Wednesday, 23 April 2014

Gov't agrees with search for strategic partner for ČSA

ČTK |
9 November 2012

Prague, Nov 8 (CTK) - The Czech government agrees with the search for a strategic partner for national air carrier Ceske aerolinie (CSA), Prime Minister Petr Necas said at a briefing that followed Thursday's cabinet meeting.

There is now a suitable opportunity to take this step and not wait until the restructuring of CSA is completed, Necas said. The restructuring process is to end next year.

Audit company Ernst & Young put the value of CSA before its entry in aviation holding Cesky Aeroholding at Kc148m.

"We have, of course, made an analysis of the market, we see some possibilities as open and we want to use the window of opportunity for finding a strategic partner," said Necas.

The recovery process in CSA has accelerated markedly after the company's inclusion into Cesky Aeroholding this year, according to Necas. The holding associates companies operating in air transport controlled by the state.

"After the approval of CSA's privatisation Thursday we will start to send letters to possible buyers," Cesky Aeroholding spokeswoman Michaela Lagronova said, describing the way the company will choose the future owner of the airline.

According to the Finance Ministry, CSA's future owner should be one of the world's fifty largest airlines associated in the International Air Transport Association (IATA).

Cesky Aeroholding will test interest in CSA on the market among IATA members. The Finance Ministry said the ability of the winner to support CSA's long-term development is more important than the price.

The high requirements on a future partner of CSA are definitely not inappropriate, Jan Prochazka, the director of company Cyrrus and aviation analyst, said.

As regards the state budget, it is not so important whether the investor will pay Kc148m for the airline or double the amount, or whether it will acquire CSA for free, Prochazka said.

It is much more important that the investor can benefit the Prague airport by using it for long-distance flights from Asia, for example, he said.

Although the time for the sale of the airline is not ideal now as a number of large companies are focusing more on defending their positions rather than on development, more suitable time will not arrive in the near future, either, according to Prochazka.

If the economic results of the national carrier improved along with the continuing recovery process, they could be damaged again by growing prices of fuel and other commodities, Prochazka said.

CSA cannot avoid an entry of a strong investor if it wants to stay on the market in the long term, Prochazka added.

CSA operates 15 Airbuses, five Boeings and seven smaller propeller planes ATR. However, the company has a number of them in operative lease.

Apart from the stake in this fleet, only the CSA trademark, traffic rights to flights and know-how are for sale because all immovable assets were transferred under the parent holding company.

CSA subsidiaries CSA Services, Czech Airlines Technics, Czech Airlines Handling and charter airline Holidays Czech Airlines were also transferred under the holding. Their total value is Kc2.3bn, according to earlier estimates.

The cabinet was trying to sell the national air carrier in January 2009 already. However, only a consortium of companies Unimex and Travel Servis made it into the second round of the tender. The consortium offered Kc1bn for CSA on condition that the company's owner's equity is zero at worst.

In mid-2009, CSA had negative owner's equity of over Kc700m.

Originally, proceeds from CSA's privatisation were to reach Kc3bn to Kc5bn. The government later decided not to sell CSA to the consortium.

CSA sustained a pre-tax loss of Kc241m last year. In 2010, the company made a gross profit of Kc76m. However, the profit included proceeds from the sale of long-term assets worth almost Kc2.7bn.

In 2009, CSA posted a Kc3.7bn loss.

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