April 2 (Bloomberg) -- The Polish government cleared the way for the sale of a majority stake in its unprofitable airline LOT as the national carrier implements a cost-cutting program to avoid a collapse.
The government, which holds a 93 percent stake in the Warsaw-based airline, approved draft legislation lifting a legal requirement that the state keep a majority stake in the company, the Treasury Ministry said in a statement today on its website. The changes to the law need to be approved by Parliament and signed by the president.
Poland plans to resume attempts and sell the airline to industry and financial investors after it becomes profitable next year, Treasury Minister Mikolaj Budzanowski said March 22. LOT lost a potential buyer in June when Turk Hava Yollari AO, or Turkish Airlines, ended talks because of European Union rules capping owners from outside the bloc.
“Privatizing LOT is one element of a thorough restructuring of the company,” Budzanowski was quoted as saying in today’s statement. “The Treasury will be able to offer a majority stake, which gives us the opportunity to attract a strong, stable industry or financial investor.”
LOT, central Europe’s biggest state-owned carrier, last month filed its proposals with the government, seeking to generate more than 150 million zloty ($46 million) of savings this year. The company has already started cutting jobs, sold assets and got a 400 million-zloty emergency loan from the government to prop up its finances.
The Treasury wants to preserve the LOT brand and its passenger hub in Warsaw, Budzanowski said.
State-owned carriers in post-communist Europe are struggling to survive as the global debt crisis coincides with high fuel prices and a EU clampdown on state aid. Hungary’s Malev Zrt. collapsed in 2012 while AS Estonian Air, Latvia’s AirBaltic AS and Slovenia’s Adria Airways d.d. asked for state support in past years after their losses mounted.
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