Aircraft Industries at centre of tug of war: report

Struggling Czech aircraft company Aircraft Industries is subject to an ownership tug of war between local aviation group Aero Vodochody and the Chinese conglomerate CEFC, according to the business daily Hospodářske Noviny.

Aircraft Industries, photo: ČT

The current owner of the Kunovice company, based in the far east of the Czech Republic, is a Russian based mining company. Fears about the prospects of the Czech manufacturer following a sharp drop in Russian orders due to the drop in the rouble recently sparked top level interventions from Czech politicians seeking assurances that production would not be shifted entirely to Russia to cut costs. Last year, Aircraft Industries already registered a loss of around 46 million crowns (around 1.5 million euros) with little prospect of anything other than a deepening of that loss this year.

The newspaper reports that Aircraft Industries’ woeful position has now pushed the Russian owner into a corner where it is willing to negotiate ceding control of the firm. It adds that a takeover by Aero Vodochody would result in a Czech aviation company capable of producing aircraft from start to finish. Aero Vodochody is part of the wide ranging Czech-Slovak Penta group.

New management at Aero Vodochody have been tasked with producing a new generation of military aircraft based on L-39 and L-159. Hospodářske Noviny says a possible takeover of Aircraft Industries by Aero Vodochody could allow it to have use the 900 highly skilled workers at the Czech firm or sub-contract work to them from its current operations. Aero Vodochody is said to be facing severe problems recruiting skilled engineers and technicians at its current site in Central Bohemia.

Chinese company CEFC’s interest in buying out Aircraft Industries has been expressed in the past by its top Czech representative, Jarolsav Tvrdík. He was not willing, however, to confirm the ongoing interest to the newspaper. CEFC’s interest was referred to by Czech president Miloš Zeman on a trip to the Zlín region earlier this month. CEFC has already made investments in the Czech Republic, buying up the Slavia football club, the Lobkowicz brewery, and the engineering group Ždas.

Aircraft Industries earlier this month survived the threat of an insolvency declaration. Around a quarter of the workforce of around 900 workers have been at home on reduced pay over the last year because of the shortfall of orders on which to work. The firms’s main hopes centre on production of a new generation of the L-410 turbojet plane for which it has already received state aid.