Communique From The Polish Ministry Of The State Treasury

On November 18, 1999, the Minister of the State Tresury signed an agreement to sell 10% of LOT Polish Airlines shares to the Swiss carrier, SAirGroup, for 33.7 million American dollars as well as a subscription contract and shareholder agreement setting forth the terms of the investor`s takeover of shares in a new LOT Polish Airlines share issue. As a result of the performance of those contracts and agreements, the Swiss Airline will come into possession of 37.6% of LOT shares. Financial assets from the new share issue, equaling close to 150 million dollars, will be used to strengthen the company`s finances.


At the same time when the contracts were signed with the State Treasury, SAirGroup and LOT Polish Airlines signed a strategic cooperation contract and an agreement allowing LOT to enter the Qualiflyer Strategic Alliance. Those agreements set January 1, 2000 as the date for LOT`s entrance into that alliance.


The agreements ensure the protection of the LOT trademark and its position as a national carrier. The investor will have three representatives in the company`s 10- person supervisory board and two representatives in the 6-person management board.


In addition to financial commitments, SAirGroup also undertook an obligation to provide LOT with the latest information technologies, develop the most advanced airline products, and train employees in all specialized areas required for LOT to achieve the airline service standards for which the Swiss airlines are so highly valued throughout the world.


The performance of the contracts is connected with the process of deeply integrating LOT with systems in operation in the Qualiflyer Alliance including computer systems, the sales system, the frequent flyer program, network management and others. SAirGroup also undertook an obligation to ensure an airline flight network from and to Warsaw, which will correspond to Warsaw`s role as an equal status air transportation node in the Qualiflyer structure. That implies an increase in the number of flights and airplanes and aggressive network development and sales organization policy within the framework of the strategic alliance.

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