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Wednesday, May 22, 2024

Speculation flies over LOT takeover

Norwegian Air has confirmed that its chief executive Bjørn Kjos has attended a meeting with government authorities in Poland, but won’t say what was on their agenda. A Polish newspaper, however, reports that the meeting involved Norwegian’s possible takeover of the country’s national airline LOT.

Speculation has taken off over whether Norwegian Air might take over LOT Polish Airlines. PHOTO: Norwegian
Speculation has taken off over whether Norwegian Air might take over LOT Polish Airlines. PHOTO: Norwegian

“I can confirm that Bjørn has been at a meeting with authorities in Poland,” Norwegian’s communications director Anne-Sissel Skånvik told newspaper Dagens Næringsliv (DN) on Tuesday. “I can’t say anything about the subject of their talks.”

Polish newspaper Rzeczpospolita, however, has reported that Kjos was asked to either take over or buy into state-owned LOT Polish Airlines, which hasn’t turned a profit for five years. The government reportedly is keen to privatize LOT, which is part of the large global frequent flyer program Star Alliance (along with Norwegian’s arch rival SAS and airlines including Lufthansa and United) but has serious economic problems.

Kjos reportedly asked for detailed information on the company before he and his colleagues might formulate a bid for LOT, which has a fleet of 33 short-haul and seven long-haul aircraft including one of the first Boeing 787 Dreamliners that Norwegian is also acquiring for its new intercontinental expansion.

LOT clearly was aware that Norwegian Air, which recently reported strong profits and has seen its share price soar, may have the financial muscle and interest to take over the troubled Polish carrier. The two airlines may also be a good strategic fit, since Norwegian has long been active in the Polish market and now is keen to expand with long-haul routes, not just routes within Europe.

LOT also has two of the Dreamliners that Kjos wants to use on long-haul routes and has six more on order. Kjos, who’s in an expansion mode, has been looking for more Dreamliners himself, and also may be able to acquire LOT at a relatively low price given its financial turbulence.

Legislation can clear the way
A spokesman in Poland’s finance ministry told DN that the Polish prime minister has proposed a new law that would allow the state to own less than 51 percent of LOT and eventually sell off the state’s holdings completely. The proposal is now under consideration in the Polish parliament.

Kjos declined immediate comment and the Polish spokesman would confirm only that the privatization process for LOT was underway “and we have contact with possible private investors. But we won’t say anything about our talks underway.”

Analyst Kenneth Sivertsen at Arctic Securities noted that Norwegian Air has bought other airlines earlier, including FlyNordic in Sweden, and that it once had a base in Poland. It was shut down, however, because Norwegian lacked an operation large enough to make it profitable.

Views and News from Norway/Nina Berglund

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