Korean Air to gain seat in ČSA supervisory board

Prague, March 14 (CTK) - South Korea's airlines Korean Air will gain one seat in the three-member supervisory board of Czech national air carrier Czech Airlines (CSA), Cesky Aeroholding group CEO Miroslav Dvorak told journalists yesterday.

The shareholder contract will also give Korean Air the right to take part in decision-making on significant issues related to CSA, such as capital hikes or cuts and profit distribution. Korean Air will also gain the option to buy the remaining CSA shares belonging to Cesky Aeroholding, Dvorak said.

"Korean Air has reserved the option to buy all remaining shares in a minority stake," Dvorak said.

Besides this minority stake (up to 49 percent), Korean Air would like to buy the remaining shares owned by Cesky Aeroholding under the condition that the EU abolishes restrictions on acquisition of national air carriers in the EU by airlines from outside the EU, Dvorak added.

If Korean Air acquired the majority stake now, CSA would lose its status of a national air carrier, together with the right to fly to countries with a limited number of carriers and to use the Open Skies space.

The European Commission admitted at the end of last year that this restriction was liquidating consolidation on the aviation market, which is reflected in a zero activity on the acquisition market. The commission is therefore planning to abolish this restriction, Dvorak noted.

If the restriction was abolished still this year, Korean Air would buy the remaining shares of Cesky Aeroholding for the same price as in the current purchase of the 44-percent stake.

Korean Air has offered Kc67.5m for the 44-percent stake.

Korean Air could now acquire around 2 percent of shares that were owned by capital cities Prague and Bratislava in the past.

Prague has already sold its 1.53 percent stake in CSA to Cesky Aeroholding for Kc2.38m. The sale of the stake owned by Bratislava (about 0.5 percent) has already been approved by the city's assembly. The shares can be expected to be sold to Cesky Aeroholding in the weeks to come.

These shares can be bought by Korean Air virtually any time, Dvorak said.

Cesky Aeroholding is now holding almost 98 percent of CSA shares, together with the shares earlier owned by Prague. Apart from Bratislava, the air carrier's shares are also owned by insurance company Ceska pojistovna. But the insurer has not shown any interest in selling its stake of about 2 percent, Dvorak said.

The new Korean member on CSA's supervisory board is to replace one of the two representatives appointed by the shareholder. Of the two possible candidates, deputy chairman Petr Matousek is more likely to leave the board than chairman Miroslav Dvorak who is also the CEO of the entire group.

The third man on CSA's supervisory board is Josef Maurer who represents employees.

The transfer of shares and the payment of the purchasing price should be made during the first half of this year, according to Dvorak.

The contract enables Korean Air to return the acquired shares during the next five years if Cesky Aeroholding makes a decision that could damage the Korean airline's investment.

Korean Air also pledged not to sell its 44-percent stake to any other company in the next five years.

The sale of CSA has yielded its first tangible benefit as Korean Air has moved its client call centre to Prague from the Irish capital city Dublin, Dvorak said at yesterday's press conference.

Phone calls from Korean Air's European clients are handled by company CSA Services, a former CSA's subsidiary.

CSA Services has already started to provide this service to the Korean carrier. The Prague call centre communicates with Korean Air's clients in English, French, Italian, Spanish and German, Dvorak said.

The transfer of the call centre to the Czech Republic will not mean a transfer of its current employees to Prague. On the contrary, the move will create about 10 jobs for the local employees of CSA Services.

However, the project of the transfer of the call centre is older than the government's plan to privatise CSA, approved in autumn last year, Cesky Aeroholding spokeswoman Michaela Lagronova said.

Korean Air already planned the possibility to use the capacities of CSA Services at the time when CSA agreed with the Korean carrier on the so-called "code share" cooperation as part of which the two companies sell plane tickets for selected flights of the other partner, Lagronova said.

CSA Services is a subsidiary of Cesky Aeroholding. The company secures call centre services mainly to CSA clients, but it also offers part of its capacity for use by other companies operating outside the aviation segment.

The sale of part of CSA shares was approved by the Czech cabinet on Wednesday. The contract between CSA and Korean Air is to be signed in the second week of April.