|Previous attempts to sell LOT have failed so far|
Courtesy of LOT
Poland’s troubled state-owned air carrier LOT could be sold this year, once legal obstacles are removed, the airline’s newly appointed CEO, Sebastian Mikosz, announced last week.
The government has long been looking to offload the loss-making airline, but has had trouble since Polish law requires the Treasury to maintain a controlling stake. Government officials have already proposed draft legislation to make the privatization possible, and it is expected to pass soon.
But another obstacle to finding a new owner for the airline will be EU regulations that prohibit an entity from outside the EU from owning a controlling stake in any European air carrier. It was these regulations that scuppered LOT’s sale in previous years. Several potential buyers from outside the EU showed interest in the past, most notably Air China and Turkish Airlines, but due to the restrictions a deal was never struck.
When asked who could buy LOT, Mr Mikosz responded that “the most obvious choice would be another European airline. Although right now they’re not interested in buying LOT, things could change in the future.”
However, most European airlines are struggling with problems of their own. According to the International Air Transport Association, European carriers lost €1.3 billion in 2013. They are therefore unlikely to look to acquire new assets.
But experts point out that while it would be easiest for a European airline to take over LOT, the restrictions on the buyer’s origin are hardly insurmountable. A potential non-European buyer could set up a EU-based entity – alone or in a joint venture with a European strategic or financial investor – thus circumventing EU regulations.
For Mr Mikosz, the preparations to sell LOT mean restructuring. “The changes must be radical,” he said, adding that he has the Treasury Ministry’s “blessing” for “any move that is necessary.” He estimates that the company will fire over 500 of its employees.
LOT has been hammered by bad news recently, and there is little to smile about when it comes to its recently purchased Dreamliners as well. Deputy Treasury Minister Rafał Baniak announced that the company is losing $50,000 a day due to the grounding of its two new Boeing planes.
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