Bloomberg News

Poland Holds ‘Difficult’ European Commission Talks on LOT Aid

June 11, 2013

Poland is in talks with the European Commission on state aid for LOT Polish Airline SA, as the national carrier undergoes an overhaul that includes selling part of its fleet to help return to profitability next year.

“We are in a difficult dialog” on the motion, Treasury Minister Wlodzimierz Karpinski said in a TVN CNBC interview today. Polish government provided LOT with a 400 million-zloty ($124 million) loan last year to avert bankruptcy. The airline needs the executive arm of the European Union to approve the aid and has to file the motion by June 20.

Karpinski, who must first approve LOT’s request, said the airline forecasts it will have operating profit in 2014 after posting a loss for the last five years. One of the ways to achieve it will be to sell part of its fleet, he said, adding that the motion to the commission also includes request for additional aid, declining to give the amount.

LOT applied for a 1 billion-zloty aid package last year. The company plans to cut 800 jobs and will stop flying to Athens, Helsinki, Zurich, Cairo, Beirut, Barcelona, Berlin and Dusseldorf from Warsaw as early as fall of 2014, reducing flights on offer by a quarter, Gazeta Wyborcza reported today, citing a restructuring plan.

Marek Klucinski, a spokesman for the airline, declined to comment on the plan before it’s submitted with the commission.

The carrier will retire its 15 Embraer planes and will lease out two its Boeing 787s to other airlines, Wyborcza said. The company plans to post net income of 68 million zloty in 2015, according to the newspaper.

Poland is waiting for President Bronislaw Komorowski to sign a law that will allow to end the government’s control over LOT as it’s looking to sell the airline.

Both the government and the carrier are “actively” looking for a buyer, Karpinski said. It’s “too early” to talk about who might be a potential investor, he added.

To contact the reporter on this story: Maciej Martewicz in Warsaw at mmartewicz@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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