Flag carrier Lot Polish Airlines faces a financial crunch this year and must find an investor quickly to survive, a report released by Poland’s state audit body NIK on April 12 states.

Public aid and restructuring have saved the company from bankruptcy and brought improvement of its financial standing, but there are still no grounds to say Lot is safe and can achieve stable profitability, the analysis says. The report supports the government’s sceptical view of the restructuring process carried out by the previous administration, but not its stance on privatisation.

Last year, the Polish flag carrier produced a net loss of PLN250mn (€57mn). The last government had spent years trying to find an investor for the company, but following the election in October the new cabinet said it does not want to lose control of the carrier, even if it a capital injection were necessary.

According to NIK, however, the company needs “fast, measured, and long-term” decisions to ensure it can achieve sustained profitability. There is little time to get it right, the analysts warn.

“The critical time for the company will be the first half of 2016, when Lot will face a challenge of launching new destinations … while [a] key problem will be how to finance [the expansion],” NIK said. “The situation of the company remains serious and without finding an investor, the odds for surviving on the very competitive market are insignificant."

Lot’s position is additionally weakened by high debt and servicing costs. The airline also has no unencumbered assets. Put together, those issues prevent the company from being able to modernise its fleet, NIK says. Revenue, as calculated per passenger, is falling, while addressing that issue via increased ticket sales might be problematic on a competitive market, according to the audit institution.