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CSA airlines are on the verge of bankruptcy. They could file for insolvency themselves

Smartwings has been fighting for survival since the beginning of the covid-19 pandemic. In the coming days, however, an even more challenging period will begin for him. An extraordinary moratorium that protected him from creditors will expire on Saturday, February 27, after half a year.

The further prospects of the aviation group hard hit by the global air transport crisis are very uncertain. The state refused to provide her with any special assistance.

The unofficial information in the List of News shows that Smartwings, a charter-oriented parent airline, has a very solid chance to save itself. At least for the coming weeks and months. Negotiations with banks and aircraft lessors on the rescue plan are allegedly on the right track. All indications are that the company should obtain a state-guaranteed loan from the Covid Plus program in the amount of two billion crowns.

However, the situation of the ČSA subsidiary, which does not meet the conditions for similar assistance, is much more difficult. The state also rejected the request of both airlines to provide compensation in the form of a seat for the period of emergency from the spring of last year, when air traffic practically stopped. Likewise, CSA’s request for direct financial assistance in the amount of CZK 1.1 billion ended without a positive response, as the News Report has already informed.

Deputy Prime Minister Karel Havlíček offered as an alternative the inclusion in the newly prepared comprehensive compensation program, which is to help companies from the most affected sectors, whose sales have dropped significantly. However, the outlines of this program are still very vague, and therefore this “lifeline” is now unusable for CSA.

Do they file an insolvency petition themselves?

The variant that CSA – a company with a century-old tradition – will eventually end up in insolvency proceedings is now very real. The proposal could be submitted by creditors, including ordinary customers, who bought tickets from CSA last year and did not have the opportunity to “fly by” them. CSA owes passengers almost a billion crowns for canceled flights (which is one of the reasons why the company urgently asked the state for help). Last year, according to preliminary results, it lost over 1.5 billion crowns.

However, according to the list of reports from the Smartwings Group’s management, it is not at all impossible that the insolvency petition will eventually be filed by CSA itself in the role of a debtor. Other Czech companies, such as the clothing companies Blažek, Pietro Filipi and Kara, have come up with a similar legal step in recent weeks. This procedure gives current owners a better chance of not losing influence over other events.

If CSA airlines filed for insolvency and subsequently succeeded in court with resolving the bankruptcy in the form of reorganization, it could enable them to keep the aviation business alive even at this difficult time, albeit in a very truncated form. It would not be necessary to close the business and sell all the assets, as is the case when bankruptcy is resolved through bankruptcy.

List The News asked the co-owner of Smartwings, Jiří Šimáně, when asked whether CSA Airlines was ready to file an insolvency petition on its own. “I’m sorry, but I don’t want to comment on it at the moment,” Šimána told Thursday.

Hospodářské noviny has recently warned that CSA has already reported to the Labor Office the possible dismissal of up to all 430 employees. According to the subsequent statement of the airline, however, the mass termination may not occur to such an extent at all, it is only an intention that is part of the planned restructuring.

Prague Airport wants money in advance

The owners of the Smartwings Group extinguish fires on several fronts. In addition to negotiations with banks and aircraft lessors, Prague Airport is a key partner for them, where both airlines have their main base.

And it is precisely with the Prague-owned air port, which is owned by the state, that relations have allegedly been severed for several months. This was also indicated by a recent case with two detained aircraft. The ATR-72 machines were confiscated for several days (before it had to be returned by a court decision) due to outstanding liabilities of the service company Czech Airlines Technics, the daughter of Prague Airport.

But that is not all. According to the list of reports, the business ties between a state and a private company are also significantly eroded by the fact that both domestic airlines – ČSA and Smartwings – have had to pay for all services in Ruzyně for several months in advance before they even use them. The standard business model, which is paid only after the service is provided, was changed to subscriptions last year.

And Smartwings, even according to the information in the List of News, brought a significant financial burden in the order of hundreds of millions of crowns.

Standard and non-standard

Payment in the form of prepayments is confirmed by both parties.

The Smartwings Group does not hide the fact that it has a problem with this. “Smartwings has no overdue liabilities to Letiště Praha, and therefore considers the payment of prepayments to be problematic and non-standard,” said Vladimíra Dufková, a spokeswoman for the aviation concern.

However, Václav Řehoř, Chairman of the Board of Directors of Prague Airport, sees nothing non-standard in this.

“It simply came to our notice then. In the 7 years I have been working at the airport, I remember four airlines that occasionally got into this regime. For some, however, it is a completely normal and standard procedure within the valid business conditions, we apply it transparently and by mutual agreement. We do not relieve anyone, we do not favor anyone, “said Václav Řehoř in an interview for Seznam Zprávy with the addition that some type of security is now required by approximately half of the air carriers at Prague Airport.

“If we have been cooperating with a company for a long time, or they normally pay us on time for the services we provide as an airport, we do not require financial security. As soon as this is not the case with a company – any airline – we demand some form of security, “said Řehoř.

However, despite the required prepayments, both parties declare that they are still capable of normal business communication. Václav Řehoř states that he gets along very well with both Czech co-owners of Smartwings, Jiří Šimán and Roman Vik. “I think we can say it all,” the airport chief said.

We will bring the whole interview with the Chairman of the Board of Directors of Prague Airport, Václav Řehoř, tomorrow.

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