Korean Air Lines Co. pledged to hold its stake in Ceske Aerolinie AS for five years, while CSA’s majority owner will refrain from making “significant” changes in its strategy, according to terms of this week’s sale.
Cesky Aeroholding AS Chief Executive Officer Miroslav Dvorak said today in Prague that the 2.64 million-euro ($3.4 million) contract accepted by the Czech government this week includes a provision for Korean Air to keep a minimum 34 percent stake in the carrier over the five-year period.
Korean Air, which is a member of the same Skyteam alliance as CSA, was the only bidder for a 44 percent stake in the unprofitable national airline, based at Prague’s Vaclav Havel Airport. The government, which failed to sell CSA in 2009, streamlined its operations, cut staff and capacity and merged the carrier into a joint company with Havel Airport operator Letiste Praha AS into a single entity, Cesky Aeroholding.
Korean Air will also have an option for a buyout of minority stakes held by the cities of Prague and Bratislava that were recently sold to Cesky Aeroholding, Dvorak said.
Should the European Commission loosen regulations on foreign ownership of EU-based carriers, Korean Air has the option to buy the remaining stake held by Cesky Aeroholding, according to Dvorak. The price for a such a buy-out would be based on the current bid if it comes within a year of the signing of the current contract. After that, the price would depend on an assessment by an independent adviser, Dvorak said.
The sale of the CSA stake should be finished in the first half of 2013, he said. The two companies started harmonizing their flights schedules in Europe and Asia and Korean Air will move its European call center to Prague.
The Asian carrier will also have one representative in the CSA three-member supervisory board, he said. CSA expects to post a net income for 2012, Dvorak added. The airline had an operating loss of 1.2 billion koruna ($61 million) in 2011, Mlada Fronta Dnes reported on Jan. 10.