Indigo Partners in talks with LOT Polish Airlines?

Indigo Partners, the US-based private equity and venture capital firm behind Wizz Air (W6, Budapest) and Frontier Airlines (F9, Denver International), has expressed an interest in LOT Polish Airlines (LO, Warsaw Chopin) with negotiations currently ongoing.

Informed sources who spoke to the Puls Biznesu business daily state airline management has been in talks with Indigo and LOT's owner, the Polish Treasury, with Rothschild the facilitator. Should a binding Letter of Intent be signed, Indigo would be prepared to push for a final-offer agreement the report said.

As EU regulations cap foreign ownership of local airlines at 49%, Indigo reportedly plans to partner a European fund to assume majority ownership of the airline. Warsaw, which has already passed legislation allowing minority state-ownership in the airline, would remain a minority shareholder initially. It may subsequently exit the carrier altogether.

In terms of plans, Indigo has indicated it would invest "several hundred million zloty" in LOT to develop Warsaw Chopin into a Central and Eastern European hub. The move would create thousands of new jobs over the next five years.

Though LOT has managed to turn its finances around posting a EUR24 million (USD27.1 million) operating profit for 2014, it has yearned for a strategic investor to help it realize its full potential.

While it has been linked to Lufthansa (LH, Frankfurt International), Air Berlin (1991) (Berlin Tegel), Turkish Airlines (TK, Istanbul Airport), and Norwegian (Oslo Gardermoen) in recent years, none of the purported talks have resulted in any tangible investment. In May, LOT CEO Sebastian Mikosz said that the carrier would consider going public should it fail to find a suitable strategic partner.