Czech Airlines on the ropes after record losses in first half of 2009

Radomír Lašák, photo: CTK

After record losses in the first half of this year, the Czech Republic’s national carrier Czech Airlines is now fighting for its very survival. That was the message at a news conference given on Wednesday by senior executives at CSA, who described the problems facing the airline as a “fatal cocktail”.

Figures released by Czech Airlines on Wednesday morning paint a bleak picture. Sharp falls of 10 percent in passenger numbers and 9 percent in ticket prices caused the state-owned company a net loss of over USD 100 million in the first half of this year, the worst loss it has ever recorded. Senior CSA executive Petr Pištělák said the “cocktail” which the company had in front of it was “genuinely fatal”.

Most of Europe’s airlines have been hit hard by the financial crisis and only a few are currently making a profit. Mr Pištělák said, however, that many of Czech Airlines’ competitors were sitting on what he called a “huge cushion of money” that would safely tide them over for a few years.

Radomír Lašák,  photo: CTK
By contrast, said CSA president Radomír Lašák, the previous management at the company failed to build up reserves in the relatively good times. The carrier went into the red in 2005 and has been having problems ever since.

As for measures that can be taken to try to turn the situation around, plans for significant layoffs have been announced, with a fifth of CSA’s 4,500 or so employees due to be let go between now and next spring. It is also going to discontinue routes to New York and Manchester, fly less frequently to other destinations, and sell some planes that are surplus to requirements.

Czech Airlines’ management would like also to sell off more valuable assets, specifically its duty free shops and handling business. However, the firm’s supervisory board has ordered it not to do so pending the planned privatisation of the company later this year.

The privatisation is itself somewhat troubled, with only one bidder now remaining, a consortium of Czech and Icelandic investors. The government is due to decide on whether to accept its offer in early October. However, general elections are due at that time, which could well complicate things further.