LOT Outlines International Expansion 2020

LOT Polish Airlines is planning to operate a fleet of seventy aircraft, including sixteen B787s, with an annual passenger throughput of 10 million by 2020 airline chairman Rafal Milczarski has said.

Outlining LOT's recently adopted four-year business plan during the 26th Economic Forum in Krynica this week, Milczarski said the strategy will see the carrier placing more focus on international expansion hence the need for more widebody aircraft.

The Polish carrier is facing increased pressure on the domestic and regional European fronts from carriers such as Ryanair thus necessitating the need to further abroad for newer, more commercially viable markets.

“Long-haul flights are the most profitable part of our business and being the only airline in the region, LOT has the related growth potential," he said. "We are mostly going to focus on developing flights to North America and the most important business centres in Asia."

Of the new markets it will target in Asia are Shenzhen, China where fellow Star Alliance member Shenzhen Airlines (ZH, Shenzhen) maintains its primary hub. Concerning North America, LOT plans to switch its New York services back to Newark with a 4x weekly (growing to 5x weekly) in Summer 2017.

"Connections to Central Asia and to the Middle East are particularly interesting from our perspective. Warsaw’s geographical location allows to develop an unmatched offering of flights to countries such as Kazakhstan or Iran. We are going to take advantage of that potential,” Milczarski said.

While it is seeking to expand its international footprint, LOT is also looking to recover lost local market share. The chairman said LOT was looking to claw back a 25% share in 2020. This will entail the carrier exceeding 10million passengers per annum as compared to the 4.3million registered in 2015.

"As new long-distance flights are launched, the number of short-distance flights, especially from Central and Eastern Europe, is going to go up as well. We assume that the percentage of transfer passengers, that is, those who change planes in Warsaw, is going to reach approximately 50% in 2020."

At present, LOT operates six B787-8s with a seventh and eighth due from Boeing this year and next year. As such, Milczarski said the added B787s would be acquired through sale/lease back agreements with third party firms so as to ease the financial burden on the carrier.

Fifteen new 150+ seater narrowbody aircraft will also be acquired from next year onwards although Milczarski did note that negotiations here were still at an early stage. The jets will likely be Boeing given LOT's intention to standardize its fleet.