On verge of bankruptcy, LOT re-nationalised. Future uncertain
In May-09, Financial Association Silesia (TFS) bought a 25% share of LOT from SAir Group which effectively put Poland’s national carrier fully back in control of the state. TFS, which, it is estimated paid between EUR40 and 50 million for the shares, is a state company set up in 2000 to save the Katowice steel foundry from bankruptcy - and is owned by the Polish Treasury and Industry Development Agency.
The transaction means that LOT is 93% state-owned, with the remaining shares owned by employees.
The company still waits auditors to sign financial statements and LOT has to reach full agreement with foreign banks about its debt restructuring.
The re-nationalisation is one stage in the company’s preparations for privatisation. There has been speculation that Lufthansa was interested in LOT, with the government in Warsaw merely saying that many potential partners are being considered to bail out the national airline which has been making huge loses.
In Mar-2009, LOT closed down its no frills subsidiary airline, Centralwings. More recently, LOT announced that it will open LOT Charter, in an attempt to move in to the package holiday market.
The re-nationalisation comes on the heels of LOT incurring a loss of PLN700 million (USD220.3 million) last year, according to preliminary estimates, leading to speculation the airline could soon crash land into bankruptcy.
It has been reported the auditor is not willing to sign the annual balance sheet, as he is uncertain whether the airline will survive another year. It has been reported that over PLN300 million (USD94.4 million) of the 2008 loss was due to unwise fuel hedging transactions.
LOT is reportedly currently not paying many of its invoices - as it has no funds, while banks refuse to provide further loans.
The new acting President of LOT, Sebastian Mikosz, when talking about recently liquidated Centralwings, said, "I cannot understand how a company could operate for five years and not post any profit. And this was the case even though it paid much lower rates for planes rented from LOT than market rates."
He also admitted that the firm will reduce staff numbers to stay afloat, a move that trade unions are expected to resist.
It all adds up to a very uncertain outlook for the Polish national carrier.