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Poles put LOT on the block
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October 4, 1999: 9:08 a.m. ET
Three major European airlines bid for 38% stake of Polish flag carrier
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LONDON (CNNfn) - Three major European airlines are fighting it out to buy a 38 percent stake in LOT Polish Airlines, eastern Europe's largest and only profitable airline.
The three airlines -- British Airways, Lufthansa and Swissair -- all submitted sealed bids to the Polish government last week. Warsaw is expected to decide on its choice within a month, although one airline official said that could involve paring down the field to two contenders for a final bidding round.
"The Polish government has indicated it wants to complete the industrial partner side of the privatization process by the end of the year," the official told CNNfn.com.
The sale of the stake to an airline partner will kick-start the planned sell-off of the Polish flag carrier, which has dragged through most of the 1990s. LOT employees will be handed a 10 percent stake in the airline next year, before the rest of the airline is offered on the stock market in 2001.
There appears no clear favorite between the three bidders, with each one already cooperating with LOT on specific routes.
"Each could make a case," Chris Tarry, airline analyst at Commerzbank told CNNfn.com. "For the vendor, it's not just about the price but also what each bidder can bring to the party,"
LOT is valued between $200 million to $300 million, and is widely regarded as having the most progressive management in Eastern Europe. It was the first to dispose of all its Soviet era aircraft and move to a fully Western fleet -- mainly Boeing 737s and Franco-Italian ATR turboprops.
In 1998, LOT made a profit of $500,000 on revenue of $613 million and carried 5.1 million passengers.
The privatization of LOT is part of a wider sell-off of state-owned assets. In August, two bidders emerged for a stake in Poland's state-run telecom company, TPSA. The telecom company is valued at up to $3.5 billion, making it the largest proposed disposal so far.
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