Europe

LOT to Become Strategic Partner of the Estonian National Carrier

LOT Embraer 170
Tis Meyer / Planepics.org

The Polish carrier is strengthening its presence in the Baltic states.

LOT has executed a strategic partnership agreement with the Estonian national carrier, Nordica, and is intending to take up 49% of shares in its subsidiary Regional Jet, which operates a fleet of modern Bombardier CRJ regional planes.

Starting on the 19th of November, LOT will use its designator for all connections from Tallinn.

The Polish airline will temporarily base one of its Embraer aircraft in the capital of Estonia. At the same time, two CRJ900s will start operating direct flights from Warsaw on behalf of LOT.

This is an innovative model of cooperation, which will enable LOT to strengthen its position in Central and Eastern Europe, and allow both carriers to develop further, while preserving their national identities.

Nordica is the Estonian national carrier, established in 2015 by the decision of the Estonian government, after Estonian Air went out of business. It has a stable and established position on the Estonian market, from where it serves over a dozen European destinations.

Thanks to this new agreement, LOT will start operating flights under its LO designator, using planes operated y Regional Jet, including Nordica’s services between Tallinn and Brussels, Stockholm, Amsterdam, Vienna, Kiev, Vilnius, Oslo and Trondheim.

Apart from the sales network, Nordica will also take advantage of other elements of  the operational and commercial platforms of LOT, thus generating a scale effect, beneficial for both entities. As part of the cooperation business model, the entire commercial risk for flights from Tallinn will remain on Nordica’s side.

Rafał Milczarski, CEO of LOT, said:

“It is the first step towards consolidating the Central and Eastern European markets by LOT. At the same time, it is the first such cooperation between two carriers from the CEE region in such an innovative business model, demonstrating that airlines from our region are not condemned to be subordinate to the great players from Western Europe, to lose their national identities and limit their scope of operations.

“In fact, quite to the contrary. Together with LOT, they can develop further, while building an effective transfer hub in the centre of the region, Warsaw, especially with regard to long-distance flights.

“I am very happy that the Polish carrier builds synergy with its Estonian partner. Both Poland and Estonia, which is one of the most dynamically developing economies in Europe, will surely take advantage of it”.

Jaan Tamm, CEO of Nordica, said:

“Nordica has entered a new phase of its development. The cooperation with LOT Polish Airlines will enhance the sustainability of our business model and ensure the financial security and reliability of our company in the international aviation market.

“The willingness of LOT to become a minority shareholder in our subsidiary Regional Jet shows that cooperation with Nordica is taken seriously and that LOT sees it as a long-term partnership rather than a short-term project”.

Thanks to the investment in Regional Jet, a subsidiary of the Nordica group, LOT will gain access to the fleet of modern Bombardier CRJ planes, namely their 700 and 900 versions.

Both airlines the potential for expanding their collaboration in the upcoming seasons.

“Nordica’s flight schedule converges with ours in almost 100%. Using Regional Jet’s Bombardier CRJ-900 planes will enable us to have far higher operational flexibility, thus achieving higher cost effectiveness. For example, a plane flying from Warsaw to Stockholm will not have to stay overnight in Stockholm any more, but will be able to carry out another flight to Tallinn, where it will stay in its home base. This is not only much cheaper, but also lets us avoid the cost of crew accommodation”, said Rafał Milczarski.

The aircraft operated by Regional Jet will allow LOT  to launch new connections from Warsaw, as well as increasing the frequency of the existing ones.

“Our booking system will soon include a second, additional flight between Tallinn and Warsaw; this will enable us to power our hub more efficiently, especially with regards to long-distance flights. The same is going to take place in Vilnius, with a 5th daily flight appearing soon. It will strengthen the leading position of LOT on this route, regardless of the steps that our competitors will take. Soon there will be more positive changes of this kind, as well as new connections from Warsaw to Scandinavia”, Milczarski added.

The Bombardier CRJs will be fully maintained in their base in Tallinn, and fully manned by Estonian crews.

This enables LOT to carry on with its strategy of intensive growth, while reducing the need of the Polish carrier for additional cockpit and cabin crews, which is already high at this point, due to the confirmation of orders for new Boeing 787-8 Dreamliner and Boeing 737-800 / MAX 8 aircraft.

“Contrary to our Western competitors, we understand the national, historical and cultural specificity of Central and Eastern Europe. We are deeply convinced that not a single one of the proud countries living between the Baltic and Adriatic Seas will agree to losing direct flights to the main centres of Europe, carried out under the national airline brand. With its innovative model of cooperation, LOT offers synergy and joint development, without having to give up the national identity – this is an offer extended not only to our partners from Estonia, but also to other carriers from the region. It is worth taking advantage of this offer, since the few unfortunate examples from recent years show that losing a carrier always results in significant restrictions regarding connections with the world, as well as outflow of foreign investments. Together we are stronger”, Milczarski added.

The development of flight schedule, as well as the expansion in Central and Eastern Europe is one of the most important elements of the strategy carried out by LOT since the beginning of 2016.

The carrier started its development by abruptly expanding the number of flights scheduled for departure from its Warsaw hub.

This year, LOT opened 25 new routes, including two long-distance flights to Tokyo and Seoul.

In the upcoming year, LOT is going to launch two new long-distance flights to Newark and Los Angeles, as well as flights to new European destinations.

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