Lithuanian Airports are preparing to become a limited liability company: preparations to be completed in the first half of 2022
Lithuanian Airports should be changed from a state-owned enterprise (SOE) to a limited liability company by the end of 2022. According to the airports’ representatives, the change is planned to take place sooner – all efforts are being made to complete the interim preparations within the first half of this year, and the company will become a limited liability company in the middle of this year. The reform is being implemented on the basis of decisions by the Government and the Seimas, as well as recommendations by the Organisation for Economic Co-operation and Development (OECD) to reduce political influence in state-owned enterprises.
“The application of good governance principles in the public sector was one of the main recommendations of the OECD’s proposal to review, simplify and harmonise the legal forms of state-owned enterprises. In essence, for us as an organisation, this does not only mean changes in internal processes or management, but also opens the way for us to optimise some of our activities, to be more flexible in our asset management decisions, which are currently taking too long, and to be able to have alternative sources of funding in the future,” says Indrė Kunigėlytė, the Head of the Department of Finance and Administration of Lithuanian Airports.
One of the most important future governance changes in the implementation of this decision relates to the strengthened role of the Board in the management of the airports – the Board will elect the Head of the company and approve the company’s strategy, and some of the other management functions currently attributed to the Ministry of Transport and Communications will be redistributed and delegated according to the level of responsibility within the organisation.
It should be noted that even after the future change of Lithuanian Airports into a limited liability company, all the shares of the organisation will be owned by the state.
Investment alternatives and more efficient asset management
When Lithuanian Airports becomes a limited liability company, there will be more opportunities to raise more forms of capital – not only to borrow from banks or to receive state funds.
“Lithuanian Airports, like other members of “ACI Europe”, have clearly agreed that environmental protection and the reduction of carbon dioxide emissions is one of the most important strategic objectives in all the organisation’s activities. As we continue to develop certain larger projects at airports, we will be able to start discussing the possibilities of “green” financing alternatives and the application of new instruments with potential that have already been tested in the financial market,” comments Indrė Kunigėlytė.
It is claimed that becoming a limited liability company will also allow for the establishment of subsidiaries and better coordination of risks in the management of airport business, the possibility of entering into joint operating agreements and the provision of new services, which means that it will be easier to adapt to the needs of the market and generate a better return for the State.
Focus on national security
Ensuring national security remains a key priority in the implementation of the changes in airport governance, so even if the company’s legal status changes, the company will remain on the list of companies of national security importance and the infrastructure will remain on the list of assets of national security importance.
It will also continue to review the company’s transactions and the compliance of its employees with national security interests.
As the sole shareholder in the management of the airports, the State’s participation will be aimed at increasing the value of the business and the return to the budget, safeguarding national security and the State’s objectives and interests. The State will receive a return through the payment of dividends and the reinvestment of the airports’ accumulated profits in strategic projects as a limited liability company.
About Lithuanian Airports
The network of Lithuanian Airports includes three air gates in Vilnius, Kaunas and Palanga.