Big milestone for Polish and European aviation market has been reached: four key companies (LOT Polish Airlines, LOTAMS, LS Airport Services and LS Technics) unified forces under the same roof – the Polish Aviation Group. This move starts the integration of aviation sector in Poland and the entire CEE region.
On October 10th 2018, four Polish leading aviation companies were transferred to Polish Aviation Group (PGL) as in-kind assets. From now on, LOT Polish Airlines – the flag carrier of Poland, LOTAMS and LS Technics global aircraft maintenance services provider, and LSAS responsible for handling services will be sharing the same goals and profitable growth strategy under one integrated structure and common management centre. This is a window of opportunity as each company has already achieved to become a profitable and developing entity with the potential to take over the role of a regional leader in its sector.
“Thanks to the integration of so far leading aviation companies into PGL, each passenger will be in the hands of one capital group and not several companies which did not share common goals and development strategy. Consolidation combined with growing passenger demand will require effective business management across all segments of the industry. As a result, our passengers will gain a wider choice of connections, a more competitive offer and better service both on the ground and onboard and result with a higher standard of travel as well as best value for their money” emphasized Rafał Milczarski.
PGL consolidation will bring the balance of power in the growing aviation market in Europe, as well as positive competitiveness to the services provided by other strong entities on the market. PGL will operate on a similar basis to other aviation groups around the world organized around major airlines, such as the Lufthansa Group, IAG and Air France-KLM. This does not mean, however, that the other companies will develop for the benefit of LOT – all entities of the group will retain their identity, capital separation and will continue to expand their business activity in the aviation market in Poland as well as abroad.
The establishment of PGL is another step towards the consolidation of the CEE market which is the most fragmented in Europe. Passenger potential of the entire CEE region accounts for 180 million inhabitants. According to IATA forecasts, until 2036 entire European market will grow at 2.3%, and will add an additional 550 million passengers a year. The total market will account for 1.5 billion passengers.
“I am certain that PGL will stimulate the development of the aviation sector both in Poland and fragmented Central and Eastern Europe. It will allow improving the efficiency coming from a common strategy in leveraging operations, investing in advanced technologies while expanding the most modern fleet, better flow of information and know-how, as well as joint planning and group procurement. The establishment of a strong PGL is in the interest of the Polish economy, but also in the interest of all passengers travelling from Europe and beyond,” he added.
In August 2018 the Office for the Protection of Competition and Consumer Protection (UOKiK) gave its consent for PGL to take over LOT, LOTAMS and LSAS and LST.
Forecasts of the rapid development of the aviation sector in CEE plans to build the Central Transportation Hub, for which the Polish government will need a strong aviation group, i.e. a carrier with a large market share and efficient maintenance and handling companies integrated within the group. The aim of the group is to effectively compete with other major groups which potentially might be interested in operating at the new central hub in Poland.
The first investment announced by PGL is the MRO base (Maintenace Repair and Overhaul), which will be created within three years by LOTAMS in the Rzeszów-Jasionka Port in the southern-east part of Poland. The investment includes hangars for aircraft maintenance, which are to be adapted, among other, to service the latest generation of wide-body aircraft, such as Boeing 787 Dreamliner, Boeing 777 or Airbus A350.
In the next steps, PGL will also include a company dealing with aircraft acquisition and leasing for airlines as well as the entity investing in the real-estate, technologies and innovations for the future growth of the aviation market in Central and Eastern Europe.
Warsaw, 10 October 2018