British Airways was favourite to take a 38% equity stake in Lot, but relations between the two have deteriorated. For example, there was the niggle over the Polish airline's decision to announce its codeshare deal with BA ahead of the UK carrier. Now, the limited nature of BA's offer to the Polish Government threatens to unhinge its favoured status.
Poland has received six bids for the 38% stake. Swissair, Finnair, and an unnamed American carrier have also submitted offers, as have Lufthansa and SAS, with the latter possibly forming a joint bid on behalf of the Star Alliance.
Entry into a global alliance is at the core of Lot's privatisation strategy, but until recently the carrier favoured the BA-led oneworld option. The Polish airline could fill an important gap in the alliance's route network into eastern Russia and central Asia. BA cannot economically fly into this region from London but LOT could from Warsaw.
BA, however, could be on the verge of losing to either SAS or Lufthansa. It is thought that the Swedish-German bid is offering full and direct enry into the Star Alliance, whereas the UK carrier is only willing to give LOT limited oneworld membership. This would be based on using the Polish airline as a feeder for BA's long-haul routes in return for the former's routes into central Asia.
If its bid is unsuccessful, BA could turn its attention to Malév, which is being prepared for privatisation next year. The Hungarian flag carrier would plug oneworld's Asian hole equally well, with its recently announced route network into the region. BA says it is not interested in a stake "at this stage".
Martin Borghetto, equity analyst with Morgan Stanley in London, says: "I can't make up my mind whether Lotor Malév is better for BA."
But the UK airline could be outgunned over Malév, too. Swissair is thought to have expressed an interest in buying a stake from the Hungarian Government despite the absence of a formal privatisation timetable.
Malév was also unhappy at hints last year that the UK carrier would force it to give up its long-haul routes to Bangkok and New York as a condition of purchasing an equity stake.
There is a lot of interest in Malév because it has a proportionally high number of international business class travellers - a result of the importance of foriegn investment in the Hungarian economy.
"Malév has a lot of objectives in getting into an alliance," says Ed Smick, a consultant with SH&E who is advising the Hungarian airline on its privatisation strategy. "Route network is one, tying into broader marketing programmes another. I would be very disappointed if Malév just turned into a feeder airline if it did join a global alliance."
Source: Airline Business
