The Czech competition watchdog has cleared the creation of a new state aviation holding company that will control both the country’s main airport operator, Letiště Praha, and carrier Czech Airlines (ČSA) after saying that serious concerns about the impact on competition had been overcome.
The Office for the Protection of Competition (ÚOHS) approved the new role of Český Aeroholding to manage both the main airport and airline companies and their subsidiaries on Tuesday.
“With regard to the fact that the merger has created serious fears of a fundamental breach of competition on various markets, participants offered a series of guarantees which will have the effect of preserving competition,” the office said, without giving further details.
‘Participants offered a series of guarantees which will have the effect of preserving competition.’
The creation of a new holding company to oversee and manage both the highly profitable airport operator, whose main asset is Prague airport, the busiest in Central Europe, and the loss-making airline is a key facet of the state’s plan to turn around ČSA’s fortunes.
The corporate format, though, is believed to be unique in Europe, sparking clear worries from ČSA’s rivals that it could be given sweet deals on a series of airport services by the parent company or subsidiaries.
Czech public broadcaster Czech Television (ČT) reported that the new head of the holding company from Nov. 1 will be the current director of Letiště Praha and president of ČSA, Miroslav Dvořák.
ÚOHS said that the decision on the aviation merger was one of the most difficult and complex the office had faced, taking the full five months available before a final verdict on the deal could be given.
The European Commission is currently looking into whether part of the Czech state plans to restructure ČSA involves illegal state aid. It announced the start of an in-depth probe in a series of steps, including soft loans and special financial conditions for aircraft purchases, in June.
The Czech Ministry of Finance says it wants to sell of a significant stake in ČSA or invite a strategic investor to take a share in the airline once the restructuring process is complete in around three years.
