EU launches probe into restructuring aid for Czech Airlines.

By bne IntelliNews February 24, 2011
The European Commission opened an in-depth investigation into Czech Airlines on February 23 saying it doubted the companys restructuring would return it to viability and comply with EU state aid rules, the commission said in a statement on its website. The Czech government plans to merge the loss-making carrier with Prague airport operator in a bid to cut costs and restructure the company. The commission also said that it doubted a loan of CZK 2.5bn (94 million euros) from state-owned firm Osinek and several other measures could be considered as part of the overhaul. Rescue and restructuring aid is one of the most distortive types of State support. When this happens, the Commission must make sure the company contributes its fair share of the burden and that it is ultimately viable without further State support," EU competition commissioner Joaquin Almunia said in a statement. In a separate statement, iDnes.cz server reported that Czech Airlines transported 4.6mn passengers on regular flights in 2010, down by 1.6% y/y, according to data from the Association of European Airlines (AEA). The decrease stemmed from the fact that the carrier reduced the number of flights and destinations last year. It also announced the sale of some Boeing planes as it plans to switch from Boeing to Airbus. The airlines seat occupancy rose by 3.8%on average to 69.5% last year, below the European average of 77.9%. The company is expected to post a loss of CZK 1bn for 2010.

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