LOT Polish Airlines reported it has moved into profit on its core business eight months into the year.
At the end of August, the airline exceeded its cumulative operating breakeven point, in line with the assumptions of its restructuring plan.
LOT Polish Airlines CEO Sebastian Mikosz said: “Compared to the corresponding period of 2013, we have attained the result which is about PLN100 million ($31 million) better. We consistently pursue our goals and meet our annual financial forecast. According to the restructuring plan approved by the European Commission, in 2014 we are expected to achieve the return on ordinary activities of more or less PLN70 million.”
At the end of July, the European Commission approved LOT’s restructuring plan and found that public aid granted to the carrier was lawful. Details of a new company policy are currently being finalized and the restructuring process is due to last until the end of 2015, during which time the carrier may not launch any new routes. However, the first new flights, including long-haul routes, are expected to be announced at the beginning of the next year.
LOT had already begun to see an improvement in its financial performance last year when it closed with an operating loss of PLN4 million. This was substantially ahead of the PLN138 million loss assumed in the restructuring plan. In addition, 2013 was the first time in five years that LOT recorded a net profit (PLN26 million).
The airline said it continues to finance the difficult restructuring process exclusively from its own resources, and would hold off applying for a second tranche of public aid, originally due last August, at least until the end of September this year. The amount of the second tranche would also be smaller than originally planned, it said.
Mikosz said progress toward effective restructuring was due purely to the company’s own in-house efforts and not the result of external market forces. “Reaching the breakeven point is the exclusive success of the company’s activities,” he said. “There are no market-specific factors—such as aviation fuel prices or currency exchange rates—that would help us, as was partially the case last year.”