LOT Polish Airlines is preparing to start operations of its regional, low-cost subsidiary EuroLOT in the hope of cutting costs on its shorter routes, after dropping sharply from modest profitability into loss in 1996.

EuroLOT, which is expected to become operational early in July, will initially take over its parent's fleet of eight AI(R) ATR 72-200s, but is looking at extending this with about eight more aircraft in the 30- to 40-seat class. The airline says that it is considering types including the de Havilland Dash 8-100, Jetstream 41 and Saab 340.

LOT itself is in the early stages of considering a possible regional-jet acquisition, and has begun looking at various types in the 40- to 70-seat class.

Talks are going on now between EuroLOT and Szczecin-based regional carrier Tasawi, about a possible franchising deal under which Tasawi would operate some domestic routes on behalf of EuroLOT. The smaller carrier operates two 19-seat Jetstream 31s.

LOT suffered a loss of Pzl40.9 million ($12.7 million) in 1996, despite a steady increase in operational revenue and a 2.2% increase in passenger-kilometres flown. LOT attributes the loss to an unexpectedly high dollar exchange rate; and higher operating costs towards the end of the year as a result of an increase in capacity offered and rising fuel prices, "especially outside Poland".

An average load factor of 67.7% was achieved during the year, and airline sources say that it is aiming to reach 70% within the next two to three years. Most profitable were business routes into Eastern Europe, and transatlantic services.

Source: Flight International