Lot chief Sebastian Mikosz plans quick turnround A LOT Polish Airlines Boeing 787 Dreamliner An enormous picture of tattooed former boxer Mike Tyson glowering from the tail fin of a Lot airliner shows that something is changing at the troubled Polish flag carrier. Inside the cabin, free newspapers have disappeared for economy class passengers and anyone wanting a sandwich will have to whip out a credit card to pay for it. "Those sandwiches have turned into a symbol of our restructuring," laughs Sebastian Mikosz, Lot's CEO, who was hired in February to save the airline after it was forced to turn to the government for a 400m zlotys ($126m) bailout late last year. The rescue was needed to keep Lot flying after the carrier last year reported an unexpected 150m zlotys loss instead of a promised 52m zlotys profit - its fifth annual loss. The carrier's CEO was fired and Mr Mikosz, a professional manager who headed Lot in 2009-10, was brought in to turn the airline around and quickly prepare it for sale. During his previous stint at Lot, Mr Mikosz fell foul of powerful labour unions, but this time around he was able to bring in swingeing cuts in the workforce, revamp contracts with pilots to make them more flexible, and try to squeeze savings and profits out of every aspect of the operation. The initial result is fairly positive. Originally, the airline had been prepared to ask for as much as 1bn zlotys of assistance. Now, a second tranche of aid has been pared back to 381m zlotys. "We want the aid to be as small as possible," says Mr Mikosz. He is frequently in Brussels discussing the aid package with the European Commission, which has to approve any rescue and will probably demand reductions in fleet size and routes in return for the bailout. Any reduction in aid means that Lot's cuts will have to be less severe. The commission's demand that Hungary's Malev repay €130m in state aid drove that airline into bankruptcy last year. Mr Mikosz has already started chopping away at Lot's network, trying to turn the airline into a long-haul carrier with destinations in Asia and North America fed by short-haul flights from Europe. The system is already starting to work, with Lot taking passengers from cities such as Belgrade and sending them on to Beijing, instead of just flying Poles to visit relatives in Chicago and Toronto. "We are no longer an ethnic long-haul carrier," says Mr Mikosz. There is no Polish diaspora in Beijing and our planes flying there are full. A country like Poland should have a local flag carrier Sebastian Mikosz A key to improved financial results is Boeing's 787 Dreamliner. After initial teething troubles that grounded two Dreamliners earlier this year (the airline is in compensation talks with Boeing), Lot now has a fleet of five, the largest in Europe, and three more on order. Lot is selling twice as many expensive business class seats on its long-haul flights as when it used older Boeing 767s. Mr Mikosz predicts that Lot will turn an operational profit in 2014 and by 2015 will be self-sustaining, something that could make it an attractive takeover target. The government also recently scrapped a rule requiring the state, which directly and indirectly owns 93 per cent of Lot, to retain a majority stake in the airline. He also points out that Poland's passenger market is expected to triple to about 20m in 15 years. "A country like Poland should have a local flag carrier," says Mr Mikosz, adding however that medium-sized European airlines can only survive over the long term if they are taken over by larger carriers. The problem is going to be finding a buyer. Lufthansa is probably Lot's most obvious partner - both are members of Star Alliance - but the German carrier has been engaged with absorbing its Austrian and Swiss acquisitions. Non-EU carriers have been looking at central Europe - Korean recently took a 44 per cent stake in neighbouring CSA Czech Airlines. However, EU regulations limiting them to a minority share of European airlines are scaring off some potential suitors. Turkish Airlines had been interested, but recently said EU rules "inhibit maximisation of [Turkish Airlines] shareholder value" and it would not participate in Lot's privatisation. Another potential buyer is thought to be Etihad Airways of the United Arab Emirates.