Gov't raises LOT's capital by EUR 243 million in first tranche of aid

Łukasz Gągulski/PAP

The Polish government has raised the capital of PLL LOT, the national airline, by PLN 1.1 billion (EUR 243 million) in the first tranche of a government aid programme for the flag carrier.

LOT, like nearly all airlines, has seen passenger numbers plummet owing to the pandemic. Earlier this month the airline announced it had carried around 2 million passengers this year, instead of the 12 million predicted in January.

"Implementation of the aid plan announced by the government for LOTPLAirlines has begun. The first tranche has been launched, increasing the capital by PLN 1.1 billion," the Ministry of State Assets wrote on its Twitter account.

The ministry said in mid-December that the aid package for LOT adopted by the government and approved by the European Commission would enable the company to continue functioning despite the Covid-19 pandemic and would save thousands of jobs, not only in the aviation sector.

It added that "the possible collapse of the airline would be unacceptable from the point of view of the country's economic and strategic interests."

"Hence the Government of Poland took the decision to grant LOT aid," the ministry said.

The European Commission announced in December that it had approved two Polish aid packages, amounting, in total, to a about EUR 650 million (about PLN 2.9 billion), designed to support the airline. It specified that the aid would be in the form of subsidised loans to the tune of EUR 400 million (about PLN 1.8 billion) and a capital injection of about EUR 250 million (about PLN 1.1 billion).

Margrethe Vestager, vice-president of the European Commission and responsible for competition policy, said at the time that LOT played a key role in Poland's economy and network of connections.

The Commission ruled that the government aid was in line with Art. 107 of the Treaty on the Functioning of the European Union, and with the conditions on temporary legal measures.

The Polish Aviation Group (PGL), a State Treasury company, is the 100-percent owner of PLL LOT and the rights attached to shares in the company are exercised by the Minister of State Assets.