LOT POLISH AIRLINES POSTPONES STATE AID DUE TO PROFITABILITY
WARSAW, Oct. 2, 2014—Due to its profitability through September, LOT Polish Airlines announced it will postpone a request for state aid from the Polish government at the end of October.
LOT continues to perform as predicted in the annual financial forecast. By year end, the airline will reach the result on its core business of ca. PLN 70M ($21.1M) in the black. This is consistent with the assumptions of the Restructuring Plan.
“We consistently strive to sustained profitability,” said Sebastian Mikosz, CEO LOT Polish Airlines during the European Forum of New Ideas in Sopot. “At the end of August, we recorded a positive result on the core business on a cumulative basis. Following years of loss, it was only within the last eight months when LOT begin making money on flying. September was a very good month. We succeeded in making profit at the level expected in the budget. Following an initial summary, we are now a few dozen million PLN in the black on a cumulative basis. With the cash flow being better than expected, we are still able to finance the challenging restructuring process ourselves and still refrain from requesting the public aid. This is why we are postponing our decision on whether to apply for the payment of the second tranche of aid at least till the end of October. Our current financial standing is exclusively the effect of the efforts and consistent actions of the company. No market-related factors, such as jet fuel prices or exchange rates, have helped us so far, as was partly the case in the past years.”
LOT has repeatedly been assured that if the second tranche of aid was requested, it would certainly be much lower than assumed. According to the Restructuring Plan, the company should have received PLN 381M ($115 M), in August of the past year.
However in 2013, LOT improved its financial results considerably. The last year closed with a slight loss on the core business of only PLN 4M ($1.2 M). That result was PLN 138M ($41.7) better than assumed in the Restructuring Plan. 2013 was also the first year of many in which LOT recorded a net profit. It was PLN 26M ($7.9).
LOT owes its positive results to continuous transitions. The carrier continues to improve the quality of services, launch new products, extend its portfolio and approach new passenger groups. These actions include the new LOT Economy Simple tariff introduced on European flights, the new LOT Economy Plus class of service and new and revised duty free Shop & More.
Also, the new philosophy of creating better connections via Warsaw introduced this summer, has begun to pay off. LOT has increased its transit capacities by more than 40 percent. Passengers traveling via Warsaw are now able to change more comfortably on their way to other cities in Poland and destinations in the Central and Eastern Europe.
2014 is also the first year in which the “Dreamliner’s effect” fully worked. Last year, the first LOT Boeing 787 jets started to fly in June and by August, all long-haul flights were operated with Dreamliners. This aircraft is very popular among passengers but also brings tangible benefits, such as fuel savings. LOT currently owns six Dreamliners which are used on the long-haul flights and, according to the Restructuring Plan, they are also wet-leased to other airlines. This winter LOT’s Dreamliners will also operate charter flights for the two largest tour operators in Poland.
At the end of July, the European Commission made a positive decision about LOT. The Restructuring Plan was approved and the public aid was found to have been lawfully granted. The restructuring process of the company will formally end at the end of 2015. Until that time, LOT may not fly any new routes. However, the first, especially long-haul, new flights will be announced at the beginning of 2015.
About LOT Polish Airlines
LOT Polish Airlines, as one of the oldest airlines in the world, has been connecting Poland with the rest of the world since 1929. LOT flies to nearly 60 destinations in Europe, the Middle East, North America and Asia. LOT is a member of Star Alliance whose network currently offers more than 21,900 daily flights to 1,328 airports in 195 countries. Since 2013, LOT – as the first airline in Europe – has had 5 Boeings 787 Dreamliners in its long haul fleet. For more information, visit www.lot.com.