Polish flag carrier LOT has decided to pursue privatisation next year and has hired an advisor to help it decide on whether to go for a public offering or sell to a strategic partner.
LOT CIO Tomasz Kochan says "the decision has already been made" to privatise and the carrier's new management team is now aiming to complete a sale in the third quarter of 2011. He says LOT recently selected JP Morgan as its advisor for the privatisation process.
Kochan says LOT has not yet decided to pursue an initial public offering (IPO) or to sell to another airline. Lufthansa CEO designate Christoph Franz recently said the German carrier would look into buying LOT but a Lufthansa spokesman played down the comments, saying it would naturally pay attention to the privatisation process at LOT but has not yet made any formal decision to participate. Lufthansa and LOT are both members of the Star Alliance.
LOT has long been a target of privatisation by the Polish Government but has struggled to achieve financial and management stability. In late September, LOT appointed new CEOs and CFOs, marking its seventh CEO change in only five years.
The Polish Government has a 68% share in LOT while a regional economic fund holds 25%. The remainder is owned by staff.
Kochan says LOT now has the financial stability to pursue privatisation. After incurring large losses in 2008 and 2009, Kochan says LOT is now on path to roughly break even in 2010.
"The plan was to show black figures this year but unfortunately the ash cloud from the volcano grounded us for six days," Kochan told Flightglobal after speaking at the 15 October Amadeus Horizons 2010 conference in San Francisco.
Kochan has overseen an IT transformation at LOT, which also helps position the carrier for privatisation. The transformation has already resulted in implementing several new systems from Amadeus, including a new inventory system. Kochan says a new revenue accounting system from Kale Consultants will be implemented next year and LOT recently issued a request for information for a new MRO system, which will be the last of its legacy systems to be replaced.
Kochan says LOT has doubled its annual IT investment from 2008 to 2009 to support the IT transformation and the carrier is also now looking at investing in ancillary service solutions to facilitate plans to introduce more ancillary streams. Kochan says LOT's ancillary business is now "very small" but needs to grow as the carrier faces stiff competition against low-cost carrier's across its short-haul network.
LOT also has a small long-haul network operated with six widebody aircraft. Kochan says LOT still expects to begin replacing its widebody fleet in November 2011, when the first of eight new 787s is now slated for delivery.
Source: Air Transport Intelligence news
