Break Point Distressed Assets Management (90%), the beneficiary of which is Cypriot citizen Iliya Irakli. This fund was registered just a month prior — on September 22, according to data from the companyinfo.nl portal referencing the Dutch Trade Register.

Before the change of ownership, the sole shareholder of SmartLynx Airlines was Smart Aviation Holding LLC, owned by the Avia Solutions Group, whose beneficiary is Gediminas Žemalys.

On October 28, the Riga District Court initiated a case for the legal protection of SmartLynx.

According to unofficial information published on the blacklist.aero website, SmartLynx's total liabilities to more than 780 creditors amount to 238.4 million euros. Of this, 174.374 million euros are debts to companies associated with the former owner Avia Solutions Group, and 64 million euros are debts to other creditors.

Among the latter are: – Fedex Express Latvia LLC — about 775,000 euros, – BTA Baltic Insurance Company (BTA) — 117,000 euros, – ARS Logistika LLC — 86,000 euros, – Havas Latvia LLC — 69,000 euros, – Novatours LLC — 67,583 euros, – Airo Catering Services Latvija LLC — 53,000 euros.

BTA informed LETA that the airline purchased insurance policies with annual payments, but the company has taken measures to reduce the debt amount, and the actual amount today is significantly lower than the mentioned 117,000 euros.

BTA representatives also stated that they have not yet received a legal protection plan for approval but will continue to monitor developments.

Representatives of Novatours confirmed the existence of debts from SmartLynx Airlines but did not disclose their amount, citing the lack of complete official documentation necessary for assessing the situation and making decisions on further actions.

The other mentioned companies have not yet commented on the situation, nor has SmartLynx Airlines provided an assessment of the total debt to creditors.

The blacklist.aero website indicates that the collected data shows signs of intentional bankruptcy: the sale of the company shortly before filing for creditor protection, retention of managerial control, and division of the business, which may indicate an asset stripping scheme, whereby profitable parts remain with the former owner while debts are transferred to the new fund.

In a letter available to LETA and sent to creditors on behalf of Demenjus on November 24, it is claimed that false and misleading statements about SmartLynx Airlines and the restructuring process have been published on the blacklist.aero website, authored by Artem Degtyarev.

The letter states that the company operates in full compliance with legal requirements, ensuring transparency and an adequate approach to all stakeholders.

It also mentions that Degtyarev and his associated company Air Justice are spreading calls to action against SmartLynx Airlines and allegedly previously participated in coordinated reputational attacks on companies.

In turn, in Degtyarev's letter to SmartLynx creditors, it is stated that the behavior of Avia Solutions Group indicates a deliberate avoidance of corporate restructuring and an attempt to evade oversight of the bankruptcy process by the legal administrator. He urges creditors to develop a coordinated strategy and tactics for action.

As previously reported, Latvia-based SmartLynx Airlines ceased its business operations on Monday, November 24. The operations of its subsidiaries — SmartLynx Airlines Estonia and SmartLynx Airlines Malta — have also been terminated. All three Air Operator Certificates (AOC) have been suspended.

The decision was made considering the company's financial situation and the lack of prospects for continued operations in the long term.

According to Demenjus, the decision was made after a thorough assessment of all possible scenarios.

"Unfortunately, under the existing conditions, it has become impossible to continue operations," he stated.

SmartLynx representative Agija Kola-Kanca informed LETA that a small team remains in the company, which is engaged in returning leased aircraft to their owners.

At the same time, she added that the exact number of employees who lost their jobs is currently unknown, as the cessation of operations was announced only on November 24. In total, about 400 employees worked in SmartLynx structures in different countries, mainly aviation specialists — engineers, flight planners, and support staff.

She also clarified that in Latvia, SmartLynx Airlines has one or two aircraft left, while the others are being transferred to companies in Malta and Estonia.

The company's office in Riga was rented, and its future depends on the building owners.

Last year, SmartLynx Airlines transported 10.66 million passengers — 62.5% more than in 2023. A total of 68,085 flights were made, which is 43.4% more than the previous year. Cargo transportation decreased by 6.8% to 31,872 tons.

By the end of 2024, the airline's fleet consisted of 68 aircraft — one more than the previous year. However, this spring, the company announced a 30% reduction in its fleet.

In 2023, SmartLynx Airlines had a turnover of 339.027 million euros and a profit of 11.089 million euros. The turnover of the SmartLynx Airlines group was 496.651 million euros, with a profit of 22.774 million euros. Financial results for 2024 have not yet been published.

SmartLynx Airlines was registered in 1992. The authorized capital is 1 million euros.