Polish airline, LOT, has announced that it is reducing its fleet and employee levels due to an impending financial crisis.
The airline will be downsizing its fleet by around 15 aircraft, and will be making job cuts to reduce its employee strength by 30 percent, to stem its loss making services.
The Polish government, which owns around 93 percent of the airline’s stock, has offered a €97 million emergency loan to the company to sustain its operations.
LOT airline has been running at loss since 2010. In the last quarter, passenger traffic has reduced by around 20 percent, leading to a predicted loss of €1 million for 2012.
The announcement to downsize comes immediately after an earlier announcement by the airline that it was taking delivery of its initial Boeing Dreamliner aircraft. The new aircraft will have fully flat beds on offer for business class passengers.
The airline will now be concentrating on flying its most economical planes on its most beneficial routes. It currently flies to four destinations in the UK, London Heathrow, Birmingham, Manchester, and Edinburgh, and will continue to do so because of strong cultural and trade links between Poland and the UK.
Airlines from Eastern Europe have not been performing well in adapting to the latest technological upgrades, and LOT wants to be the exception to that rule. Most of these airlines face stiff competition from Air France, British Airways, KLM and Lufthansa on long-haul routes, and from budget airlines for domestic traffic.
Poland’s treasury minister, Mikolaj Budzanowski, in a statement to Polish parliament, said, ‘At least 30 percent or much more of headcount will be restructured, which is already taking place in the first quarter. In addition, there will be a fleet restructuring, with the focus on the most effective planes-some 25 of about 40 airplanes LOT has. The rest that are generating losses will be returned. Leasing agreements were signed years ago and it’s not profitable to be using those planes anymore.’