LOT's contract termination could bode ill for other deals
AMR officials hinted that LOT's decision to terminate the contract will not only affect ground service at Warsaw's Okecie Airport, but also calls into question future cooperation between the two airlines.
"From my point of view it has been a very successful venture for us, for LOT, and for the Warsaw airport," said AMR Services President Thomas Metzler, adding that ground service delays decreased 34% from 1993 to 1994 while traffic increased. "Airplanes are leaving on time and bags are getting on the same planes as passengers - which is a good sign."
AMR Services is a subsidiary of American Airlines' parent company, AMR Corporation, which has been snuggling up to the state-owned Polish airlines - scheduled to be privatized in 1997 - through various other agreements on code-sharing reservations and research on air services efficiency and productivity.
"I think each one of those deals will be viewed independently, but both parties will look at individual items in the framework of the entire relationship," Metzler said.
The $10 million management contract signed in 1992 between LOT and AMR Services was based on a five-year plan which called for three years of organizing ground services and two years of employee training. In a surprise move, however, LOT took advantage of a clause that allowed either party to terminate the contract after only three years, leaving AMR guessing as to what the reasons could be.
"They haven't been open enough to tell us why they decided to do it," said AMR Services' assistant managing director Michael O'Donnell. "That's why we're so confused."
LOT maintains that they were satisfied with the cooperation and the results it has brought to ground services in Warsaw, but that they feel employees are now ready to go it alone. Skeptics say it was simply an attempt by the airline to save money without considering additional benefits cooperation could bring.
LOT's decision to terminate the management contract with AMR Services followed the election in May of a new management board at LOT. It was made at the request of LOT Ground Services, which currently consists of only three people, and was anxious to take over the 800 workers employed by AMR Polska, the company to which LOT Ground Services sub-contracts work.
The termination letter also came on the heels of a meeting between AMR Corporation President Robert Crandall and LOT President Jan Litwinski where the two discussed expanding cooperation and extending the contract. AMR expressed an interest in eventually investing in LOT Ground Services and becoming part owner.
But cooperation on ground services was not the final aim of increasing ties between the two airlines.
In May of last year LOT chose American Airlines over competitors like Delta and Lufthansa to form a strategic alliance which called for deeper cooperation between the two including code-sharing for making joint reservations, crew allocations and studies on how to turn Warsaw into a major regional hub.
The strategic alliance was expected to help LOT increase passenger traffic by up to 30%, and was also seen as an important step toward increased efficiency before privatization.
These agreements could be in jeopardy now that LOT has canceled the management contract.
"We always used this operation here as a foundation for cooperation in the future," said Mike O'Donnell of AMR Services. "Now they're taking away the foundation thinking that the house will still stand."
There have even been suggestions that American Airlines planes could start landing in Warsaw. O'Donnell said that there is one route open from Chicago to Warsaw, and that it would be no problem to take it.
"Right now it makes more sense to fly to Warsaw," said O'Donnell, explaining that American had announced and then scrapped attempts to open service to Poland in 1989. "But we were working on the basis of a strategic alliance."
O'Donnell adds: "We were trying to make them see us more as a partner than a competitor."
"From my point of view it has been a very successful venture for us, for LOT, and for the Warsaw airport," said AMR Services President Thomas Metzler, adding that ground service delays decreased 34% from 1993 to 1994 while traffic increased. "Airplanes are leaving on time and bags are getting on the same planes as passengers - which is a good sign."
AMR Services is a subsidiary of American Airlines' parent company, AMR Corporation, which has been snuggling up to the state-owned Polish airlines - scheduled to be privatized in 1997 - through various other agreements on code-sharing reservations and research on air services efficiency and productivity.
"I think each one of those deals will be viewed independently, but both parties will look at individual items in the framework of the entire relationship," Metzler said.
The $10 million management contract signed in 1992 between LOT and AMR Services was based on a five-year plan which called for three years of organizing ground services and two years of employee training. In a surprise move, however, LOT took advantage of a clause that allowed either party to terminate the contract after only three years, leaving AMR guessing as to what the reasons could be.
"They haven't been open enough to tell us why they decided to do it," said AMR Services' assistant managing director Michael O'Donnell. "That's why we're so confused."
LOT maintains that they were satisfied with the cooperation and the results it has brought to ground services in Warsaw, but that they feel employees are now ready to go it alone. Skeptics say it was simply an attempt by the airline to save money without considering additional benefits cooperation could bring.
LOT's decision to terminate the management contract with AMR Services followed the election in May of a new management board at LOT. It was made at the request of LOT Ground Services, which currently consists of only three people, and was anxious to take over the 800 workers employed by AMR Polska, the company to which LOT Ground Services sub-contracts work.
The termination letter also came on the heels of a meeting between AMR Corporation President Robert Crandall and LOT President Jan Litwinski where the two discussed expanding cooperation and extending the contract. AMR expressed an interest in eventually investing in LOT Ground Services and becoming part owner.
But cooperation on ground services was not the final aim of increasing ties between the two airlines.
In May of last year LOT chose American Airlines over competitors like Delta and Lufthansa to form a strategic alliance which called for deeper cooperation between the two including code-sharing for making joint reservations, crew allocations and studies on how to turn Warsaw into a major regional hub.
The strategic alliance was expected to help LOT increase passenger traffic by up to 30%, and was also seen as an important step toward increased efficiency before privatization.
These agreements could be in jeopardy now that LOT has canceled the management contract.
"We always used this operation here as a foundation for cooperation in the future," said Mike O'Donnell of AMR Services. "Now they're taking away the foundation thinking that the house will still stand."
There have even been suggestions that American Airlines planes could start landing in Warsaw. O'Donnell said that there is one route open from Chicago to Warsaw, and that it would be no problem to take it.
"Right now it makes more sense to fly to Warsaw," said O'Donnell, explaining that American had announced and then scrapped attempts to open service to Poland in 1989. "But we were working on the basis of a strategic alliance."
O'Donnell adds: "We were trying to make them see us more as a partner than a competitor."
