Speculations about the intentional change of owners of the Latvia-based airline SmartLynx Airlines to separate the company from the previous owner Avia Solutions Group and avoid debt obligations are not true, said SmartLynx Airlines CEO Edwin Demenus to the LETA agency.
Demenus, who is a minority shareholder of SmartLynx Airlines, noted that he would not have invested money in the company if he had known about its possible bankruptcy or cessation of operations.
He emphasized that, judging by the investments, the claim that the new owners of SmartLynx Airlines were preparing for insolvency is not true.
"The restructuring or reorganization of SmartLynx Airlines began in early 2024. The company gradually liquidated unprofitable business areas, abandoned certain types of aircraft, and conducted a collective layoff, reducing the staff by about 30%," he stated.
Demenus stressed that the company's management was aware of the need for the next stage of transformation, and the previous owners were offered stricter measures that could not be implemented. "Therefore, the previous owners of the company decided to sell it to the management of SmartLynx, which was a minority shareholder in this structure," he noted.
He added that all of this was preparation for the next stage of development and "rehabilitation" of the company, not a step towards insolvency.
In response to the question of whether the change of owners was an attempt to separate the troubled company from the previous owner Avia Solutions Group to improve the situation in the group, Demenus stated that this is not true, and such speculation is an "example of a real slander campaign" that actually led the company to unsuccessful restructuring.
He explained that the management of SmartLynx could not control whom the previous owner wanted to sell the company to, but they were willing to participate in the deal.
When asked why a Netherlands-based specialized investment fund, Stichting Break Point Distressed Assets Management, which was registered just a month before the deal, was involved in the acquisition, Demenus explained that this is common practice – an instrument is created through which the deal is made when a decision to sell is made.
He also emphasized that the Netherlands is one of the "strictest" countries in terms of regulation and compliance requirements.
"Creating a fund takes time, and it is perfectly normal for distressed assets like SmartLynx, with known debts, to be acquired through a separate structure into which investments are made," Demenus said.
He added that typically creating such funds can take up to six months, so when the fund was created – that’s when the deal took place. "If the fund had been created three months ago, the deal would have happened three months ago," he noted.
In response to the question of whether the company could be accused of intentional bankruptcy, Demenus pointed out that the previous owner of SmartLynx Airlines, Avia Solutions Group, invested more than $80 million in the company over the past year, so such accusations are unfounded and speculative.
As previously reported, SmartLynx Airlines suspended its business activities on November 24. The company also confirmed that it had ceased commercial operations of SmartLynx Airlines Estonia and SmartLynx Airlines Malta, and all three air operator certificates (AOC) have been suspended.
It was also reported that on October 22 of this year, SmartLynx Airlines announced a change of owners. The owners of the company became Demenus (5%), the company's CFO Mindaugas Kazakavičius (5%), and the Netherlands-based specialized investment fund Stichting Break Point Distressed Assets Management (90%), the beneficiary of which is Cypriot citizen Ilias Irakli.
Previously, the sole owner of SmartLynx Airlines was the company LLC Smart Aviation Holding, owned by Avia Solutions Group, whose beneficiary, according to Firmas.lv, is Gediminas Žemalys.
A few days later, on October 28, the Riga District Court began the legal protection process for SmartLynx. Demenus informed the LETA agency that SmartLynx Airlines has currently filed for insolvency in the Riga District Court.
He explained that SmartLynx planned to implement a restructuring plan by December 15 of this year, offering creditors a share in the company's stock and payments within a certain timeframe. However, due to "the spread of false and misleading information from various interested parties," contracts for the use of aircraft and clients were lost.
"Therefore, the company will not implement the legal protection process and has filed documents for recognition of insolvency," Demenus added.
SmartLynx representative Agija Kola-Kanca previously explained to the LETA agency that in total, about 400 employees worked across all SmartLynx companies in different countries, mainly aviation specialists, including aviation engineers, flight planning specialists, and auxiliary function staff.
Kola-Kanca also noted that over the past month, SmartLynx has been returning all aircraft, so technically there are no aircraft left in the airline's fleet, and the remaining documentation is currently being finalized.
Last year, SmartLynx Airlines transported a total of 10.66 million passengers – 62.5% more than in 2023. In 2023, the airline operated a total of 68,085 flights, which is 43.4% more compared to the previous year when 47,495 flights were operated. However, the volume of cargo transported decreased by 6.8% to 31,872 tons.
At the end of 2024, the airline's fleet consisted of 68 aircraft – one more than the previous year. However, this spring, the airline 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, according to Firmas.lv data. The turnover of the SmartLynx Airlines group was 496.651 million euros, and the profit was 22.774 million euros. The company’s financial results for 2024 have not yet been published.
SmartLynx Airlines was registered in 1992, and its authorized capital is one million euros.
