By John Reed in Warsaw
Published: October 9 2001 20:34 | Last Updated: October 9 2001 20:40
Poland said it would recapitalise troubled national carrier, Lot Polish Airlines, to help it secure financing for a restructuring plan.
Meeting on Tuesday, the government decided to increase PLL Lot's capital with state-held shares in three companies to give it collateral for financing worth 400m zlotys ($97m).
Lot, which gains much of its revenue from transatlantic flights, has been hit hard by the drop-off in traffic since September 11 and then the collapse of SAIR Group, which owns 37.6 per cent of its shares. The government said recently it might seek a strategic partner for Lot, and it has extended the airline guarantees to keep its fleet in the air after insurers capped war-risk coverage.
Under the plan announced on Tuesday, Lot will be recapitalised with up to 2.41 per cent of state-held shares of retail bank Pekao SA, up to 2.5 per cent of metals concern KGHM Polska Miedz, and up to 26.5 per cent of trading company Impexmetal, the government said.
The move would raise the Polish treasury's ownership of Lot by "several percentage points".
But it warned that "it is essential that the money not be used to plug holes, but to help [Lot's] financial liquidity and allow for a deep restructuring of its activities".
Swissair first invested in Lot in 1999 as part of a strategy of seeking minority stakes in other small carriers. The Polish airline was a rare cash cow for the Swiss company until recently, when the economic downturn led it to report a loss of 252m zlotys in the first half of this year.
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