I’m Niemczycki, fly me

“WEA’s charter arm will make planned losses during the first two years .. But we will get close to the breakeven point by the end of 2002, and we expect profits in 2003.”
By : Robert Wylot

    Where eagles dare.

   Zbigniew Niemczycki transformed his airline, White Eagle Aviation (WEA), from a domestic puddle jumper to an international charter in the late 1990s. In 2001 he’s set his sights on an even larger target: LOT Polish Airlines (http://www.lot.com.pl).

   “This year will see the charter market divided between us and LOT,” Niemczycki said. “We’ll reach nearly 50% (of the market).”

   His grandiose plans are certainly ambitious, particularly considering that WEA’s fleet comprises just three aircraft.

   But the dearth of carriers hasn’t discouraged Niemczycki. He’s a licensed pilot who first entered the airline business in 1990 when he bought a 40 year-old CSS-13 aircraft. During the next few years, his small airline carried mostly cargo and the few odd businessmen wealthy enough to afford an air taxi. But Niemczycki was set on bigger things. In 1995 he founded General Aviation, later renamed WEA, and by 2000 he’d replaced his old cargo of businessmen and freight with vacationing Poles on their way to the Mediterranean and beyond.

   Now, 16 months later, WEA has positioned itself firmly among charter operators flying out of Poland, and Niemczycki has good reason to be optimistic.

   Last year WEA carried 78,000 passengers or 14.3% of the 564,000 charter passengers who flew out of Warsaw, according to statistics released by Fryderyk Chopin International Airport. That figure is likely to improve this year, after Niemczycki’s airline added an ATR 42 and a second Boeing 737-400 to its fleet.

   “We carried 114,000 passengers last year with just one aircraft,” said Niemczycki, whose passenger figures differ from those of the airport. “But we will certainly carry more than 200,000 passengers this year.”

   Recently he signed an agreement with Germany’s Preussag, the world’s leading travel operator, under which Preussag took a 29.3% stake in the airline in return for a capital injection. Niemczycki declined to quote the financials of the contract, but said he will use the remaining capital to expand the airline’s technical infrastructure and possibly purchase a third Boeing.

   “We are now building a hangar and expanding our technical facilities (at Warsaw’s airport), which will stabilize our position there,” Niemczycki said. “Until now, we have had to lease hangars from LOT.”

   But more than just increasing WEA’s infrastructure, the Preussag deal will increase the company’s market share. Under the deal, the German firm will integrate WEA into its massive global-travel industry network, which last year flew 10 million passengers on the seven airlines it owns or controls, and boarded 22 million people in its chain of 270 hotels. What is more, the alliance will also give WEA a preferred position with Preussag’s Polish travel companies – TUI Polska and Scan Holiday (http://www.scanholiday.com.pl).

   “The contract provides that we will now carry at least 60% of Scan Holiday’s and TUI’s travelers,” Niemczycki said. In comparison, WEA flew only 11-15% of TUI and Scan’s charter passengers last year.

   WEA’s growth in these markets could inevitably be at the expense of LOT. According to a report released by the national carrier, Scan Holiday booked more chartered flights than any travel agency in Poland last year and provided LOT with the largest percentage of its charter business (35%). With the amount of chartered flights booked by TUI thrown into the mix, the two travel companies provided LOT with 43% of its chartered flights in 2000.

   But if WEA’s larger stake in the charter business is causing any concern at LOT, company spokesman Leszek Chorzewski isn’t saying.

   “Much time will pass before the market is divided equally between us and White Eagle (http://www.whiteeagle),” said Chorzewski, who added that this year LOT will retain half the charter market in Poland, which includes about a dozen airlines.

   In addition, Chorzewski said LOT plans to increase its market share of Poland’s chartered flights to 54% in 2001, up from 52% last year. And according to LOT’s projections for 2001, the company is planning the increase while receiving just 12% of Scan’s charter business.

   The reason for LOT’s favorable projections is due, in part, to the dramatic growth of the chartered flight market in the past few years. Buoyed by a strong złoty that has allowed thousands of Poles to vacation in sunnier climes, the charter market grew 117% between 1997 and 2000, to 660,000 passengers from 303,400. According to LOT projections, the market will grow a further 22% this year.

   Elżbieta Marciszewska, an airline analyst at the Warsaw School of Economics, also forecasts further growth. “The charter market has very strong growth potential,” she said. “It’s possible that White Eagle will catch up with LOT’s position in the market in the future.”

   Yet despite its impressive rise in the market, WEA has yet to generate profit.

   “WEA’s charter arm will make planned losses during the first two years,” Niemczycki said. “But we will get close to the breakeven point by the end of 2002, and we expect profits in 2003.”

   Niemczycki said the airline will generate zł. 120 million-zł. 130 million ($28.6 mllion-$31 million) revenue in 2001.