LOT expects much-reduced operating loss

London
Source:
This story is sourced from Pro
See more Pro news »

Polish flag-carrier LOT is expecting to close the full year with an operating loss of zl20 million ($6.6 million) but points out that this figure is much better than the zl142 million loss predicted in its restructuring plan.

LOT says its third quarter generated over zl100 million in profits, five times the figure in the previous year.

"Such improvement was possible thanks to consistent implementation of the restructuring plan - that is, reducing costs while generating additional revenue," says the airline.

It says it achieved savings through fuel-burn reduction, employment restructuring and renegotiation of supplier contracts, while the airline's Boeing 787s have contributed to higher premium traffic. Summer load factors on the 787, it says, exceeded 90%.

LOT adds that it has resolved a dispute with Boeing over the financial impact of being unable to operate its 787 fleet during this year's grounding of the type. "The major impact of this agreement on the result will be visible only in 2014," the carrier states.

The airline had been pressing Boeing for compensation. While it has not given details of the settlement, reports citing unnamed sources indicate a figure of around zl100 million.

But despite its performance this year, LOT warns that 2014 is set to be "important and difficult" and that the period will be "decisive".

"LOT faces considerable challenges," it says, including the need to maintain liquidity. It has to receive European Commission approval for its restructuring efforts, it adds, and reduce the need for public financial support. LOT also wants to secure a strategic investor.

But it states that it has not yet been forced to apply for a second tranche of public funding. "The company makes every effort to apply for the second tranche as late as possible, and to ensure that its amount is as small as possible," it says.