Confusion over Air China’s Polish links

It was believed that Air China, one of the ‘Big Three’ in the country, was considering taking a considerable minority stake in LOT Polish Airlines. The Eastern European carrier has now denied this, claiming that any link with the Chinese carrier would be “simply commercial cooperation.”

Confusion has arisen over the involvement Air China is planning on having in Poland. The Chinese carrier was reportedly interested in acquiring a 49 percent stake in LOT Polish Airlines, and are scheduled to meet representatives from Poland’s finance ministry this week.

It has now been revealed that this is not the case, and any link would be for commercial reasons. The information being misinterpreted is thought to be due to the fact that Air China is scheduled to begin a service from Beijing to Warsaw – four times weekly. LOT Polish Airlines currently offers a three times weekly service to Beijing.

Although a 49 percent stake is significant, it must be in the minority as LOT is a European Union (EU) carrier – EU rules state that any EU carrier cannot be controlled by an outside entity. This issue has arisen previously for LOT, who have been interested in privatisation.

In 2012, Turkish Airlines were interested in acquiring LOT in order to grow business. As Turkish Airlines are not an EU carrier, they could not own a majority stake which is believed to be a major reason behind the deal falling through. Turkish Airlines released a press release following their decision, starting the acquisition would not bring the medium-to-long term growth that was initially envisioned, or that it would give Turkish a sustainable competitive advantage.

After the Turkish deal failed to materialise, in 2015 LOT were in talks with Indigo Partners – the firm behind Wizz Air – to strike up a partnership. At the time, Indigo indicated their intent to invest several hundred million zloty into the flag carrier in order to develop Warsaw Chopin into a hub for “the new Europe”, resulting in thousands of new jobs. It is believed this deal fell through due to the inaction on Warsaw’s part.

Despite the fact Air China will not buy shares in LOT Polish, a commercial cooperation would be beneficial to the Eastern European carrier. LOT would like to increase their frequencies to mainland China, but slot restrictions at Beijing Capital International makes it difficult to do so. As Air China are based in Beijing, it’s a logical step to work with them.

Sabre Market Intelligence Data shows that for the first quarter of the year, almost five and a half thousand passengers have flown from Warsaw to Beijing.