Abstract
In late March the Czech finance ministry said the first round of tendering in
the bidding for the
privatisation of CSA Czech Airlines had concluded with
a total of four preliminary bids being made. The
four bids were from Air
France-KLM, Russia’s Aeroflot, Odien (a private equity group) and a
consortium including Czech companies Unimex Group and Travel Service. The
ministry said that a
winner would be selected by the end of September
2009. The government is selling its 91.5% stake in the
airline, at a time
when the global recession is creating downward pressure on its valuation and
on
profitability. Independent analysts had scaled down their estimate for
the value of the shares on sale to
CZK5bn (US$255mn). According to a
report in French newspaper La Tribune Air France/KLM was
prepared to pay
up to EUR200mn (US$260mn). Bidders were required to agree to retain
CSA’s status as
the national Czech flag carrier that among other
things would retain the airline’s rights under a series of
bilateral
government-to-government air travel agreements. Doing so would require the
successful bidder
to form partnerships with Czech or European companies.
Aeroflot, which has been looking for a
European partnership for some time,
said it had not yet decided on its preferred partner, but would be
looking
for a 49% stake in any consortium together with the right to appoint the
airline’s CEO. Air France
noted that CSA’s flight network was
‘highly complementary’ with its own, and would give it a
better
presence in central and Eastern Europe, where its German competitor
Lufthansa, has a stronger network.
In 2008 CSA reported pre-tax profits of
US$550,000, coming after three years of losses. The return to
profitability was helped by a restructuring programme including the divestment
of non-core assets and the
sale and leaseback of a number of planes.
BMI believes the Czech aviation sector will contract in 2009 because of the
recession. In our latest Czech
Republic Freight Transport report, BMI
concludes that air cargo traffic will grow by an average of 3.6%
per annum
on average over the next five years. This is based on a number of factors.
Despite tough
conditions, the Czech Republic is set for positive economic
growth (2.0% per annum on average to 2013,
according to our forecasts).
European Union (EU) membership has placed the country near the centre of
gravity of Eastern European logistics.
We expect freight carried by road
to be positive over the next few years, with annual growth averaging
2.7%
in 2009-2013. This incorporates the negative effect of the fall in demand
currently taking place. Oil
shipped by pipeline should grow at around 2.3%
a year, ahead of GDP. However, we expect rail freight
growth to lag, as
investment in the rail system takes time to have an effect, meaning that the
average
growth for 2009-2013 will come out at a more modest 1.7% per
annum. Freight carried by inland
waterways will grow slowly, at 1.0% per
annum. Consequently, we now forecast total freight carried
across all
modes, measured in million tonne kilometres (mntkm), to rise by an annual
average of 2.4% per
annum in 2009-2013. Under our freight transport
rating, the Czech Republic earns a composite score of
59.4 out of a
theoretical maximum of 100. This places it at the upper end of its European
peer group. The
total value of transport and communications GDP will rise
to US$29.9bn in nominal terms by 2013,
representing 11.6% of the Czech
Republic’s GDP. The transport and communications sector employed
373,000 people, or 7.8% of the labour force, in 2008. We see that figure
holding broadly steady in the
five years to 2013.
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