Čtvrtek 28. března 2024, svátek má Soňa
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Finance Ministry finds way of landing airport investor

  12:04

The Ministry of Finance has come up with a way of bypassing a ban and getting a private investor into the company running Prague’s airport

Ministerstvo financí vedené Miroslavem Kalouskem vytvoří Český Aeroholding, do nějž vloží státní podíly v Letišti Praha a v ČSA. foto: © ISIFA, ČESKÁPOZICEČeská pozice

The Czech government  on Wednesday should clear a cunning plan from Finance Minister Miroslav Kalousek (TOP 09) that gets around a ban on bringing a private investor into the new company running Prague Ruzyně Airport and Czech Airlines (ČSA).

Kalousek’s plan envisages a two-stage creation of a joint company called Czech Aeroholding. In the first stage, all the airport’s tangible assets such as property, runways and other items would be transferred to the new company.

This would leave the current airport management company, Letiště Praha, as the airport operator with 100 percent of its shares lodged in the main holding company as illiquid assets. This step would pave the way for bringing a strategic investor into Letiště Praha without that investor having a claim on the airport’s brick-and-mortar assets. These would be rented by Letiště Praha from Czech Aeroholding, which would also receive dividend payments from the operating company.   This step would pave the way for bringing a strategic investor into Letiště Praha without that investor having a claim on the airport’s brick-and-mortar assets.

The structural and financial conjuring act gets round a ban on privatizing airport assets pushed through the lower house of Parliament by the Social Democrats  (ČSSD) in February 2010. The move was supported by the Communist Party (KSCM), Green Party (SZ)  and the Christian Democrats (KDU-ČSL) in the face of opposition from both the Senate and President Václav Klaus.

A main ČSSD argument at the time was that a sale of the airport assets in the midst of the world financial and economic crisis would bring in an unfavorable price for the state.  

When airport privatization was being mulled ahead of the crisis in 2007 by the government of then-Prime Minister Mirek Topolánek (Civic Democrats, ODS), there was talk of the airport sale netting hundreds of billions of crowns. Some experts at the time said around Kč 50 billion would be more realistic.

Those expectations have now slimmed down  further with a valuation presented to ministers by the global auditing company and court recognized expert, PricewaterhouseCoopers,  on April 1 putting a price of just over Kč 30 billion on airport company Letiště Praha.

Prime Minister Petr Nečas’ ODS-led government took the first steps toward creating the Czech Aeroholding company in January. The Ministry of Finance set up a commercial company with basic capital of Kč 50 million and reserves of Kč 5.0 million. The target was for the assets of both the airport company and loss-making Czech Airlines to be sunk into the new entity.

The creation of the holding company formed part of a rescue plan for the airline, with the process expected to be completed by mid-2012. The Ministry of Finance said that the forced marriage between the two state-controlled companies would have a positive impact on the state budget.

Those plans have run into problems in Brussels. The European Commission opened a formal in-depth investigation into the airline rescue on Feb.23, 2011, questioning loans involved in the plan and how the tie-up between airline and airport would contribute to ČSA’s long-term financial viability. In such sensitive cases of state support, proof that a private investor is willing to invest in the restructured company can often ease Brussels’ worries as to whether competition is being distorted.

Ministry of Finance spokesman Ondřej Jakob said later that the two step process had always been planned and was not an attempt to get round the ban on airport privatisation but was rather aimed at fulfilling its provisions. The Kč 30 billion valuation was an accounting valuation and did not reflect the market price of Letiště Praha if there was a real competition to buy the asset, he added.

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