State aid

In December 2020, the European Commission issued a decision in case SA.59158 by which the state aid to LOT Polish Airlines aimed at counteracting the consequences of the COVID-19 pandemic was approved. LOT Polish Airlines, like most EU carriers, was granted aid due to the severe consequences of the pandemic. The purpose of the aid was to restore the financial situation of the carrier affected by the pandemic and to meet the resulting immediate liquidity needs. The aid package consisted of a loan with subsidized interest rates granted by Polski Fundusz Rozwoju S.A. (the Polish Development Fund) of PLN 1.8 billion and a capital injection (recapitalization) of EUR 250 million.

Without the state aid LOT Polish Airlines would not have been able to cope with the negative consequences caused by the extraordinary situation or settle the liabilities related to its activities. The aid measures received allowed the carrier to manage its financial position properly so as to avoid the negative consequences due to significant restrictions on the performance of operating activities since 2020, beyond its control, and to ensure adequate liquidity so as to remain in the market despite the negative impact of the pandemic on a sector. The purpose of the aid measures was to ensure that disruptions in the economy did not lead to enterprises that were profitable before the outbreak of the pandemic exiting the market unnecessarily. LOT Polish Airlines was just that – a profitable carrier undergoing intensive development. Therefore, the aid measures granted to LOT Polish Airlines were oriented towards providing the carrier with the minimum necessary to ensure its profitability and to repair the capital broken into by the pandemic. They were used to improve LOT Polish Airlines’ position at the difficult time of a series of disruptions occurring in the economy, which carried, for most market players, a real risk to their activities.

The EC decision approving the award of the aid measures to LOT Polish Airlines was accompanied by many obligations and requirements on the carrier’s part. One of the obligations arising from the decision is to support the activities in line with EU objectives and national commitments related to ecology and digital transformation. The state aid provided to LOT Polish Airlines in connection with COVID-19 allowed the carrier to settle the liabilities related to its activities at that difficult time and, in consequence, it also allowed LOT Polish Airlines to continue the measures aimed at supporting green and digital transformation.

One of the main methods to transform the aviation sector and its decarbonization is to tank SAF (sustainable aviation fuel). LOT Polish Airlines fully supports this path and supports the development of the production of sustainable aviation fuels in Poland through close cooperation with PKN Orlen. We wish to use SAF on all connections from airports at which it will be supplied by PKN Orlen. In addition, we are an active participant of Renewable and Low-Carbon Fuel Supply Chain Alliance whose primary objective is to cooperate on the development of SAF production in the European Union.

Moreover, by acting in line with the environmental policy developed in 2020, LOT Polish Airlines supports a number of climate protection initiatives. The most important of these include:

• Fuel efficiency  consisting of the measures aimed to cut down an amount of fuel burnt in flight, so that the amount of carbon dioxide emissions are reduced. The activities in this area include, among others: an optimization of flight routes, precise selection of ascent and landing speeds, an accurate calculations of the centre of the gravity of an aircraft, regular washing of the airframe and engine, or reducing the weight of the aircraft. Whenever possible, we use external power supply (GPU) instead of fuel power supply (APU) at the airports. We also invest in a new software for flights planning and data analysis, which allows us to fly in the most sustainable and efficient way.
• Introduction of sustainable products and services on the boards of our aircrafts – consisting in the serving of reusable tableware in long-distance flights, as well as the use of 100% paper cups, as well as the replacement of plastic cutlery with wooden ones.
• ECO-Destination Program – with the voluntary commitment of our passengers, we support the environmental projects aimed at reducing CO2 emissions and compensating for the emissions. One of the main projects is cooperation with the State Forests in the field of Forest Coal Farms, enabling, inter alia, planting more species of fast-growing trees and increasing the share of natural regeneration and planting in Polish forests. The Program covers a total of 12,000 ha in 23 forest districts across Poland. In addition, LOT Polish Airlines is involved in the activities which consist protection of a crane species and precisely wetland restoration and improvement of the retention capacity of rosary ponds in the Starogard Forest District.

We do realize that the main driver of the environmental protection measures is an awareness of current risks, therefore, we take part in research projects and cooperate with scientific and research centres, including the Łukasiewicz Research Network – Institute of Aviation in calculating the actual impact of the emissions from the aircraft on the environment.

The obtained public aid allowed LOT Polish Airlines to survive that period of the pandemic and significant core business constraints and to meet liquidity needs. Despite the negative impact of the pandemic, the company was able to implement and continues its pro-ecological activities.