LOT Polish Airlines (Warsaw) is enjoying a financial turnaround, especially with the help of its new Boeing 787-8 Dreamliners. The airline issued this statement:
LOT Polish Airlines has consistently improved its financial standing and is now in the black. At the end of August, the airline exceeded the cumulative breakeven point, thus making a profit on its core business of flying following years of losses. This is in line with the assumptions of the restructuring plan.
Sebastian Mikosz, CEO of LOT Polish Airlines said, “Compared to the corresponding period of 2013, we have attained a better result of PLN 100M ($30,934,000). LOT is seeking to achieve sustainable profitability and we have consistently pursued our goals to meet our annual financial forecast. According to the Restructuring Plan, approved by the European Commission, we are expected to achieve a return of approximately PLN 70M ($21,654,000) in 2014. Our improved effectiveness is marked in all aspects of our operations. Reaching the breakeven point is the exclusive success of the company’s activities. There are no market-specific factors, such as aviation fuel prices or currency exchange rates that helped us achieve these results, as was the case partially last year.”
LOT began to improve its financial results in 2013. Last year closed with a slight loss on the core business of PLN 4M ($1,237,360). This result was still better than assumed in the Restructuring Plan. Last year was also the first year of many in which LOT recorded a net profit. It amounted to PLN 26M ($8,042.840).
LOT continues to finance the difficult restructuring process exclusively with its own resources. By the end of September, the airline will not apply for the second tranche of public aid, which will be smaller than assumed.
LOT owes its positive results to continuous transitions. The carrier continues to improve the quality of services, launch new products, expand its portfolio and approach new passenger groups.
LOT has also increased its transit capacities by as much as 40%, meaning passengers travelling via Warsaw are able to change more comfortably on their way to other cities in Poland and destinations in Central and Eastern Europe.
2014 marks the first year of the “Dreamliner’s effect”. The first LOT Boeing 787 jets started flying in June with now all long-haul flights operated with Dreamliners since August. This aircraft is not only popular among the passengers, but brings tangible benefits, such as fuel savings.
In July 2014, the European Commission made a positive decision about LOT. The Restructuring Plan was approved and public aid was granted. The restructuring process of the company will end at the end of 2015. Until that time, LOT may not operate new flights. However, the first new flights are to be announced at the beginning of 2015.
Copyright Photo: TMK Photography/AirlinersGallery.com. The restructuring program and the new Boeing 787s are game changers for LOT. The 787s have also changed the way people think of the airline. Boeing 787-8 SP-LRC (msn 35940) arrives in Toronto (Pearson).
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LOT Polish Airlines (Warsaw) is introducing new “Economy Plus” and “Economy Simple” fare groups to remain competitive against low-fare airlines. The airline just issued this statement:
In June LOT is introducing new Economy Plus class of service in short and medium haul aircraft and LOT Economy Simple tariffs providing discounts of up to 30 percent off normal economy fares.
Passengers traveling in LOT Economy Plus will enjoy a business product for an economy price. They will have a dedicated hotline number, check-in desk, priority baggage and boarding service as well as a dedicated bus when the aircraft cannot be accessed from a jet bridge at Warsaw airport. On board, these passengers will have a choice of meals, beverages and alcoholic drinks just as in business class. They will sit in the front of the aircraft and obtain more miles in the frequent flyer program than before. Premium Economy passengers traveling on long-haul flights will connect to flights in Europe in LOT’s Economy Plus Class.
LOT has also prepared a special, simple and low-cost tariff called LOT Economy Simple created for the short-haul passengers who want to decide for themselves what services to use and when the fare price is the lowest. Ticket prices are 30 percent lower than in standard economy class. With a LOT Economy Simple ticket, a passenger has the option for online or airport check-in and while on board, served a drink and a sweet snack plus score frequent-flyer miles.This tariff is mainly for leisure travellers traveling only with their cabin luggage.To check luggage, there will be charged PLN 60 ($20) extra.In normal economy class, checked luggage is still free.
A ticket in LOT Economy Simple starts at PLN 199 ($65).For example, flights to Brussels are 30 percent off PLN 439 ($144) in Economy Simple vs. PLN 638 ($210) in Economy; to London 29 percent off PLN 499 ($164) in Economy Simple vs. PLN 705 ($232) in Economy and to Paris 24 percent off PLN 449 ($148) in Economy Simple vs. PLN 458 ($151) in Economy.
These new developments are another step in implementing the Restructuring Plan.In the past year, the airline focused primarily on cutting costs, looking for savings and beginning to improve the quality of the product and service standards.
“We significantly improved our results in the past year, but cutting costs alone is not enough,” said Sebastian Mikosz, CEO LOT Polish Airlines. “To achieve sustainable profitability, LOT has to grow and take better care of its passengers, by expanding the portfolio, offering better comfort and a broader range of optional services.”
Copyright Photo: Rolf Wallner/AirlinersGallery.com. Embraer ERJ 170-200LR (ERJ 175) SP-LIE (msn 17000153) in the 1945 retrojet scheme taxies at Zurich.
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LOT Polish Airlines (Warsaw) on April 30 took delivery of its sixth new Boeing 787-8 Dreamliner, specifically the pictured 787-8 SP-LRF (msn 35942). The new 787 is named “Franek” which is Frank in Polish. The name was chosen as a result of an Internet contest. The airline issued this statement:
“Frank” (Franek in Polish) is the newest and sixth Dreamliner in the LOT Polish Airlines fleet that landed yesterday (May 1) at the Chopin Airport in Warsaw. The aircraft was named Frank as a result of an Internet contest. The name has been posted to the body of the aircraft and will appear until the end of the year.
“This year is special for us, full of changes and our Jubilee Year with our 85th anniversary,” said Barbara Pijanowska-Kuras, press officer for LOT Polish Airlines. “For our 6th Dreamliner delivery, we decided to organize a contest for the name of the aircraft numbered SP-LRF. The interest exceeded our wildest expectations. We are pleased this aircraft raises so many positive emotions.”
There was record interest in the Internet naming contest for the 6th LOT Dreamliner with 199,393 hits, 92,709 unique users and nearly 1,300 entries.
The Internet contest was held in March. The rules were simple–create an interesting name, justify your choice and become a “parent godfather” for this Dreamliner. Ms. Katarzyna Wฤ chaลa of Warsaw was the lucky winner. As a reward, she flew to visit the Boeing factory in Seattle. She returned to Poland today with her “baby”. She became the first long-distance passenger on the first flight of the youngest aircraft in the LOT fleet to Warsaw.
“The choice was difficult,” said Pijanowska-Kuras. “We wanted the name to arouse positive emotions, to be nice, short, easy to read and pronounce for foreigners, creative, intriguing and somewhat surprising. The choice was determined by the reasons given by the author. The registration number of this new aircraft is SP-LRF, so F is for Franek; F is also the 6th letter of the alphabet corresponding to LOT’s 6th Dreamliner; Franek in Polish is a timeless name; Franciszek is the name of two aces of the skies: Franciszek Peter and Franciszek Jacha and finally, it is also the name of Franciszek Zwirko – as Ms. Wachala wrote as her reasons for Franek.”
Franek will start to fly by mid-May on regular long haul connections in LOT’s network. The plane will be seen at airports in New York, Chicago, Toronto and Beijing. Beginning this winter season at the end of October, Franek may also visit other tourist places, such as Cuba, Sri Lanka, South Africa, Vietnam, Mexico or Thailand because LOT will begin long haul charter flights.
Since August 2103 when the fleet was joined by the fifth Boeing 787, LOT has been performing all long-haul flights only with Dreamliners. The Polish carrier was the first airline in Europe to operate this most modern world aircraft. Passengers appreciate the change in product quality and comfort of this machine. Given the company’s financial results and their year-to-year comparison in 2013, thanks to the Dreamliners, LOT gained as much as 95 million Zloty or $31,276,400. Business Class (Elite Club), perceived by passengers as the best on trans-Atlantic flights from Eastern Europe, has become increasingly popular. LOT has experienced huge success for its Premium Economy (Premium Club), between business and economy class. The Dreamliner also provides greater cargo business opportunities. LOT has also saved several million Zloty due to lower fuel consumption because from mid-2013, the long haul flights were flown by Dreamliners. At the end of 2017, the Polish carrier will have eight Dreamliners. The 7th Dreamliner will be delivered in the winter 2016/2017 and the 8th later during 2017.
The Dreamliner is a long-haul aircraft (12000 km) with a maximum cruising speed of 875 km / h, length of 57.72 m and a wingspan of 60.13 m. It has 252 passenger seats. The specially designed interior gives a feeling of spaciousness on board. Windows larger by ca 30% provide an excellent view, an appropriate pressure gives a greater sense of comfort, and the higher humidity as well as adequate filters ensure clean and healthy air. Luggage lockers are larger, and LED lighting system imitates daylight and adjusts to the time of the day. The special solution allows passengers to avoid turbulence and motion sickness.
Copyright Photo: LOT Polish Airlines.
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LOT Polish Airlines (Warsaw) has introduced an Embraer ERJ 170-200LR (ERJ 175) registered as SP-LIE (msn 17000153) in a 1945 retro paint scheme. This livery was used by company from 1945 through 1973.
According to LOT, “On the interior walls are mounted vintage photos and posters”.
Copyright Photo: LOT Polish Airlines.
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LOT Polish Airlines (Warsaw) reported a profit for the first time since 2008, closing 2013 with a net profit of PLN 26 million ($8.6 million) and an operating result of minus PLN 4 million ($1.3 million). The result is PLN 138 million ($45.6 million) better than assumed in the Restructuring Plan. The main reasons for this result are a consistently implemented transformation process in the company and the Boeing 787 “Dreamliner effect”.
Back in November 2012, LOT announced the 2013 financial results would be better than expected in the Restructuring Plan. Today’s presentation of detailed figures, following an audit, has been a pleasant surprise.The figure achieved was PLN 26 million ($8.6 million) towards minus PLN 196 million ($64.8 million) assumed in the Plan.Thus, the result has been improved by more than PLN 222 million ($73.3 million).
LOT has gotten closer to where the core business will be profitable. The carrier ended with just a minus PLN 4 million ($1.3 million), compared to a planned minus of PLN 142 million ($46.9 million).This meant more than a PLN 138 million ($45.6 million) improvement, of which PLN 119 million ($39.3 million) LOT earned itself. Macroeconomic factors such as favorable fuel prices had very little impact on the achievement.Furthermore, such factors were offset by unfavorable currency exchange rate fluctuations. The company benefit of the market situation was only PLN 19 ($6.3 million) out of the PLN 138 million ($45.6 million) improvement. This result is also unaffected by the agreement with Boeing on the settlement for the period when the Dreamliners were not used on long-haul flights.
This profitability was reached despite the fact that LOT had to reduce its carrying capacity under so called compensatory measures.This is a requirement of the European Commission due to the received public assistance. Therefore, LOT carried 5% fewer passengers than in 2012, but in 2013, carried more than 4.6 million passengers.
Considering the core business, a significant increase of cost effectiveness and raising the revenue contributed to the improvement towards the Restructuring Plan.Better results were also possible due to reduced administration cost, employment restructuring, fuel savings, reduced cost of ticket distribution and renegotiation of contracts with suppliers. LOT also managed the range of destinations more efficiently, expanded connection possibilities for passengers and improved flexibility of the tariffs offered. The carrier launched extra services and extended distribution channels, including mobile solutions.
Comparing the results year by year, the improvement was most significantly impacted by the ‘Dreamliner effect’.Thanks to this state-of-the-art luxury jet, LOT gained as much as PLN 95 million ($31.4 million).The business class (Elite Club) recognized by passengers as the best in transatlantic flights available from this part of Europe has become increasingly popular.
A huge success is also the Premium Club, an intermediate standard between the business and economy class. Thanks to the Dreamliner, the number of the business and premium class passengers in 2013 increased by more than 80 % compared to 2012. Boeing 787 also offers greater business opportunities in terms of cargo carriage.Because LOT operated the Dreamliner long-haul flights (New York, Chicago, Toronto, and Beijing) beginning mid-2013, consequently LOT saved several million PLN on the reduced fuel consumption.
The year 2013 marks just the beginning of changes.Regaining sustained profitability, maximum reduction of the second installment and maintaining financial liquidity are not the only challenges to face in 2014. It is also of key importance to obtain the European Commission acknowledgement for the Restructuring Plan.So far, there have been positive signals from Brussels.The Commission recognizes the consistency and effects of the Restructuring Plan being implemented.Another challenge is to maintain the market position where LOT is facing increased competition and to effectively use the 6th Dreamliner in a situation where LOT cannot offer new destinations. There are various scenarios being considered, apart from operating the jet on flights to the destinations available at the height of the holiday season. LOT is gradually developing the charter business and is in talks with various partners to explore potential leasing .For 2014, LOT plans to develop the strategy of expanding the range of destinations after completion of the formal restructuring process, after October 2015, as well as steps to acquire a strategic investor.
Copyright Photo: TMK Photography/AirlinersGallery.com. The Boeing 787 has helped LOT Polish Airlines back into profitability. Boeing 787-8 SP-LRD (msn 35941) departs from Toronto (Pearson).
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LOT Polish Airlines (Warsaw) is allowing passengers to use their personal electronic devices (PED) on board LOT’s aircraft in flight mode beginning on February 17, 2014.
Passengers may keep these devices switched on throughout the journey including take-offs and landings.ย They may use all the functions on their phones, tablets, MP3 players or cameras, but without the use of the cellular signal (making calls or sending SMSes).
The use of PEDs on board LOT’s aircraft was driven by a decision of the European Aviation Safety Agency (EASA) which stated the use of electronics on board planes does not affect aircraft operations provided the flight mode (non-transmitting mode) is switched on.
Copyright Photo: TMK Photography/AirlinersGallery.com. Boeing 787-8 SP-LRD (msn 35941) arrives at Toronto (Pearson).
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Avianca’s (Bogota) owner, German Efromovich, is considering making a deal to acquire a share of struggling Alitalia (2nd) (Rome) or state-owned LOT Polish Airlines (Warsaw). Any acquisition would be completed as an individual, not through Avianca which has expressed it does not have any interest in either airline.
Read the full story from Reuters: CLICK HERE
LOT Polish Airlines (Warsaw) will not apply in September to the Treasury for payment of the second tranche of public aid. According to the airline, this is possible thanks to the promising results of the Restructuring Plan consistently implemented in the Company. At the same time LOT is introducing the flight schedule for the winter season 2013/2014 to its reservation systems. A new network is in line with the Restructuring Plan submitted by the Ministry of the Treasury to the European Commission. It is also a result of necessary compensation required by the European Commission.
The first tranche of aid for LOT was paid in December of last year. Disbursement of the second – in accordance with the Restructuring Plan submitted by the Ministry of the Treasury to the European Commission – was planned for August this year. Meanwhile, the Company has not applied for the second tranche in August and will not apply for it in September. An amount of the second tranche will be carefully assessed when the Company will apply to the Treasury for its payment. Perhaps this will happen only in October.
According to its underlying principles, the Company will achieve sustained profitability starting from 2015.
Consistently implemented restructuring measures include, among others, the network of destinations for the winter season. These changes are in line with the objectives of the Restructuring Plan submitted in June by the Ministry of Treasury to the European Commission. They are also a result of necessary compensation required by the European Commission. Within planned changes, destinations from Warsaw to Bydgoszcz, Rome and Stuttgart will be suspended from the beginning of the winter season 2013. In the coming months, passengers will also not find in the network flights to Beirut, Cairo and Nice, which are seasonal destinations. At the same time, like last winter, flights with the aircraft staying overnight from Warsaw to Stockholm will be suspended. This means two, not three flights a day to the Swedish capital.
The Polish carrier also decided to suspend flights from Warsaw to Zurich, Helsinki and Dusseldorf. These destinations did not generate enough transfer traffic for other LOT flights from Warsaw, especially the long haul which are key to the company’s long-term strategy.
Since, in accordance with assumptions, LOT focuses on expansion of its hub in Warsaw, there will be also less flights from Polish regional airports. In winter 2013, LOT aircrafts will not fly from Cracow to Frankfurt, from Poznan to Munich and from Katowice to Munich.
At the same time, flights from Warsaw to Yerevan, Athens and Belgrade will be unchanged in the coming winter season. Belgrade, one of the strongest destinations in the network of the Polish carrier, will continue to support the flow of transit passengers in their further travel to North America or other European ports. And Athens will remain in the flight schedule due to Greek Presidency of the European Union, which will begin on ย January 1, 2014.
Copyright Photo: TMK Photography. LOT Polish has been gradually replacing its older Boeing 737 fleet with newer Embraer E-Jets. The remaining 737-400s are likely to be retired this winter with this schedule reduction. Boeing 737-45D SP-LLF (msn 28752) approaches Belgium for landing in the updated 2011 livery.
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LOT Polish Airlines (Warsaw) has applied for additional state aid in the amount of over $115 million from the Polish treasury according to this report by Business New Europe citing treasury sources. The treasury has promised the citizens of Poland that this will be last bailout for the state airline. The treasury ministry must approve the request before it is sent to the European Commission in Brussels for the final approval.
There is also a report the airline will lease out out two of its new Boeing 787-8s.
LOT Polish will continue to shrink in size and go to smaller aircraft as the government continues its attempt to sell the loss-making carrier.
Read the full report: CLICK HERE
Copyright Photo: Ole Simon/AirlinersGallery.com. LOT Polish’ย Embraer ERJ 170-200LR (ERJ 175) SP-LIN (msn 17000313) taxies at Paris (Orly).
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