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LOT headed for a crash?

The embattled airline is reportedly close to bankruptcy after reports of massive losses.
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Although official figures have not yet been released, Rzeczpospolita claimed last week that LOT recorded massive losses last year. According to the daily, in 2008 the airline incurred losses in excess of zł.700 million, with misguided hedging on fuel prices alone accounting for zł.300 million. The firm is apparently also unable to pay invoices because it has no money, and it is being refused bank credit.

The news adds to the woes of the ailing airline, which recently closed its low-cost subsidiary Centralwings. State aid will also be unavailable as the European Commission will not agree to government interference again - in 2001 Poland recapitalized the carrier to help it secure financing for a restructuring plan. Adrian Furgalski, from Transport Consultants Group "TOR," believes that Lufthansa, British Airways and Air France-KLM are interested in acquiring the airline, but he warned that speed is of the essence. "If it doesn't acquire a strategic partner, this will be the last year for LOT," he told WBJ. "Talks are ongoing but they are slow."

"At the same time there must also be a restructuring program, because if LOT just simply sits there, begging to be bought and saved from bankruptcy, the price will be much lower than in a situation in which the firm was trying to save itself," he added. "The effects will be costly, and will be accompanied by a reduction in employment."

Workers are reportedly not ruling out the possibility of a strike, which, according to Furgalski, would be the final nail in LOT's coffin. "Strikes would take LOT closer to bankruptcy," he said. "If the aircraft were grounded at Chopin [airport], the Polish carrier could last no longer than two to three weeks."

Robert Szmigielski

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