Air France In, Aeroflot Out Of CSA Czech Tender

Czech authorities picked Air France-KLM to bid in a tender for flag carrier CSA Czech Airlines but ruled out Russia's Aeroflot, which blamed artificial security concerns for its exclusion.

A consortium comprising Czech companies Unimex and Travel Service also advanced to the second round of bidding while private equity firm Odien did not.

Finance Minister Miroslav Kalousek told a news conference the cabinet had used "formal, security, and international" qualification criteria to make its decision. Both he and Prime Minister Mirek Topolanek declined to comment further on why it had rejected Aeroflot and Odien, which has offices in the Czech Republic and Turkey.

Czech politicians have voiced concerns Aeroflot may not be an ideal buyer for the carrier from the security point of view as the Russian carrier's ownership structure was unclear.

Prague has in general been wary about Russian involvement in Czech industries, especially ones that are considered strategic.

Aeroflot said any security concerns surrounding its bid were unfounded.

"If we took decisions (not to bid) ourselves in the past, now someone else took that decision for us," the carrier's deputy general director Lev Koshlyakov said.

"It was alarming that (Czech officials) have expressed concerns about threats to national security because of Aeroflot's bid... We think those remarks look absolutely politicized and artificial."


The government is offering a 91.5 percent stake in Czech Airlines (CSA) and the sale is expected to continue despite Topolanek's resignation last month.

New Prime Minister Jan Fischer is building a caretaker cabinet that will take the country to an early election expected in October and Kalousek said he expected that cabinet to make the decision on the sale.

Analysts expect the sale of the relatively small European airline, hit by leasing costs as well as the impact of the global economic downturn on demand for air travel, to fetch up to CZK5 billion Czech koruny (USD$240 million).

Government officials had said it was necessary to privatize the airline quickly as the economic crisis could further worsen its weak financial position, hurt by the previous management's ambitious expansion plans.

CSA, Air France and Aeroflot are all part of Sky Team.

Air France acquired a nearly 40 percent stake in CSA in early 1990s for USD$60 million but sold it back to the Czech state for USD$27 million in 1992.

CSA's 50-aircraft fleet flies to most European capitals.

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