Brussels probe into Lot state aid

Brussels probe into Lot state aid

A Brussels probe into whether Poland broke EU competition rules in supplying €200 million in state aid to lossmaking Lot Polish Airlines has been instigated.

The investigation aims to verify whether the aid will turn Lot around and allow it to become a viable carrier without further infusions of state capital.

The European Commission said it “has doubts whether Lot’s restructuring plan complies with the requirements” of the EU’s guidelines on state aid.

It also had misgivings over whether proposed capacity reduction was enough not to distort competition and whether the airline was contributing enough to its own rescue, the Financial Times reports.

Brussels will also look at whether Lot has received other state aid, which would make it ineligible for the current rescue programme as such efforts are only permitted once a decade.

Lot chief executive Sebastian Mikosz said: “The commission routinely launches such a procedure in the case of entities, including airlines, asking for public help in order to restructure.”

Lot posted a 400m zlotys (€96m) loss in 2012, its fifth year of losses, and needed an immediate injection of aid to keep flying.

Mikosz, who took over in February, has been slashing costs, revamping contracts with workers, and restructuring the airline’s network.

His aim is to repair the state-owned airline as quickly as possible and then put it up for sale.

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