Poland's LOT sees losses, higher fares

WARSAW, Poland -

Poland's national airline, LOT SA, said Thursday that its first-quarter losses more than doubled as a result of soaring fuel costs, and warned that it would probably have to raise ticket prices.

Konrad Tyrajski, a LOT board member responsible for finance, said the airline lost 101 million zlotys ($46 million) in the January-March period. That compared with losses of 44.6 million zlotys ($20 million) a year earlier.

A hike in ticket prices "is very likely" as a result, he said at a news conference in Warsaw.

He did not say by how much fares might rise, and neither he nor LOT president Dariusz Nowak said when they might go up.

Nowak said that the airline was also looking for other ways to control costs to limit the increases on ticket prices. But, he added, for now "cheap tickets are not the best thing for us."
he airline also presented planned changes at its low-cost subsidiary, Centralwings, which has suffered from financial troubles.

Nowak said Centralwings plans to expand its charter connections and put less emphasis on its budget flight operation.

He also said that Tomasz Szymczak - the president since 2006 of Warsaw Airport Services, which manages the capital's airport - would become Centralwings' new director.
Source:forbes.com

Poland's PGNiG buys 10 percent of chemicals group Tarnow in poorly-bid IPO

WARSAW (Thomson Financial) - Polish blue-chip gas company PGNiG bought a more than 10 percent stake in state-owned chemicals maker Tarnow for around 78 million Polish zlotys in its initial public offering, PGNiG said in a statement on Wednesday.

PGNiG said in a statement it bought 4 million shares in Tarnow, helping keep most of the company in state hands after an IPO that was intended to sell off around 40 percent of the state-owned company to private investors.

Reuters also reported a source close to the transaction as saying that another state-controlled company, the country's largest chemicals producer Ciech, had also bought a five percent stake in the IPO.

Tarnow was seeking to raise at least 307.5 million zlotys from the sale of 16 million new shares in Tarnow, which would reduce the government's stake to 60 percent. But the company said today it sold 15.1 million shares at 19.50 zlotys each, which values the stake sold at 295 million zlotys.
Source: By Patrick Graham, forbes.com

Poland May output low but economy still healthy

(Adds analysts, detail)
By Piotr Bujnicki and Urszula Kaczorowska
WARSAW, June 18 (Reuters) - Polish industrial output came in well below market expectations in May but most analysts said this was due to a statistical effect and central Europe's largest economy remained healthy for now.
The zloty and bonds hardly reacted to the statistical office's data showing output rose 2.3 percent year-on-year against 7.4 percent expected by analysts in a Reuters poll and 15.1 percent in April.
Analysts said the Monetary Policy Council (MPC) was still likely to raise interest rates at next week's meeting as a rise in producer prices by half a percentage point to 2.8 pointed to strong inflationary pressures in the economy.
"The output data is strongly affected by two long weekends in May ...So we don't think this will affect the way the MPC sees the economy," said Ryszard Petru, chief economist at BPH Bank in Warsaw.
The expected June rate hike would bring the main rate to 6 percent from the current 5.75 percent.
May consumer price inflation stood at 4.4 percent -- the highest level since December 2004 and almost two percentage points above the central bank's target of 2.5 percent.
The MPC has already raised rates seven times bringing the main rate to 5.75 percent, responding to a booming economy which grew by 6.1 percent in the first quarter. In 2008 the economy is expected to grow by 5.5 percent compared to 6.6 percent in 2007.
"We do not think today's data constitutes a collapse in economic activity in Poland, but rather expect a gradual slowdown in GDP growth in the coming quarters," Piotr Kalisz economist at Citibank Handlowy in Warsaw wrote in a note.
THE SCEPTICS
Some economists said the output data could be marking the beginning of a sharper-than-expected slowdown but more data was needed to confirm the trend.
"The economic slowdown is taking place and I think it will continue in the time to come," said Michal Dybula, economist at BNP Paribas in Warsaw. who expects the economy to slow to 3.9 percent in 2009.
Dybula said the slowdown would be revealed in export and output data in the coming months. "We will face a slowdown resulting from a cyclical downturn connected with the slowdown in the European Union as a whole," he added.
But so far exports are strong. In April they rose by more than 30 percent in year-on-year terms despite the strong zloty which has also strengthened by about 30 percent against the euro since Poland entered the European Union in 2004.
Economists who remain sceptical of Poland's growth prospects say that while the economy may be slowing some indicators, like wages, consumer and producer inflation, can still show a considerable rate of growth.
Wages, which are one of the main concerns of the MPC, grew by 10.5 percent in May raising fears of second round effects.
Source:(Writing by Kuba Jaworowski; Editing by Malcolm Whittaker)
guardian.co.uk