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Air China and the Warsaw connection – new direct flights and a LOT share purchase?

In a move that connects two Star Alliance hubs, Air China has begun flights to fellow Star member LOT Polish Airlines’ hub in Warsaw, Poland.

Air China will serve the Polish capital 4x weekly from their Beijing hub on their Airbus A330 aircraft to compete with LOT’s existing direct flights which is a bit odd because…..

It seems as though Air China might be in the running to purchase about 49% of LOT stock to become one of the airline’s majority shareholders. It makes sense because both are Star carriers and Air China will seek to increase their European footprint through a solid Warsaw hub, but it definitely strikes us a move from left field given CA’s hesitance to involve themselves in much foreign investment prior to this move.

LOT1

Apparently word on the street is that Air China representatives are meeting with senior Polish government officials, the deputy Prime Minister of Poland and the CEO of LOT to push the move through. The parties had already met on August 3 and had ‘fruitful discussions’ on the purchase, with just some smaller details left to be ironed out.

LOT is also in a position whereby a foreign purchase might be beneficiary for the airline, given their financial state and capacity to grow – and a fellow Star carrier would be an ideal option for them. Deputy Polish Prime Minister Mateusz Morawiecki had this to say about the deal:

“LOT is our national carrier, which we are trying to save no matter the cost. It is deeply in debt. The previous government has already granted public support for LOT, we cannot grant another and we are looking for an investor. According to EU law a carrier from outside the EU cannot take over more than 49 per cent of a carrier from the EU, hence we are in talks with potential investors, among others, from China”

At the very least we feel a solid code share agreement is in place with the new Air China flights to Warsaw, otherwise the potential for greater cooperation is there – LOT is a smaller player in the European market with just eight long haul aircraft including their newly acquired 787 fleet – they are ripe for the picking and Air China seems to be in a buying mood.

Should this deal go through I see some prosperity in Air China’s European future, LOT’s presence in the Asian market and the development of Warsaw as a Star hub in Northern Europe as an alternate to the existing German Star Alliance mega hubs.

 

 

 

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