The Latvian Ministry of Transport has launched an extraordinary financial compliance assessment of the airline. At the same time, criminal investigations are reportedly being conducted against SmartLynx management who are on suspicion of repeated fraud.
On 25NOV25, the Latvian carrier, SmartLynx, filed for bankruptcy and ceased business operations. Shortly before that, all assets were transferred to a Netherlands-based investment fund, with CEO Edvinas Demeņus and CFO Mindaugas Kazakevičius acquiring a 5% stake each. As has now emerged from a leaked list of creditors, the airline owed its creditors €238.4 million at the time of its insolvency declaration, with additional unpaid claims amounting to €64 million. At that time, there were also outstanding invoices from the Latvian state amounting to €1 million, which the government will probably have to write off permanently due to the airline’s bankruptcy.
High debt load
In contrast to the parent company whose debt mountain is immense, the carrier’s subsidiaries are doing comparatively well. For example, the regional airline, SmartLynx Australia, which obtained a permit to operate flights in Thailand. According to a report aired by local TV station, Latvijas Televīzija, the move has raised suspicion in the industry and among officials of the financial controller, State Revenue Service, that the airline’s Latvian parent company’s business has been spun off to write off debts.
The outlined debt is likely to increase further due to claims from crew members amounting to several million euros, who are asserting unpaid wages.
Dubious personnel policy
In contrast, Agija Kola-Kanča, Chief Marketing & Communications Officer at SmartLynx Airlines Ltd, stated that the company owes nothing to its employees.
She holds that the posts were written by people who never stood on the airline’s payroll. Instead, they belonged to staffing companies. The same applies to another group: cockpit personnel, flight attendants, and technicians, who were not employed by the airline but belonged to private job agencies. “They have no social guarantees and are not protected by labor contracts, so cannot invoke safeguards.” commented Dace Kavasa, Head of the Latvian Aviation Trade Union, explaining the specifics of the industry.
ACMI strategy
According to the latest data available from the Register of Enterprises, SmartLynx Airlines had 382 employees before it went bankrupt. It specializes in ACMI leasing (aircraft, crew, maintenance, insurance) and was committed to lean operating models. However, this concept clearly did not work, as evidenced by the insolvency filing.
The carrier’s fleet consisted of Airbus aircraft, including A320 and A321 variants. It served a variety of destinations in Europe, the Middle East and the northern part of Africa, focusing on wet lease agreements. In 2024, 68,000 flights were performed by the carrier’s fleet, transporting 10,6 million passengers and 31,872 tons of cargo in the lower decks of the aircraft.
