ČSA struggling to stay aloft
ČTK | 27 August 2009
Czech Airlines said yesterday it is out of cash and struggling. The state-run carrier will scrap unprofitable flights to New York, Toronto and Manchester, reduce service on some other routes, sell six of its 50 aircraft and fire about 860 people. Top management offered resignation on the condition that employees agree to a 15-30% pay cut.
The national air carrier Czech Airlines (CSA) is struggling to survive and it also lacks cash reserves from the booming period when it was headed by Jaroslav Tvrdik, CSA president Radomir Lasak told a news conference Wednesday.
The fight for survival is due to a steep fall in passenger numbers this year and a drop in the average air ticket price, CSA representatives said at the press conference informing about the situation at the airline.
"It is a deadly cocktail mix," said marketing vice-president Petr Pistelak.
Large rival airlines that are also in the red sit on a "big cushion of money" they can use over the next couple of years, according to him.
This, however, is not the case of CSA, which under Tvrdik's management in 2005 failed to meet the plan's aims and posted a Kc500m loss.
According to Lasak, the ideal financial reserve would be around Kc2.5bn.
In H1 this year, losses reached Kc1.8bn and full-year loss is estimated at Kc2bn, while the plan counted with a loss of around Kc300m at end-2009.
The number of passengers decreased by 10 percent in Jan to June this year, and the average price of air tickets was 9 percent lower at EUR133.
"It does not matter at all if the firm's loss amounts to Kc10bn or Kc1bn at the end of the year, what will be decisive for its survival in a weak season in spring is if it has money on the accounts or not," said Lasak.
Flight schedule has been reduced significantly in response to the situation and the firm is cancelling the loss-making flights from Prague to New York, Toronto and Manchester. CSA is also planning to reduce the frequency of flights on other routes.
Compared with previous winter, there will be 33 fewer planes taking off per week. CSA will get rid of 6 out of 50 aircraft including two Airbuses A310. The company also wants to operate a smaller fleet of 44 planes in the next 5 years.
Planned dismissals are a more sensitive issue. The firm has already offered shorter working hours to the staff and unpaid leave up to two years for pilots. CSA wants to employ pilots via its own agency and also make them available to other airlines, for instance, in East Asia and the Middle East, which have expressed interest.
Up to 860 people could be sacked in total.
CSA pilots are among the loudest critics of Lasak's management. They reproach him for selling CSA's assets and for layoffs. On Tuesday, seven trade unions headed by the pilot's union CZALPA asked the state as the CSA's owner to withdraw Lasak from his post.
CSA also wants to raise money through the sale of assets, for instance, Duty Free shops.
Lasak expressed the hope that the difficult period would be overcome and CSA could possibly be in the black next year.
CSA is now undergoing the process of privatisation, with the Unimex-Travel Service consortium as the only bidder. The deadline for submitting price bids is September 30.
According to the daily Mlada fronta Dnes (MfD), CSA owner's equity is minus more than Kc700m, which, according to Lasak, is not a problem since this is a figure calculated according to Czech accounting standards which do account for aircraft leasing.
CSA's management offered to resign if trade unions agree on a 30-percent cut in pilots' wages, on a 15-percent cut in wages of other employees and on freezing of employees benefits, Lasak said at a press conference called for this afternoon to resolve the problems between CSA's management and trade unions.
CZALPA's president Filip Gaspar and representatives of other trade unions told CTK they will comment on the current information at a press conference on Thursday.
Lasak said he was trying to end the impasse, secure the survival of the firm and finish its privatisation.
"We want to end the negative campaign," Lasak added.
According to Czech Finance Minister Eduard Janota, this was an essential step towards unblocking the impasse and creating space for negotiation between CSA'a management and trade unions.
New management would have a big advantage since the firm will start saving about Kc1bn a year, Lasak said.
"If this money stayed in CSA earlier, we would be in a different situation. We would have a significant "financial cushion"," Lasak said.
Janota said in case the agreement was reached, CSA's president and some other members of the board would leave in order to preserve the continuity of privatisation.
"We cannot afford any chaos. This can be handled," Janota added.
Copyright 2008 by the Czech News Agency (ČTK). All rights reserved.
http://praguemonitor.com/2009/08/27/csa-struggling-survive
ČTK | 27 August 2009
Czech Airlines said yesterday it is out of cash and struggling. The state-run carrier will scrap unprofitable flights to New York, Toronto and Manchester, reduce service on some other routes, sell six of its 50 aircraft and fire about 860 people. Top management offered resignation on the condition that employees agree to a 15-30% pay cut.
The national air carrier Czech Airlines (CSA) is struggling to survive and it also lacks cash reserves from the booming period when it was headed by Jaroslav Tvrdik, CSA president Radomir Lasak told a news conference Wednesday.
The fight for survival is due to a steep fall in passenger numbers this year and a drop in the average air ticket price, CSA representatives said at the press conference informing about the situation at the airline.
"It is a deadly cocktail mix," said marketing vice-president Petr Pistelak.
Large rival airlines that are also in the red sit on a "big cushion of money" they can use over the next couple of years, according to him.
This, however, is not the case of CSA, which under Tvrdik's management in 2005 failed to meet the plan's aims and posted a Kc500m loss.
According to Lasak, the ideal financial reserve would be around Kc2.5bn.
In H1 this year, losses reached Kc1.8bn and full-year loss is estimated at Kc2bn, while the plan counted with a loss of around Kc300m at end-2009.
The number of passengers decreased by 10 percent in Jan to June this year, and the average price of air tickets was 9 percent lower at EUR133.
"It does not matter at all if the firm's loss amounts to Kc10bn or Kc1bn at the end of the year, what will be decisive for its survival in a weak season in spring is if it has money on the accounts or not," said Lasak.
Flight schedule has been reduced significantly in response to the situation and the firm is cancelling the loss-making flights from Prague to New York, Toronto and Manchester. CSA is also planning to reduce the frequency of flights on other routes.
Compared with previous winter, there will be 33 fewer planes taking off per week. CSA will get rid of 6 out of 50 aircraft including two Airbuses A310. The company also wants to operate a smaller fleet of 44 planes in the next 5 years.
Planned dismissals are a more sensitive issue. The firm has already offered shorter working hours to the staff and unpaid leave up to two years for pilots. CSA wants to employ pilots via its own agency and also make them available to other airlines, for instance, in East Asia and the Middle East, which have expressed interest.
Up to 860 people could be sacked in total.
CSA pilots are among the loudest critics of Lasak's management. They reproach him for selling CSA's assets and for layoffs. On Tuesday, seven trade unions headed by the pilot's union CZALPA asked the state as the CSA's owner to withdraw Lasak from his post.
CSA also wants to raise money through the sale of assets, for instance, Duty Free shops.
Lasak expressed the hope that the difficult period would be overcome and CSA could possibly be in the black next year.
CSA is now undergoing the process of privatisation, with the Unimex-Travel Service consortium as the only bidder. The deadline for submitting price bids is September 30.
According to the daily Mlada fronta Dnes (MfD), CSA owner's equity is minus more than Kc700m, which, according to Lasak, is not a problem since this is a figure calculated according to Czech accounting standards which do account for aircraft leasing.
CSA's management offered to resign if trade unions agree on a 30-percent cut in pilots' wages, on a 15-percent cut in wages of other employees and on freezing of employees benefits, Lasak said at a press conference called for this afternoon to resolve the problems between CSA's management and trade unions.
CZALPA's president Filip Gaspar and representatives of other trade unions told CTK they will comment on the current information at a press conference on Thursday.
Lasak said he was trying to end the impasse, secure the survival of the firm and finish its privatisation.
"We want to end the negative campaign," Lasak added.
According to Czech Finance Minister Eduard Janota, this was an essential step towards unblocking the impasse and creating space for negotiation between CSA'a management and trade unions.
New management would have a big advantage since the firm will start saving about Kc1bn a year, Lasak said.
"If this money stayed in CSA earlier, we would be in a different situation. We would have a significant "financial cushion"," Lasak said.
Janota said in case the agreement was reached, CSA's president and some other members of the board would leave in order to preserve the continuity of privatisation.
"We cannot afford any chaos. This can be handled," Janota added.
Copyright 2008 by the Czech News Agency (ČTK). All rights reserved.
http://praguemonitor.com/2009/08/27/csa-struggling-survive
