Czech carrier CSA on the brink of bankruptcy – AirlineGeeks.com
By Vanni Gibertini
Czech carrier CSA on the brink of bankruptcy
An airline that has flown over Europe and the world for 98 years could be the next victim of the pandemic-induced crisis in the aviation industry.
Prague-based Czech Airlines (CSA), the national airline of the Czech Republic, has filed for reorganization under the country’s insolvency law. Before making the decision, the company had sent a letter to its entire workforce of 430 informing them that they were going to be made redundant, leaving the carrier unmanned.
The airline is unable to meet its financial commitments after a moratorium that was previously granted by a Prague court expired on February 27. Unlike other carriers in Europe, CSA has not received financial support from its government.
“Despite the recommendations of the European Commission and the International Air Transport Association, CSA has not received any financial support from the government, unlike its direct competitors,” the airline said. Flightglobal. “The Czech state refused to participate in the rescue of CSA despite the fact that the shareholders declared themselves ready to financially support CSA.
The reorganization aims to merge CSA with parent company Smartwings, which operates another eponymous airline under a different Air Operator Certificate. Last May, the Smartwings group refused to be renationalized by the Czech government, instead asking for a loan or loan guarantee to allow the company to keep its ownership structure unchanged. Currently, the group is owned by Czech businessman Jiri Simane and his partners, with a minority stake of 49.9% owned by CITIC Group Corporation, a Chinese public investment company, Simple theft reports. According to EU laws, this is the highest stake that non-EU entities can have in EU carriers.
Earlier in February, airline Czech Airline Technics CSAT, a maintenance company that is a branch of the state-owned Prague Airport, withheld two of the airline’s ATR 72s due to unpaid debts owed by CSA to the maintenance unit, report Aerotelegraph.
CSA had to return its largest aircraft, an Airbus A330-300, to its original lessor and consequently suspend its only long-haul route, a flight to Seoul. The airline currently has orders for three Airbus A321 XLRs, scheduled for delivery in 2023, and six Airbus A220-300s, which have been postponed due to financial difficulties. The carrier still has only one Airbus A319-100 and one Airbus A320-200 in addition to five ATR 72-500s, two of which are still held by the maintenance company.
Without any other legal alternative after the expiration of the moratorium, CSA is now short of options and can only hope for outside intervention to continue its 98-year history. These interventions could take the form of state-guaranteed loans from the government or a merger with parent company Smartwings Group.