The carrier reached $2.6 billion in sales that translated into $276 million in net profit
A LOT Polish Airlines Boeing 737-800 (Photo: AirlineGeeks | William Derrickson)
According to the press release from the company, the Polish national carrier achieved a record-breaking 10.1 billion PLN ($2.6 billion USD) in revenue and 1.1 billion PLN ($276 million USD) in net profit. The result was highly anticipated and pre-announced even before the end of 2023, but now it is safe to say that the airline’s management delivered on its promises.
For LOT Polish Airlines, 2023 was its best year in history. Compared to last year’s financial performance, revenue grew by 21.9% with costs only rising by 7.9%. One of the key elements to such performance was a 9.7% fuel savings year-over-year, while the number of operations grew by 13% and the flight passenger carrying capacity of Available Seat Kilometers (ASKs) grew by 22%. Moreover, the fuel hedging generated another $22 million USD in financial gain for the carrier.
The financial result looks even better when compared to 2019. The airline’s revenue grew by 37.4% while costs rose 25%, resulting in nearly 15x higher than in 2019 net profit. The operating margin, as well as net margin, broke 10% in 2023, which was a far cry from 2019 when the carrier oscillated around 1% with its margins.
What did not contribute to the year-over-year growth was carried cargo. The carrier noted -35.5% in revenue, going down from $194 million USD to $125 million USD. That being said, cargo is not a major part of LOT’s business.
The peak performance was not only about the financials last year. LOT was named 4th most punctual airline in Europe by Cirium in 2023, which was mentioned by the company’s CEO, Michal Fijol: “LOT is punctual, hospitable and profitable. I would like to thank everyone who contributed to this success – it is thanks to their daily work that we can boast of such results.”
In 2023 LOT Polish Airlines paid down the first tranche of the outstanding debt the carrier had taken on during the pandemic slowdown. From the total of $460 million USD borrowed, the first tranche amounted to 115 million USD, with the upcoming tranches to be paid down in the years 2024-2026.
The government support was a necessity in 2020, and most of the European national carriers used it within the means allowed by the European Commission. Now though, it is hindering the carriers’ ability to grow. It is worth noting that LOT’s entire record-breaking profit of 2023 will not be enough for the company to get rid of the loans completely. It needs another year, just like this one, and the global aviation prognosis for 2024 is not as optimistic.
Putting the results into a long-term perspective, in October 2023 LOT Polish Airlines announced a strategy for the years 2024-2028. Slowly but surely it is taking steps in the right direction. In 2023 the carrier bought out seven narrowbody planes from financial leasing taking the fleet ownership to 12%. The aim is to have a fleet of 110 aircraft, which will already grow in 2024 from 76 units at the end of 2023 to 86 with the planned deliveries this year.
The fleet is just the means to support the tangible goal of carrying 17 million passengers annually by 2028. This assumption goes in line with the planned Solidarity Transport Hub, the new airport currently under construction in Poland. LOT is supposed to be the backbone to jumpstart the new airport operations. The target number is achievable only if the carrier maintains an average of 11% annual growth rate in passengers carried.
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