LOT Plans Mass Layoffs
March 1, 2013
Poland’s troubled national air carrier PLL LOT will lay off up to 40 percent of its employees under a rescue plan that officials hope will pull the company out of a nose-dive next year.
LOT has been generating losses since 2006 and it recently faced more problems after its newly purchased Boeing 787 Dreamliner planes were grounded following a succession of technical faults found in aircraft of this type used by other airlines.
Layoffs at LOT will begin this March and will hit both flight crews and ground staff. They are part of a restructuring plan that Poland’s Treasury Ministry hopes will next year staunch the company’s losses.
Deputy Treasury Minister Rafał Baniak told the Newseria news agency that LOT employees will be laid off gradually as selected destinations are canceled, planes are retired and other stages of the rescue plan are carried out.
Public consultations on the plan are under way and employees who take part in a voluntary redundancy program will receive extra benefits. Those who lose their jobs in group layoffs will receive severance packages, as required under the Labor Code. The rescue plan will also see unprofitable routes scrapped while more flights will be offered on profitable routes.
Baniak has also announced that a law which currently prevents private investors from acquiring a majority stake in LOT will be changed. The move aims to enable the company to be privatized soon. The Treasury Ministry is searching for potential investors, as is LOT itself, with the help of an adviser.
The company has been hit by technical problems with its new Boeing 787 Dreamliners. LOT is the first European airline to have bought such planes, but the two machines delivered to the Polish carrier so far have been grounded since Jan. 17, after the U.S. Federal Aviation Administration and then the European Aviation Safety Agency imposed a flight ban on all Dreamliners for safety reasons. As a result, LOT has been forced to continue operating Boeing 767 planes which it planned to retire in March.
“We will expect Boeing to offer compensation for the fact that aircraft which should be in operation and which the business plan was based on are not allowed to fly,” said Baniak. LOT is prepared for its Dreamliners to be grounded until the end of October.
Baniak also said that even though LOT needs to use older planes for now, it is not canceling any of its four long-haul routes to New York, Chicago, Toronto and Beijing. The air carrier is in constant touch with Boeing’s headquarters and the Treasury Ministry hopes the American aircraft producer will handle the Dreamliner problem “not in a purely business fashion, but like a partner company of LOT should,” Baniak said.