Bloomberg News

Poland’s LOT to Discuss Boeing Costs as 787 Makes Careful Return

June 13, 2013

LOT Polish Airlines SA said it will deepen discussions with Boeing Co. (BA:US) next week over compensation for losses from the three-month grounding of the 787 Dreamliner, with a sum of several million dollars being sought.

Talks about financial restitution have commenced and will continue at the Paris Air Show, which begins June 17, Chief Executive Officer Sebastian Mikosz told reporters in Warsaw, adding that the negotiations are unlikely to be completed then.

The Dreamliner’s return to service following battery fixes should help cut operating costs at LOT, which reported daily losses of $50,000 from the grounding when its first plane was stranded in Chicago after the inaugural flight. The carrier has three 787s in the fleet with two more due by August, though it’s introducing the model with caution to avoid further disruption.

“We don’t plan to exploit the Dreamliners to the maximum extent,” said Mikosz, whose airline is basing its long-haul strategy around the model. “We want to have some margin in case of teething problems with the planes, which is always a risk.”

The CEO, who is seeking “several dozen million zloty” of compensation from Boeing, said a deal has been struck with Polish tour operator Itaka for LOT to provide 787s for long-haul winter charters. The deal, worth 32 million zloty ($10 million), follows one with Rainbow Tours SA in May, he said.

Results Due

LOT, which hasn’t made a profit in five years, is also poised to announce audited financial results for last year confirming an operating loss in excess of 200 million zloty, Mikosz said. The figures come as the Warsaw-based airline prepares to submit a restructuring plan to the European Commission on June 20 as part of a state-aid application.

Talks with the European Union regulator won’t be easy, Mikosz said, although he expects them to be successful.

The Polish government is also easing state-ownership rules that require it to hold a majority stake in LOT, as Polskie Linie Lotnicze LOT SA is known, to ease a potential disposal.

“All scenarios are possible,” Mikosz said, adding that LOT and discount unit Eurolot are both for sale, together with two ground-services units. “I deeply believe that privatization, along with the restructuring plan, is the best option for LOT.”

To contact the reporters on this story: Robert Wall in London at rwall6@bloomberg.net; Konrad Krasuski in Warsaw at kkrasuski@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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