POLISH AIRLINES LOT MIGHT GO BANKRUPT

LOT Polish Airlines (PLL LOT) found itself face to face with a number of financial problems that could lead the national carrier of Poland to ruin. The pandemic has become the reason for the deplorable state of affairs - many of the 37 airliners belonging to LOT have been chained to the ground for a long time.

A few months ago, the management of PLL LOT hoped for help from the state, having sent appropriate appeals to the authorities. In particular, one of them was sent to the Ministry of State Assets in October. However, a few months later, the airline made another attempt to obtain government funding. This happened after the company's management had held negotiations with representatives of the European Commission.

Considering that LOT is owned by the state treasury, the decision of Polish ministers to help the company in the amount of PLN 3 billion (€ 676.2 million) is understandable. Experts note that it will be very problematic for the carrier to stay afloat without a financial recovery program.

It is not yet known, whether the government allocation program will affect only LOT or the company's subsidiaries (Eurolot, LOT Charters and Centralwings) as well.

Experts say that one of the reasons for the possible bankruptcy of Polish airlines is the conflict between PLL LOT and the German air carrier Condor. The German company, which LOT was going to acquire in early 2020, was left without the promised investment. The outbreak of the pandemic confused all the plans and the head of the Polish company Sebastian Mikosz called such a deal meaningless at that moment.

Now the German side is demanding compensation for disappointed expectations and the subsequent rejection of the deal. € 55.8 million appears as a probable amount of compensation. It is quite reasonable that for a Polish company, which has existed on the market since 1929, such a situation may threaten with losses of reputation as well.