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CORRECTED-UPDATE 1-Czech minister backs airline stake sale to Korean Air
March 7, 2013 / 8:47 AM / 5 years ago

CORRECTED-UPDATE 1-Czech minister backs airline stake sale to Korean Air

(Corrects currency in paragraph 2 to read euros instead of crowns)

PRAGUE, March 6 (Reuters) - The Czech government plans to sell a minority stake in Czech Airlines (CSA) to Korean Air , the only party interested in the loss-making airline, Finance Minister Miroslav Kalousek said on Wednesday.

Kalousek said Korean Air, CSA’s partner in the Sky Team alliance, had offered 2.64 million euros for the 44 percent stake - the price derived from an audit of the airline - and recommended the cabinet agree.

“I will propose that the cabinet accept this offer. I consider it to be a great opportunity to secure the future for CSA and the Vaclav Havel Airport Prague,” Kalousek told reporters.

Korean Air already operates direct flights to Prague, and under the privatisation plan it would make Prague one of its transfer points in Europe.

CSA had earlier said it would acquire a plane to start its own flights to Seoul as of this summer.

Korean companies also have business interests in the central European country, including a Hyundai Motor car factory.

Czech Airlines, founded in 1923 and one of Europe’s oldest carriers, has suffered financially since a failed expansion plan and has had to undergo a tough restructuring programme.

It has sold planes and other assets to stay afloat, escaping the fate of other small national carriers such as Hungary’s Malev.

It now has 26 short and medium-ranged planes serving 68 mostly European destinations, and plans to buy at least one long-range plane.

It carried 4.25 million passengers in 2011 and lost 241 million crowns ($12.19 million) that year, the last period for which results are available.

The Finance Ministry reached out to global airline companies at the start of the sale process last year but drew lukewarm interest, with initial responses from Korean Air and Qatar Airways. Qatar Airways did not file a final bid.

The government was willing to sell a majority stake to a European partner, but only a minority share to a bidder from elsewhere in order to keep the airline’s status of national carrier.

A bid to privatise the airline in 2009 collapsed after Czech charter airline Travel Service refused to proceed without securing a capital injection from the government. (Reporting by Robert Muller; writing by Jan Lopatka; editing by Jason Neely)

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