Tuesday, January 6, 2009

LOT flies on the world's most expensive fuel

Recent reductions of oil are not benefiting the Polish national carrier, because in July the management signed a long-term fuel delivery contract at over $140 per barrel.

Considering low fuel prices, in December LOT admitted to being left with overpayment of $92.4 million. Position of finance director, who was responsible for signing the deal, is threatened.

Most of airlines couldn't predict the plunging oil price and posted losses due to fuel hedging contracts, but LOT miss has beat them all. Members of workers union at LOT (employees own almost 7% of LOT shares) already announced notifying a prosecutor about deliberate actions of harming the company by the management. NIK (Supreme Chamber of Control) already initiated an inspection in LOT.

According to "Dziennik" and "Wall Street Journal Polska" McKinsey was one of the companies advising LOT on the contracts, predicting the oil price can reach over $200 per barrel on the turn of the year. It was around $40 per barrel in December.

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