LOT Polish Airlines is reaping the benefits of a successful restructuring programme and its prime geographical position in the fast-growing Central and Eastern European region, writes Justin Burns
The European continent’s airline industry has taken quite a shock in recent months with the liquidation of the likes of Germania and flybmi but this in turn this has opened up more opportunities for other airlines.
Among those spreading their wings and expanding at pace is LOT Polish Airlines which continues to widen its network and global presence after some difficult years’ itself.
In 2018, LOT’s provisional financial results show a profit of $225 million, quite a turnaround from the $45.6 million loss posted in 2015, while its fleet now totals 81 aircraft compared to 45 in 2015 and the number of connections it now operates has risen to 111 from 41.
The airline now has a market share in the ever-expanding Polish market of 25 per cent, a substantial 5.6 per cent increase on the 19.4 per cent in 2015. Last year it welcomed 8.9 million passengers, a significant rise on the 6.8 million in 2017.
Robert Ludera, Director Network and Alliances, speaking at Routes Europe in Hannover last month, says LOT has achieved a lot over the last three years and has doubled in size in terms of passengers and connections.
“We have done it after quite a difficult time in our history after our restructuring programme between 2012 and 2015, but we are now doing well and are comfortable and continuing that expansion strategy across various means,” he says. “We have increased our market share and are staying profitable.”
Flexible fleet to meet challenges
LOT operates a wide-ranging fleet including 13 Boeing 787 Dreamliners, different variants of the Boeing 737 and also has 34 Embraer aircraft and 23 Bombardier aircraft. “We have quite a diversified fleet which might be an obstacle but we use it to our benefit as we use this flexibility to use it to adapt to demand and opportunities,” Ludera says.
The airline has been affected by the suspension of the Boeing 737 Max 8, as it has five of the aircraft in its fleet and temporarily stopped using them in March after the Ethiopian Airlines 737 Max crash in Ethiopia that killed 149.
LOT has continued scheduled operations using different types of aircraft and made modifications to its network and established a short-term leasing agreements to acquire additional aircraft to maintain continuity of operations.
“Of course, we are struggling a bit now with the grounding of the 737 Max 8 but hopefully it will be resolved soon and will not affect our operations for too much longer,” Ludera says.
The Star Alliance airline was the fastest growing in Central and Eastern Europe’s (CEE) top 10 airlines in 2018, with annual seat growth of 25.4 per cent.
LOT is the largest carrier in CEE by seats and this is the principal core focus market for growth from its main bases in Warsaw and others in Krakow and Budapest.
“Our strategy is to focus on CEE. We use the potential of the region which has a population of 108 million inhabitants via our Warsaw hub,” Ludera says. “We take advantage of development from other cities, not only from Warsaw. We focus on connectivity and transfers as over 50 per cent of our traffic is transfers.”
Poland is the biggest country market in CEE with almost twice as many seats in 2018 as second placed Romania, third placed Ukraine and fourth placed Czech Republic.
Poland and the CEE region are competitive with the likes of Wizz Air and Ryanair strong, but LOT is the number player in its home market “The competition in Poland is substantial but I believe there is room for competition and it is healthy for the market,” Ludera says.
Warsaw Chopin Airport is capacity stretched and the city is not set to get a new airport until 2027 and this could hinder growth, but Ludera says it will grow Warsaw as much as it can and add services in Krakow and Budapest.
“If there is not enough capacity in Warsaw we will continue our pace of growth in the region as we already now have around 20 routes not flying from Warsaw (including seven from Krakow and seven from Budapest),” he notes.
This month (May), LOT will start a new route from Vilnius (Lithuania) to London City Airport and Ludera says it will also continue growing its network like this from bases outside Poland.
North America and Asia targeted
LOT is the leading airline from CEE to North America which is one of its main focus markets, as in 2018 it had more than 3.5 times the capacity of number two Air Canada and grew its trans-Atlantic routes by up to 32 per cent last year. This year Ludera says it will add another connection when it serves Miami from June.
The airline already operates from Warsaw to New York JFK, Chicago, Toronto, Los Angeles, New York Newark and last summer launched new services from Krakow to Chicago and from Rzeszów to New York Newark and flights from Budapest to New York JFK and Chicago as its first trans-Atlantic services from outside Poland.
Asia is also a key target for network development and it will begin a new route to Delhi in September, and Colombo on a seasonal basis in November. May 2018 saw a landmark moment for LOT when it resumed a Warsaw-Singapore route after 23 years of not flying the connection.
Ludera says the airline is now looking at growth opportunities for summer 2020 and beyond, especially within CEE region, on intra-European routes to and from Warsaw, Budapest and Polish destinations, to North America and Asian destinations from Warsaw and Budapest and to the Middle East and Central Asia from Warsaw.
The future certainly looks bright for LOT and through diligent financial planning and network development it is set to grow its global coverage.