Establishment and privatization The airline was established as government-owned Lietuvos Avialinijos (Lithuanian Airlines) on 20 September 1991, shortly after
Lithuania's independence from the
Soviet Union. Initially, it operated using aircraft of the
Aeroflot fleet located in
Vilnius (twelve
Yakovlev Yak-42, seven
Tupolev Tu-134, four
Antonov An-24, and three
Antonov An-26 airliners). In December 1991 Lithuanian Airlines sub-leased its first
Boeing 737-200 from
Malév Hungarian Airlines. Six months later, the aircraft was leased directly from
Guinness Peat Aviation and bore the registration LY-GPA. After a decade of loss-making operations, abortive plans to launch a trans-Atlantic service, and the widely criticized sale of
landing slots at
London Heathrow to cover some
US$20 million in debt, Lithuanian Airlines was
privatized in 2005. The airline was subsequently renamed
flyLAL–Lithuanian Airlines. In February 2007, flyLAL was recognized as most punctual airline at
Gatwick Airport in
London. It had 542 employees as of March 2007. During 2007, the number of passengers grew by 14% to 526,000. In 2008, charter flight services were transferred to sister company
FlyLal Charters, leaving only scheduled flights for FlyLal.
Bankruptcy During 2008, FlyLAL-Lithuanian Airlines suffered from a
price war with
airBaltic and slowing of the travel industry due to the
Great Recession. Despite the crisis, the number of passengers grew by 61% during 2008. In December 2008, the company admitted to suffering financial difficulties and having debts of 86 million litas (26.1 mln euros). It offered 51% of its shares to the
Government of Lithuania for a symbolic sum of 1 litas in exchange for a state guarantee of its debt. The government declined the offer. Shortly afterwards FlyLal announced that it would sell 100% of shares to SCH Swiss Capital Holdings, a previously unknown company registered in December 2008. The company was sold for US$1 million effective 23 January 2009. The new owners agreed to advance 1 million euros to cover some of the debts and prevent the cancellation of FlyLal's operating licence. The bankruptcy of FlyLAL significantly reduced the number of direct flights from Vilnius, from 28 to 14 destinations, and the number of passengers at Vilnius Airport decreased by 43 percent. ==Former destinations==