LOT Polish Airlines SA Dreamliners Likely to Be Grounded Until October

WARSAW—LOT Polish Airlines SA said it doesn't plan to fly its Boeing 787 Dreamliners again until at least October, setting back turnaround hopes at the struggling airline and indicating some industry executives don't expect a rapid solution to the jet's battery troubles.

The world's 787 fleet has been grounded since January because of malfunctioning lithium-ion batteries, and Boeing Co. is still trying to pinpoint the cause of the trouble and come up with ways to fix it. A spokesman for Boeing said the company "is working to get to the answer as quickly as possible."

LOT, which has two 787s out of commission, won't include the airplanes in its peak-season schedule, which starts March 31 and ends Sept. 30, said LOT's chief executive, Sebastian Mikosz. Instead, the airline is negotiating to add more older 767s and 777s to its fleet temporarily for long-haul flights.

Getting the Dreamliners back in the air for commercial flights likely will be a lengthy process, Mr. Mikosz said.

"The [U.S.] National Transportation Safety Board will take as much time as it needs, and the [U.S. Federal Aviation Administration] won't let go this time," Mr. Mikosz said. "And even if a miracle happens and regulators will rapidly allow flights, we'll have technical issues" that need to be resolved before they can resume 787 operations, he said.

What at first seemed like teething pains has evolved into serious problem that could require Boeing to redesign parts of its most advanced jet. Boeing recently conducted two test flights, without passengers, on 787s, but was unable to replicate or identify the cause of the battery problems, government and industry officials in the U.S. said.

LOT decided in 2005 to replace its aging fleet of 767s with the Dreamliner. After three years of delay, it received the first airplane in November and featured it heavily in marketing campaigns, hoping to use the jet to win a bigger share of business on more-lucrative long-haul routes and cut fuel costs. Now that plan is on hold.

"I like this plane very much, but the drawback is it's not flying," Mr. Mikosz said.

LOT was expecting to get three more 787s by March. Two are ready for delivery at Boeing's plant in Everett, Wash., although it isn't clear when they are likely to be delivered to Warsaw.

Despite the grounding of the 50 Dreamliners world-wide, Mr. Mikosz said he would stick with the airliner as the planned core of LOT's fleet—at least for now. When asked whether he would continue to wait for the jet to return to service if 787s still weren't flying in six months, he said: "I didn't say that."

By later this year, Mr. Mikosz said, LOT is likely to be in advanced stages of privatization, which he said is the only way to save the carrier from bankruptcy and liquidation. The Polish government gave LOT a $127 million loan in December and the airline will likely require more emergency funding to keep flying.

Mr. Mikosz said he expects LOT to become a smaller airline, with some of its domestic flights transferred to another state-owned carrier, Eurolot. LOT this week said it would cut 500 of its 2,100 jobs. More layoffs are likely, Mr. Mikosz said.

The company likely incurred a loss of about $60 million last year, according to government officials. Mr. Mikosz declined to comment regarding that estimate or give guidance for this year.

Poland's government wants to save the ailing carrier, although not at any price, Prime Minister Donald Tusk said in December. LOT is the largest customer for the state-operated airport in Warsaw, and a big customer for jet fuel produced by state-controlled Polish oil refiners, Mr. Mikosz said.

The chief executive said LOT's demise would make Poland a less-attractive economy. He pointed to the case of nearby Hungary, whose flag carrier Malev went out of business last year. Of 100 connections operated to and from Budapest as a hub, only 17 have been reopened by other carriers, Mr. Mikosz said.