LOT lost PLN1.3 billion in 2021

Two LOT Polish Airlines aircraft pass each other on the taxiway.
Photo Credit: Piotr Bożyk

LONDON – LOT Polish Airlines lost PLN 1.3 billion last year (275,4 million $). Polish carrier posted its financial statements for 2021 in the National Court Register on September 9.

The operating loss, excluding depreciation, closed at PLN 1.09 billion. The operating margin, meanwhile, reached minus 42.4 percent, while revenues amounted to PLN 3.07 billion.

Their level was 8 percent lower in relation to 2020, although at that time, travelers were counted by more than 30 percent less. Interestingly, revenues generated for the carriage of excess baggage increased by more than half.

Cargo operations helped generate PLN 600 million.

Although this was PLN 155 million less, or more than 20 percent less than in 2020, the result was more than 50 percent better than that obtained in 2019.

More than 4 million passengers

LOT Polish Airlines carried 4.1 million passengers last year. That’s 32.3 percent more than in 2020. Nevertheless, the number of travelers reached a ceiling of 39 percent in 2019.

The offering was 29 percent higher than in 2020 but, at the same time, 52 percent lower than three years ago.

The aircraft load factor (LF) rate was 51.6 percent, a result worse than that achieved in 2020, when the ceiling was 6.6 percentage points higher and the worst in the entire past decade.

LOT carried out 57,177 flights last year. This, in turn, is an 11 percent better result compared to 2020.

As LOT Polish Airlines points out in its 2020 report, in the face of the company’s very difficult economic situation, flight attendants were reduced by 50 percent by way of rescheduling notices.

Such action was a consequence of the failure to sign a “shield” agreement with the then-only representative trade union in this professional group.

New remuneration regulations

Under the new Salary Regulations signed on December 7, 2021, cabin crew members began the process of returning to full-time employment at LOT Polish Airlines with a main salary of 30 hours.

From the moment of returning to full-time employment, years of work under special conditions will also be accrued, enabling employees, for example, to retire early.

The parties agreed that employees, i.e. flight attendants, will have the opportunity to conclude agreements changing their working and pay conditions to those resulting from the new Remuneration Regulations immediately after their announcement.

Under the proposal for flight attendants (cockpit crew members), the number of guaranteed salary hours has been raised from 20 hours to 27.5 hours, without changing any other conditions.

Salaries will continue to be calculated in proportion to the number of hours flown. As a result, pilots’ salaries will increase to 2019 levels as they gradually return to flying more and more flights.

Following the approval of the LOT Supervisory Board to conclude the agreement, in accordance with labor law, the company entered the process of collective termination notices changing working and pay conditions.

Carrier stressed that on January 19, 2021, consultations with the social side on carrying out collective layoffs ended.

As a result, on January 22, 2021, an agreement was signed defining the rules for dealing with employees affected by the intended group layoffs, in terms of their selection criteria and the possibility of voluntary departures.

On March 31, 2021, the company completed the process of group layoffs.

As of December 31, 2021, LOT Polish Airlines had three Embraer ERJ-145s and one Embraer E175 in-house aircraft. 15 jets were used by the national carrier under finance lease agreements, and 59 aircraft under operating lease agreements.

Awaiting the final version of Fit for 55

In the field of Environmental Protection, initiatives resulting from ongoing consultations at the European Union level play an important role. In particular, the final version of the Fit for 55 packages will play a major role.

According to LOT, the increasingly ambitious goal of decarbonizing air transport is expected to result in a series of challenges aimed at minimizing CO2 emissions.

The national carrier is actively seeking opportunities to refuel with SAF sustainable fuels.

At the same time, the company is in active dialogue with slot coordinators in each country to agree on a larger scale of cancellations based on the restrictions still in place and to minimize the impact of slot regulations on the scale of operations.

A number of optimization initiatives have also been implemented, with the aim of reducing costs (particularly fixed costs), improving efficiency, and tariff and ancillary revenues.

The new approach regarding fuel and handling services

A new approach to the purchase of aviation fuel has been introduced, that is, a move away from “port by port” fuel purchases to a global tender covering 90% of airports.

The aim of these measures is to reduce purchasing costs by consolidating jet fuel volumes, reducing the number of suppliers (lowering administrative costs), and increasing the company’s weight in the supplier portfolio.

A new approach to the purchase of handling services has also been introduced, moving away from the purchase of “port by port” services in favor of establishing relationships with global service providers serving several to a dozen ports to which LOT Polish Airlines operates.

In August 2020, a lawsuit was filed against the company for payment of lease installments to Aviation Capital Group (ACG). As of December 31, 2021, no agreement has been signed on the aforementioned matter.

The airline Ryanair’s complaint for assistance to LOT is being processed before the CJEU.

Application for damage aid

Polish airline applied to the Ministry of State Assets (MAP) in February of this year for damage aid, in connection with compensation for the damage caused by the COVID-19 pandemic, the main purpose of which was to inform the Treasury of the need to secure funds for this aid.

At the same time, discussions are underway with the European Commission regarding damage aid calculations, which will affect the final damage aid application.

The new application, once approved by the corporate bodies, will be forwarded again to MAP. Damage aid is, in addition to the loan already obtained from the Polish Development Fund and the recapitalization, another instrument to counter the effects of COVID-19.

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