LOT On Verge of Bankruptcy

Polskie Radio:

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LOT on the edge of bankruptcy
Created: 27.04.2009 10:40

Poland’s national carrier, LOT airlines, experienced a 700 million zlotys (155 million euros) loss in 2008. If carrier does not find investors soon then it could go into bankrupt within weeks.

Over 300 million zlotys of the loss resulted from contracts for fuel, made when the price was high last year.

The financial situation is so bad at LOT that an auditor is refusing to sign the annual balance sheet.

The only chance for the airline is to find a new investor or to be taken over by a competitor. The Polish government can not bail out the airline as this would contravene competition rules laid down by the European Commission. The carrier was already heavily capitalized by the state back in 2001.

LOT has desperately tried to restructure of late. Last month it liquidated its subsidiary, no-frills airline Centralwings. Now the company is looking to make deep staff cuts, though trade unions are expected to resist.

“We are considering the possibility of striking. We will simply stop loading baggage,” a trade unionists at LOT Ground Services handling company told Rzeczpospolita. (pg/wg)

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FYI, 700 million zlotys = 155 million euros = $200 million