Poland Completes Formation of LOT Umbrella Group

 - October 10, 2018, 2:51 PM
A LOT Polish Airlines Boeing 787 awaits turnaround at Warsaw Chopin Airport. (Flickr: Creative Commons (BY-SA) by Hawkeye UK)

The Polish government has bundled four state-owned aviation companies into Polish Aviation Group (PGL) as part of its strategy to gain a leading position in the integration of the sector in the country and the Central and Eastern Europe (CEE) region. The strategy also calls for the construction of a new mega-hub airport in Warsaw, which ultimately would have four runways and a capacity to accommodate 100 million passengers per year, or about five times the capacity of Warsaw Chopin airport, the city’s main airport.

PGL stands as the new umbrella company of LOT Polish Airlines, MRO providers Lotams and LS Technics, and LS Airport Services (LSAS), which offers ground handling services for passenger, private, military, and government aircraft at several airports in the country. The company said it will operate in similar fashion to aviation groups organized around major airlines such as the Lufthansa Group, IAG, and Air France KLM.  

The establishment of PGL also echoes a reversal of the divestment policy initiated by Poland’s national carrier less than a decade ago when it sold LOT Aircraft Maintenance Services, its ground handling services subsidiary LOT Services, and LOT Catering to other state-owned companies to generate cash to remain afloat. Competitors alleged the transactions represented hidden public financial support, but the European Commission in 2012 cleared the sale and said it did not involve illegal state aid.

The company stressed the creation of PGL does not mean that Lotams, LS Technics, and LSAS will serve as a benefactors of LOT. “All entities of the group will retain their identity [and] capital separation,” it said.

The establishment of PGL dates from January, but Poland’s Office for the Protection of Competition and Consumer Protection approved PGL’s takeover of LOT, Lotams and LSAS and LST only in August.

Planned investments include a new MRO facility for Lotams, located in the Rzeszów-Jasionka Port in the southeast part of Poland, to service widebody aircraft such as the Boeing 787, Boeing 777, and Airbus A350. PGL also aims to incorporate a lessor.

PGL describes itself as “another step towards consolidation of the CEE market, which is the most fragmented in Europe.” Passenger potential of the entire CEE region accounts for 180 million inhabitants.