Poland's LOT airline working on rescue plan
- Associated Press
- February 22, 2013 - 10:15 AM
WARSAW, Poland - Poland's LOT airline said Friday it will present a plan to stave off bankruptcy next month after the government indicated that there will be no more money for the lossmaking state-owned company.
Poland's main link to the western world under communism until 1989, LOT has largely struggled since.
LOT spokesman Marek Klucinski said the rescue plan will be presented March 20 and will include layoffs among some 2,000 employees and a deep restructuring of the company and its routes. LOT's most profitable routes are to Chicago and New York.
The latest blow for the 83-year-old airline has been the grounding since Jan. 16 of its two Boeing 787 Dreamliners, which has cost the company 8 million zlotys ($2.5 million) so far. LOT was Europe's first carrier to buy the plane, but has been obliged by Boeing to keep them grounded — in Warsaw and in Chicago_ after problems were discovered with batteries on some of the aircraft.
As a result, the carrier will need to extend a lease on three Boeings 767s it currently uses and lease another two for the summer season. The management, under new President Sebastian Mikosz, is also talking to Boeing about the costs generated by the idling.
In 2012, LOT carried about 5 million passengers, but incurred losses of 157 million zlotys, chiefly due to high fuel prices and the changing rate of the zloty. It sought a government loan of some 1 billion zlotys ($312 million) and so far has received around 400 million zlotys to service debts and temporarily stabilize the budget. Poland will need to clear that move with the European Commission, which monitors whether government support violates competition rules.
But Prime Minister Donald Tusk has indicated there will be no more "infusions" or efforts to save LOT "at any cost."
The government owns almost 68 percent of LOT shares. Another 25 percent belong to a group that specializes in restructuring companies, while just under 7 percent are in the hands of employees.
The plan to float LOT on the Warsaw Stock Exchange, possibly this year, remains.
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