WARSAW Jan 3 Poland has agreed to give its
ailing flag carrier LOT a 400 million zlotys ($130
million) loan to prevent the airline from succumbing to its
continuing losses and mounting debts.
LOT, one of the world's oldest airlines, warned last month
it needed the state aid and would likely seek more after warning
its workers it would again be deep in the red this year.
The Treasury Ministry, which oversees state assets, said on
Thursday the loan was transferred on Dec. 20. The ministry had
previously said it looked favourably at the request, but had not
discussed whether it would provide the funds.
LOT, which lost a total of 1.1 billion zlotys between 2008
and 2011, is expected to seek further loans to fund its
business. However, the European Commission has to approve the
aid and could ultimately force LOT to pay back the loan if it
finds it illegal.
The EU executive body's competition authority was not
immediate available for comment.
Some experts fear LOT may share the fate of its defunct
Hungarian rival Malev, which stopped flying a year ago after the
European Union's executive arm forced the carrier to repay aid
worth hundreds of millions of euros.
The Polish airline has been hurt by cut-throat competition
from no-frills competitors such as Ryanair and easyJet
, along with high fuel prices and depressed demand due
to Europe's economic troubles.
LOT's ex-Chief Executive Marcin Pirog, who had indicated
improved results for last year as recently as September, said
after his dismissal the company's 2012 net loss would likely
reach 220 million zlotys.
A LOT spokesman said the group would use the state aid to
pay its most outstanding bills and help keep it steady through
the winter season before traffic picks up in the second quarter.
He added that LOT, in which the state holds 93 percent,
would present details of a rescue plan before the end of March.
Union representatives said Pirog had told them LOT planned
to dismiss some 600 employees, or about a third of its
workforce, and reduce its network of flights by about third.
LOT took delivery of a Boeing Dreamliner 787 in
November, hoping the status of being the first European carrier
to add the long-delayed jet to its fleet could help boost its