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* Commission says to conduct in-depth investigation
* Probe covers state aid worth about 200 million euros
* LOT has been struggling financially for years
* Airline says investigation is "standard procedure"
By Chris Borowski
WARSAW, Nov 6 (Reuters) - The European Commission haslaunched an in-depth investigation into whether Poland brokecompetition rules when it gave about 200 million euros ($270million) in state aid to its money-losing airline LOT.
If the investigation concludes that the rules were broken,the airline could be forced to hand back at least some of themoney, worsening its already precarious financial position oreven forcing it to declare bankruptcy.
"The Commission will examine in particular whether theplanned aid will enable LOT to become viable without continuedpublic funding and whether the company offers adequatecompensation to alleviate the distortion of competition causedby the state support," the Commission said in a statement.
LOT's chief executive, Sebastian Mikosz, said he hadexpected the European investigation.
"It is standard for the commission to launch such procedureswhen it comes to entities, including airlines, that go forpublic aid for restructuring" he said in a statement.
There was no immediate comment from the Polish government.
LOT, one of the world's oldest airlines, has struggled tocompete with the bigger networks of rivals such as Lufthansa and with low-cost competitors like Ryanair.
The state-owned airline has burned through government fundsand come up with several turnaround plans that have failed tohave a lasting effect. It reported a loss of 400 million zlotyslast year and expects to remain deep in the red in 2013.
It had been banking on the acquisition of Dreamliner jetsfrom Boeing to improve its fortunes. But those aircrafthave been repeatedly grounded due to technical problems, and LOTis seeking compensation from the manufacturer.
In its statement, the Commission said it had doubts overwhether the latest restructuring plan unveiled by LOT - acondition for getting a fresh injection of state aid this year -would make the airline commercially viable.
It also said it had doubts over whether cuts in LOT'scapacity, to off-set any distorting effects on the market fromthe state aid, were sufficient, and whether LOT itself wascontributing enough to the cost of the re-structuring.
The Commission has recently opened other investigations intopublic support measures granted to national flag carriersincluding Air Baltic, Adria Airways, Estonian Air and SAS.
Last year, Hungarian airline Malev collapsed after theCommission demanded that it give back some 130 million euros instate aid.
