New management plots course for troubled Czech Airlines

New management has been flown into Czech carrier Czech Airlines. The changes come ahead of key decisions about the loss-making airline’s future. Bosses are trying to push through a restructuring programme and a controversial privatisation is still pending.

Earthquake was the word most used to describe changes at the top of state-controlled Czech Airlines this week. Under pressure chief executive Radomír Lašák was replaced at the top of the airline on Monday. With him went most of the board including Václav Novák, the cost cutting expert brought in only a few weeks ago. Czech Airlines’ new chief is Miroslav Dvořák, the head of the state-owned operator of Prague Airport. He will combine both jobs.

Radomír Lašák, photo: CTK
Patria Finance’s Petr Kováč says the switches at the top are a clear signal about the path the loss-making carrier will take over the next crucial weeks.

“I think it was a clear decision by the Czech government ― which is the owner of Czech Airlines ― how to solve this situation in Czech Airlines by implementing synergies between Prague airport and struggling Czech Airlines.”

The company operating the busiest airport in Central Europe is a proven money maker. And Mr Kováč believes closer links between the profitable airport and loss making Czech Airlines could pay off for both. The airline is responsible for around half of the flights in and out of Prague. At the moment, the government appears to have ruled out a takeover of the airline by the airport or a merger of the two.

But where does that leave the privatisation of Czech Airlines? The government is supposed to decide on the sole offer by the consortium of Czech holding company Unimex and Icelandic-owned charter carrier Travel Service by the end of this month.

“I think the priority of the Czech government is to get Czech Airlines into the best financial condition and business condition as possible and then we can talk about privatisation. I do not want to recommend something to the Czech government but I think it makes sense a little bit to delay a decision about privatisation.”

Miroslav Dvořák, photo: CTK
That is the way the major political parties are talking as well. The Social Democrats called on Monday for Czech Airlines’ sale to be grounded. And leading Civic Democrats have shifted their stance from sale cheerleaders to join the stop the sale chorus.

Patria Finance’s Petr Kováč believes that privatisation could be an idea that can fly again once the global aviation sector recovery becomes more robust. That would put other airlines into the picture as possible bidders. He says that scenario could be a question of several months rather than years.