Sale of CSA hits turbulence as Air France-KLM withdrawal leaves only one bidder for airline
The much-anticipated privatisation of the Czech Republic’s national carrier Czech Airlines (CSA) has hit turbulence, with Air France-KLM dropping out of the tender. That leaves only one bidder for the loss-making airline – and the Czech government likely to face a choice between getting a poor price for CSA or not selling it at all.
Two of them – one being Russia’s Aeroflot – were excluded from the final round, which left just Air France-KLM, Europe’s biggest airline, and the Czech-Icelandic consortium of Travel Service and Unimex (the former is the biggest operator of chartered flights in the Czech Republic and Hungary).
Air France-KLM issued a statement on Wednesday saying they were pulling out of the Czech Airlines tender because of the economic downturn. CSA is itself not in good shape financially, with losses of over USD 70 million in the first quarter of 2009 and a 10-percent fall-off in passenger numbers in the first half of the year.
There have been suggestions that Air France-KLM (which had been favourite to take over) could have been an effective strategic partner for the troubled Czech company, a role the smaller consortium cannot fill.
The Czech minister of finance, Eduard Janota, said on Wednesday that the privatisation process would continue as planned despite the fact there is only one bidder left, adding that cancelling it could result in a messy arbitration case.
Travel Service and Unimex now have until the end of September to submit a bid for CSA which would go before the government a week or two later. The cabinet would then have to decide whether or not to accept an offer that could be considerably lower than the amount officials would have hoped the sale to raise.
Minister Janota has said, however, that if the offer is in the end rejected and CSA remains in state hands, the government would not be willing to bail the airline out should it find itself in financial difficulties.
