Warsaw, July 29, 2014 – Today the European Commission has formally approved the Restructuring Plan of LOT and found the state aid granted to the carrier lawful in terms of the provisions of EU legislation. The official decision thereby puts an end to the formal proceedings in Brussels related to the Polish national carrier.
Sebastian Mikosz, Chief Executive Officer of LOT: “This is a very important day for LOT. The Commission’s investigations of our Restructuring Plan confirmed that we are adhering to the provisions of EU law. The measures foreseen in the Plan avoid distortions to the market, and ensure our long-term competitiveness. We have indeed cut our costs dramatically, and have improved our revenues so that, after many years of losses, LOT can finally return to sustainable profitability. I would like to thank our passengers who, in appreciation of our new products and services, believe in the changes we are making. Our improving results reflect their valued recognition. LOT is becoming a modern and flexible European carrier connecting Poland, Central and Eastern Europe with key regions of the world, who can quickly react to and address the expectations of the market.”
The EC decision of today puts an end to the formal proceeding. LOT continues to consistently implement the Restructuring Plan, and the European Commission will monitor it. From the formal point of view, the process will be completed in October 2015.
In 2012, LOT had successfully filled for and receiving a Rescue Aid which was approved by the European Commission in May 2013 subject to the submission of an EU-conform Restructuring Plan. According to the Guidelines of the European Union on Rescue and Restructuring Aid, state aids can be approved only if strict conditions are met. LOT had developed and implemented a far-reaching restructuring plan, which offset the distortive effects of the Rescue Aid by discontinuing several profitable routes, reducing the amount of capacity and providing significant own contributions towards the cost of restructuring. These measures ensure that LOT will remain a long-term competitive airline. The Plan have been submitted in June 2013.
In 2013, LOT recorded for the first time in five years a net profit of PLN 26 million, instead of almost PLN 200 M loss envisaged in the Restructuring Plan presented to the European Commission. The result of the base business was only minus PLN 4 m. It was, therefore, by PLN 138 M better than assumed in the Plan. LOT restructured its network and saved operating cost also by using Boeing 787 Dreamliner jets. The Airline underwent successfully the process of phasing out old generation aircraft such as Boeing 767 and Boeing 737 jets with significant cost associated with this operation. The Company implemented painful and difficult process of employment restructuring reaching about 35% reduction factor of the ground personnel and saving 45 mln zł last year.
In 2014 LOT continues to address all elements of its revenue generating activities to improve margins, including introducing new ancillary services and better revenue management.
The company progress to renegotiate the procurement contracts with suppliers to keep cost savings and efficiency improvement. Preliminary results for first half of 2014 meet the assumptions and financial projections set the Plan.
LOT Polish Airlines is one of the oldest airlines in the world. It has been connecting Poland with the rest of the world since 1929. Now planes in LOT colours fly to nearly 60 destinations in Europe, the Middle East, North America and Asia. Many of LOT's pilots are among the European and World Champions in several types of aviation sports. Since 2003 LOT is a member of Star Alliance whose network currently offers more than 21,900 daily flights to 1,328 airports in 195 countries all over the world.
Spokesperson LOT Polish Airlines
Tel.: +48 (22) 606 79 19
Mob.: +48 731 999 924