Government Money for CSA Czech Airlines

Prague / Reudelsterz– The European Commission has permitted a 2,5 billion Czech korunas (about 100 million Euro) loan to CSA Czech Airlines. The Prague-based carrier will receive the much needed financial support from Osinek S.A., a state-owned Czech company.

Brussels has only agreed to the loan after the carrier put forward a five-year restructurisation plan. The strategy includes sale of subsidiaries and aircraft, as well as securing a commercial loan. The ultimate goal is to return the Czech flag carrier to profitability.

In 2011 CSA has lost about 240 million CZK (about 15 million EUR), three times more than in 2010. The company has already reorientated its network towards Russian and CIS markets. The charter subsidiary of CSA is also expanding. The development of Prague as a hub for Eastern European, Russian and Middle East connecting flight seems also promising.

The European Commission has simultaneously announced that it launches a probe into 2010 loan that CSA have received. Brussels suspects that this aid was given under preferential conditions.

According to the European law the European Commission must permit any state aid to airlines. Failure to obtain such a permit might result in an order to repay the loan. Such a decision was one of the final steps that led to the bankruptcy of the Hungarian flag carrier Malev earlier this year. While analyst argue CSA could face a similar fate, other experts hint to the fact that the two carriers are hardly compareable in terms of network, policy, fleet management and clientel.

AU/Dominik Sipinski/pvk