LOT dismisses CEO and asks for government aid

[Polandexpat]

It's looking bad for LO at the moment. The CEO Marcin Piróg has been dismissed and the company is asking for roughly €100m of state aid. The situation is a bit strange for me, as I recall in September or October the CEO was saying that the financial results would be quite good. The government is demanding immediate and radical restructuring, including layoffs across the board. One Polish article said that this would include 100 pilots.

LOT dismisses CEO, may receive government aid | ATWOnline (http://atwonline.com/airline-finance-data/news/lot-polish-airlines-dismisses-ceo-1213)

[DublinPole]

Could go as high as 1bn Polish Zloty according to other reports
LOT chce nawet 1 mld z³ pomocy - Pasazer.com (http://www.pasazer.com/in-12547-lot,chce,nawet,1,mld,zl,pomocy.php)

They've lost around 2.8 billion over the past decade or so and constantly are heavily loss making, they spent many millions promoting dreamliners to the press, it was on every tv station for days on end, visiting every airport, it was the kind of marketing campaign I've never seen in Poland, it must have cost them a huge, huge amount.

The irony of the whole thing, is they spent that much money marketing them, but they are struggling to pay for them it would seem and it's only going to get worse for them now, as for years they've had little low cost carrier competition, now with Modlin on the scene and RYanair, things won't get any easier.

[Copenhagen]

How Many CEO's has LOT had in the past decade?

Oh the folly of ordering the 787 and operating to Asia.

[eu01]

Last week, the loss-making LOT airlines, which are 68 percent owned by the Treasury, requested 400 million zloty (100 million euro) as the first part of an aid package from the Treasury Ministry in return for a radical restructuring process which will include job losses.According to some reports, LOT already got that money, the bank transfer took place a couple of days before Christmas. The plans are to credit them with even more zlotys, the entire sum will amount to EUR 250 mln.

The magic word "national" (airline or whatever else) still does wonders around the world, doesn't it?

[paully]

I thought State Aid for Airlines was illegal within the fantasy world that is the EU......then of course its the EU so maybe it isnt :suspect:

[Rivet Joint]

Although yes state aid gives an unfair advantage lets not forget that the State Treasury of Poland has a 68% share in LOT. They are hardly going to let the airline fail thus rendering their equity worthless are they?

They are investing in 787's (which will hold their value for some time I imagine) basing their short haul ops on Embraer jets and bringing in Q400's for their low cost operator which BE prove is the right move. Of course I havn't seen the figures but at least it appears they have some sort of plan?

Plus lets not forget Ryanair are hardly a squeaky clean operation, they even hold airports to ransom for discounts!

[Tableview]

I thought State Aid for Airlines was illegal within the fantasy world that is the EU.

Air France, Olympic Airways, Alitalia, Air Portugal, ****eberia .............

Of course which country doesn't cheat and bend the rules ......... UK. I doubt BA gets too many handouts.

[FANS]

Well said table view. The EU rules are a nonsense that everyone seems very keen on until they impact upon their wishes or limit their slice of the slush fund.

[FougaMagister]

From the Wall Street Journal:
Ailing Polish Airline LOT to Shrink - Emerging Europe Real Time - WSJ (http://blogs.wsj.com/emergingeurope/2013/01/04/ailing-polish-airline-lot-to-shrink/)

Nie dobrze, as they say in Poland! But there seems to be a silver lining for EuroLOT, as they will pick up LOT's domestic routes and a number of European ones. In such a price-sensitive market, flying turboprops on domestic and short(ish) regional routes is probably the only cost-effective option.

Does anyone have a link to ELO's Financial health, as they seem to be doing much better than the parent airline?

(Although I'm quite partial to ATRs, flying on them fairly often I must say that these new Q400s are quite nice...)

Cheers :cool:

[DublinPole]

LOT have since been given 400m zloty loan from the government for six months in return for restructuring the company for the future, the money went to the company towards the end of 2012. It was believed to be a loan because to give money would have led to an EU investigation into state aid

Now there is rumour that there will be a controlled bankruptcy of the airline and the remaining assets will be sold to subsidiary, EuroLOT. If what I've read is correct, if this would happen, the 400m zl loan may not be able to be recalled.

Draw your own conclusions from that

Link:
LOT trafi do Eurolotu? - Pasazer.com (http://www.pasazer.com/in-12911-lot,trafi,do,eurolotu.php)

[DaveReidUK]

It's looking increasingly likely that the 787 grounding will, sadly, be the final nail in LOT's proverbial ...

[Fairdealfrank]

Just a thought, with MA defunct, LO possibly about to go "belly-up", and OK not in the best of health, is time for a combined entity for the three countries: Central European Airways, with PRG as the hub and BUD and WAW as focus cities?

Was thinking of something along the lines of SK or the former East African Airways. Or is it too late because FR and W6 already have the potential market sown up in that part of the world?

[TBSC]

This nonsense is coming up again and again. There's more chance to see a joint venture of Croatia, Serbia and Slovenia which could be called, say ... Jugoslovenksi Aerotransport. ;)

[The SSK]

I wonder what you might call a joint venture of Croatia, Slovenia and *everybody but* Serbia?

[Fairdealfrank]

Quote: "This nonsense is coming up again and again."

Will take it as a "no" then.

Quote: "There's more chance to see a joint venture of Croatia, Serbia and Slovenia which could be called, say ... Jugoslovenksi Aerotransport."

Not the same, the recent history of the former Yugoslavia countries is quite different from that of those in Central Europe.

[rareair]

Quote: Just a thought, with MA defunct, LO possibly about to go "belly-up", and OK not in the best of health, is time for a combined entity for the three countries: Central European Airways, with PRG as the hub and BUD and WAW as focus cities?

I think you've pretty well described Wizz - only they have bases (yes I know, not true hubs) at these three and more!

[eu01]

LO possibly about to go "belly-up"
Well, it didn't. LOT Polish Airlines itself reported a return to profitability last year after some restructuring. Nevertheless, its regional subsidiary EuroLOT will soon disappear.
State-controlled regional airline Eurolot, an offshoot of LOT Polish Airlines, is going into liquidation after struggling with financial problems.

The airline has blocked all bookings beyond 31 March this year, but it promises that reservations already made for April and afterwards will be refunded.

The move had been expected.

''For two months we analysed various options concerning Eurolot's activities,'' commented Adam Ambrozik, head of a restructuring department at the Treasury Ministry.

''We have taken responsible decisions regarding the ownership,'' he added.

Ambrozik argues that there is no foreseeable way of making the airline profitable.

The treasury had a 62.1 percent stake in the airline.

Planes used by Eurolot will be transferred to LOT Polish Airlines.Source: Radio Poland.