Tuesday, February 10, 2009

LOT facing hard landing?

LOT Polish Airlines is expected to post financial results for 2008 that could amount to a loss of zł.500 million – as reported by Rzeczpospolita.

The airway reportedly lost almost zł.300 million on fuel hedging contracts signed last year, while the management intended to save zł.560 million by 2011. LOT also experienced a year-on-year 6.5 percent drop in the number of passengers served during 11 months of 2008.

The company had to cut costs by eliminating some cost-ineffective connections. Plans of entering the bourse seem to be unrealistic. “I doubt whether anyone would be interested in buying LOT in these circumstances,” said Grzegorz Sobczak, editor-in-chief of Skrzydlata Polska, an aviation monthly. He gave an example of Lufthansa, once interested in acquiring LOT, which purchased Swiss, but only after the carrier's financial situation was cleared. “I heard about an idea of transferring all debt onto one of the LOT's daughter companies and declare its bankruptcy,” added Sobczak.

Before the end of 2008 two hundred employees decided to choose early retirement. According to Rzeczpospolita last week the management started negotiating with the labor unions about redundancies of 250 people from 3703 personnel. Wojciech Kądziołka, press spokesman for LOT, declined to comment on these press reports.

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