Swissair grabs piece of pie in sky - Many expect investor to take passive role in Polish LOT, with little restructuring
The Treasury Ministry's decision last week to pick Swissair as a strategic investor in LOT Polish Airlines likely brings short-term gains, but also raises some long-term questions, industry members and analysts said.
"It's a short- to medium-term gain, vs. the longer term," said one airline official, who asked not be identified.
Swissair is expected to make few changes to LOT's management or staff, and is expected by many to take a somewhat passive role. "If I am a shareholder, then the aim is to maximize the value of the airline in the long run," said Ferenc Turi, managing director at consulting firm Roland Berger & Partners and former sales director at Hungary's Malev airlines.
Last Wednesday, the Treasury Ministry confirmed that Swissair had been chosen for final talks on becoming a strategic investor in LOT Polish Airlines. Under preliminary terms, Swissair will initially take a 10% stake in LOT, increasing ownership to 38% through a capital increase. Neither government nor Swissair officials would reveal the tender price. Swissair's bid is rumored to almost double bids by German carrier Lufthansa and British Airways, which ran about $100 million, according to local press reports.
Membership in an alliance of air carriers was a main requirement for becoming a strategic investor in LOT. Swissair belongs to the Qualiflyer alliance, which has Swissair, Sabena, TAP Air Portugal and Turkish Airlines, along with several smaller airlines.
But Qualiflyer, which is seen as mainly a European alliance, has not been having an easy time of it. Several weeks ago, according to Turi, Austrian Airlines pulled out of Qualiflyer and moved over to Star Alliance, which, along with Lufthansa and SAS, includes airlines such as United Airlines and Air Canada in North America as well as Ansett Australia and Air New Zealand in the Pacific region.
"I think the Swissair alliance is not one of the most powerful alliances in the world right now," Turi said.
But Ole Johansson, country manager for SAS Scandinavian Airlines, said that he could see the advantage of LOT entering Qualiflyer. "They would be able to play a more important role," he said. If they were to join a larger alliance, he also noted, they could be viewed more as a marginal partner.
Moreover, Qualiflyer is gravitating toward a larger, global alliance. And, according to Turi, the Qualiflyer group was recently invited to talks with the alliance being formed by Delta Airlines and Air France.
After winning the tender, Swissair said it would make few changes in LOT's management structure. This, however, is something over which Turi expressed concern.
"They still carry the burdens of the past," he said, while also acknowledging that Central European airlines have made strides forward in past years. "I know that any of these airlines needs thorough restructuring," he said.
Both the Treasury Ministry and Swissair would like to see an agreement signed before the end of the year. "It could be tomorrow, it could be in a month's time," said Agnieszka Dluska, a member of the Treasury Ministry's press department.
