andrej From United Kingdom, joined Jun 2001, 811 posts, RR: 0 Posted (2 months 2 weeks 3 days 2 hours ago) and read 12786 times:
Hey all
Couple days ago, Czech media has report that Korean Air is interested in buying CSA. Today, Bloomberg as well as iDnes are reporting that Korean Air has made an official offer to buy 44% in the company for EUR 2.64M (total value of CSA: EUR 6.0M!). To become second largest shareholder.
Czech government is expected to review the offer next view, while finance minister Kalousek is already recommending to accept the offer.
KAL plans to make HUB out of the Prague airport and use it for its connections to Korea (flights within Europe are expected to be conducted via CSA - capacity growth is expected).
Is this the last chance for CSA? Qatar was also interested, but did not make any official offer.
WildcatYXU From Canada, joined May 2006, 2435 posts, RR: 5 Reply 1, posted (2 months 2 weeks 3 days 1 hour ago) and read 12557 times:
It may be the last chance, as long as Korean will actually have control of the company (not sure if allowed by EU law). If the company remains "managed" by government nominees, the whole thing becomes another AF episode and OK is as good as gone.
leftyboarder From Turkey, joined Apr 2008, 654 posts, RR: 1 Reply 3, posted (2 months 2 weeks 3 days 1 hour ago) and read 12326 times:
On one hand a 46% ownership seems risky.. But on the other hand, what is EUR 2.64M for a profitable airline like KE anyway... Still, not sure it will pay off.
Azure From France, joined Dec 2012, 203 posts, RR: 0 Reply 5, posted (2 months 2 weeks 3 days ago) and read 12188 times:
Quoting WildcatYXU (Reply 1): If the company remains "managed" by government nominees, the whole thing becomes another AF episode
Would you please care to elaborate ? AFKL is a private company - the French State owns only 16% of the capital and is not involved in the management of the airline, to my knowledge.
Furthermore AF is far from being "as good as gone" as your wording could suggest it...
Quoting SCQ83 (Reply 2): The EU has a 49% cap on non-European ownership in airlines.
Correct.
Let's add CSA received permission last September from the European authorities to borrow 100 million euros to a Czech state organisation.
CSA will launch in June a new route between Prague and Seoul - Incheon, its first long-haul flight for more than three years. This weekly flight will be operated with a Korean codeshare, which already operates four weekly rotations.
mesaflyguy From United States of America, joined Dec 2012, 715 posts, RR: 1 Reply 6, posted (2 months 2 weeks 3 days ago) and read 12079 times:
When they say they want to make a HUB out of PRG and will run European flights on OK, but does this mean we will see international flights from PRG on KE metal?
WildcatYXU From Canada, joined May 2006, 2435 posts, RR: 5 Reply 7, posted (2 months 2 weeks 3 days ago) and read 12042 times:
Quoting Azure (Reply 5): Would you please care to elaborate ? AFKL is a private company - the French State owns only 16% of the capital and is not involved in the management of the airline, to my knowledge.
Furthermore AF is far from being "as good as gone" as your wording could suggest it...
I don't exactly remember the details, as it was 20 years ago, but this is roughly what happened:
In 1992 , AF (as there was no AFKL yet) purchased some 30% of OK shares. Due to the management structure AF couldn't do any positive changes to OK, so they finally gave up and sold their shares back to the Czech government.
lightsaber From United States of America, joined Jan 2005, 10682 posts, RR: 100 Reply 8, posted (2 months 2 weeks 2 days 12 hours ago) and read 8928 times:
Wow dis CSA confuse me... I thought KE was asking for something else, not a PRG based airline.
I hope KE has a real say in the operation, otherwise this is money lost. But if it works out, it will reward well for them. It would be a unique hub location...
HB-IWC From Greece, joined Sep 2000, 4414 posts, RR: 76 Reply 9, posted (2 months 2 weeks 2 days 12 hours ago) and read 8724 times:
This venture may well spell the end of some of KE's smaller European stations such as Madrid, Rome, Milan, Zurich, Vienna, Istanbul and Saint Petersburg. Even Skyteam hub Amsterdam is only served thrice weekly with A332, the smallest possible equipment.
andrej From United Kingdom, joined Jun 2001, 811 posts, RR: 0 Reply 10, posted (2 months 2 weeks 2 days 6 hours ago) and read 7204 times:
Quoting HB-IWC (Reply 9): This venture may well spell the end of some of KE's smaller European stations
That is what I believe as well. Utilizing short-haul fleet and transfer via PRG to ICN. That would free up capacity for KAL to focus on new/upgrading destinations.
Quoting WildcatYXU (Reply 7): Due to the management structure AF couldn't do any positive changes to OK
It seems that AF miscalculated and mismanaged their involvement in that investment as well. Maybe it was not 'the time' for this alliance. After-all, both airlines have met again in the SkyTeam.
Quoting WildcatYXU (Reply 1): If the company remains "managed" by government nominees
Although I am aware of different economic climate at the time, CSA was doing very well under management leadership of Miroslav Kůla who spend almost 30 years at CSA (in-house management; he started as mechanic).
In 2003 he was replaced by a political nominee (and an idiot) Jaroslav Tvrdík. The guy mismanaged everything he could (not only at his stint with CSA, but also during his other 'managerial' tenures; most importantly he had no experience in airline industry). It is safe to say, that with his arrival to CSA, it was the start of dismal decline of CSA that continues until today. Tvrdík was replaced by some MBA CEO, that managed to put CSA back into 'profit', by selling most of its assets (further political nomination, and total clueless tool at the wrong place) and CSA was further divested. Further replacements at the leadership failed to do anything, but to loose money.
It is a truly sad realization, that once a dominant player on the Central European market, CSA is fighting for survival (it remains questionable how would CSA do under Kůla's management in past 10 years, with increased LCC competition and market liberalization. But somehow I believe that it would have been better.).
44%! But as you say, by looking at the numbers, it is 'only' EUR 2.64M (that is like one day worth of fuel expenses in 4Q12).
I find it intriguing how 'cheap' CSA is valued by KAL (total value: EUR 6.0M). Given the pro-austerity government (with questionable decisions and not very much liked by Czechs), I believe that KAL will receive permission to go-ahead with this investment.
777law From Monaco, joined Jul 2006, 197 posts, RR: 0 Reply 11, posted (2 months 2 weeks 2 days 6 hours ago) and read 7151 times:
Quoting Azure (Reply 5): Let's add CSA received permission last September from the European authorities to borrow 100 million euros to a Czech state organisation.
Wait - what am I missing here? CSA, with a value of EUR 6million (where EUR 2.64million buys you 46% of the company), borrowed EUR 100 million to last year? For what - reorganization?
If so, the reorganization costs almost 20x more than the entire value of the company. That is absurd.
Why on earth would any company buy in to an airline in that sort of financial shape? I didn't know that things were such a mess at CSA. That is just mindboggling.
UA- Premier Platinum, AF / KL - Flying Blue Petroleum, BA Executive Club Silver
fn1001 From Moldova, joined Sep 2008, 213 posts, RR: 0 Reply 12, posted (2 months 2 weeks 2 days 3 hours ago) and read 6193 times:
CSA is geographically squeezed between strong Star Alliance players, who are taking a good part of the passengers away. As an example all people I know from Brno, rather drive to VIE to get access to an excellent hub than take a domestic flight to PRG. Other *A airports taking czech passengers are MUC, NUE, DRS (even LEJ for charter flights to holiday destinations), WRO, KRK.
In the last years CSA failed to find it's own market share, KE might be a last chance to get some distinctive advantage against the competitors.
I could see in the last weeks that CSA throws on the market incredibly cheap tickets with other carriers for routes even not touching PRG. Best deal I made was ~90€ STR-OTP via TXL with AB . I wish them a long life and hope they can continue this kind of offers!
flyingalex From Germany, joined Jul 2010, 1005 posts, RR: 1 Reply 13, posted (2 months 2 weeks 1 day 21 hours ago) and read 5566 times:
Quoting mesaflyguy (Reply 6): When they say they want to make a HUB out of PRG and will run European flights on OK, but does this mean we will see international flights from PRG on KE metal?
KE have been serving PRG on their own metal for quite some time already.
Public service announcement: "It's" = "it is". To indicate posession, write "its." Looks wrong, but it's correct grammar
konrad From United States of America, joined Mar 2002, 494 posts, RR: 0 Reply 14, posted (2 months 2 weeks 1 day 21 hours ago) and read 5556 times:
Quoting leftyboarder (Reply 3): On one hand a 46% ownership seems risky.. But on the other hand, what is EUR 2.64M for a profitable airline like KE anyway... Still, not sure it will pay off.
I beg your pardon, but I cannot find the source of this information. Did they really offer but EUR 2.64M for 46% of the ownership?
leftyboarder From Turkey, joined Apr 2008, 654 posts, RR: 1 Reply 15, posted (2 months 2 weeks 1 day 18 hours ago) and read 5323 times:
Quoting konrad (Reply 14):
I beg your pardon, but I cannot find the source of this information. Did they really offer but EUR 2.64M for 46% of the ownership?
Umm, I was merely referring to the OP... which has the same info (minus my typo of 46% vs 44%).
mesaflyguy From United States of America, joined Dec 2012, 715 posts, RR: 1 Reply 16, posted (2 months 2 weeks 1 day 18 hours ago) and read 5284 times:
Quoting flyingalex (Reply 13): KE have been serving PRG on their own metal for quite some time already.
I know, but what I meant was if there would be any non Prague-Seoul flying on KE metal, such as PRG- North America, South America, Africa, Asia, etc. Perhaps I should have been more clear in my question.
The whole of CSA is indeed valued at 6 MEuro. It seems a small amount of money. The first thing I checked is how many LHR slots does CSA own. Well, they do not serve LHR anymore. The slots were sold a few years ago. They were probably worth more than 6 MEuro.
L410Turbolet From Czech Republic, joined May 2004, 5394 posts, RR: 19 Reply 18, posted (2 months 2 weeks 1 day 15 hours ago) and read 5114 times:
Quoting WildcatYXU (Reply 7): AF (as there was no AFKL yet) purchased some 30% of OK shares. Due to the management structure AF couldn't do any positive changes to OK, so they finally gave up and sold their shares back to the Czech government.
Well, that's quite one-sided narrative of the AF involvement. AF did not implement any positive changes because they could not offer any and were a huge mess themselves. For some reason it was believed that in the in the land of the blind, the one-eyed airline could be the king. The joint venture was a mess equally mismanaged from both parties involved and it generated gigantic loss within couple of months which haunted the airline for many years afterwards. How destined to doom the JV must had been one can get an idea if you look at today's privatized AFKL where profitable KL is bossed around by loss making AF.
Quoting andrej (Reply 10): It is a truly sad realization, that once a dominant player on the Central European market, CSA is fighting for survival (it remains questionable how would CSA do under Kůla's management in past 10 years, with increased LCC competition and market liberalization. But somehow I believe that it would have been better.).
The biggest problem of CSA since Kula's forced departure (this is where militant pilot unions CZALPA played a sad part, because they heavily lobbied with the shareholders to get a CEO who would be more willing to cave in to their unrealistic pay demands than Kula was) is that all those political nominees who came after him had absolutely no clue how to run an airline (some appeared to have no clue how to run even a dishwasher) and lacked any positive mid to long-term vision. Therefore for the past decade or so we've seen all kinds of short-term "solutions" aimed mainly at making the numbers look not so bad, expensive fleet changes, shifting objectives often the next contradicting the previous and so on.
Fly2yyz From Canada, joined Jan 2006, 964 posts, RR: 2 Reply 20, posted (2 months 2 weeks 1 day 12 hours ago) and read 4886 times:
With talk about KE dropping their smaller European destinations, it confuses me. I guess KE doesn't rely on a lot of connecting pax via their ICN hub from Europe to Asia/Australia as much?
hoons90 From Canada, joined Aug 2001, 2668 posts, RR: 54 Reply 21, posted (2 months 2 weeks 1 day 12 hours ago) and read 4861 times:
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Quoting Fly2yyz (Reply 20):
With talk about KE dropping their smaller European destinations, it confuses me. I guess KE doesn't rely on a lot of connecting pax via their ICN hub from Europe to Asia/Australia as much?
Nothing is confirmed, it's all speculation at this point.
If KE really cuts most of their secondary European routes, it will be a mystery as to where the 7 A330-200s they have on order will go.
On a side note, the seasonal charter flights to Zagreb are resuming this summer.
The biggest mistake made by most human beings: Listening to only half, understanding just a quarter and telling double.
WROORD From United States of America, joined Mar 2009, 811 posts, RR: 0 Reply 22, posted (2 months 2 weeks 1 day 12 hours ago) and read 4839 times:
If OK is to be a feeding carrier for KE, they will have to rebuild their european network. The last couple of years OK closed some prominent routes like LHR.
ely747 From Slovakia, joined Jan 2013, 82 posts, RR: 0 Reply 23, posted (2 months 2 weeks 1 day 11 hours ago) and read 4749 times:
Quoting konrad (Reply 17): . The slots were sold a few years ago. They were probably worth more than 6 MEuro.
CSA was "forced" to sell both LHR and JFK slots to put it mildly. Back in 2010, the airline had to raise cash from somewhere to pay off debts they had, additionally the LHR-PRG route itself was not profitable either. So the sale helped generating badly needed cash flow and CSA made themselves secure for a while. If I am not mistaken the LHR slots alone went for £ 12M, but don't quote me on that.
In regards to the book value of CSA, you find this similar with many other airlines too. Accounting does not look very healthy, but what really counts are so called the grand father rights and long established government agreements.
Quoting HB-IWC (Reply 9): This venture may well spell the end of some of KE's smaller European stations such as Madrid, Rome, Milan, Zurich, Vienna, Istanbul and Saint Petersburg. Even Skyteam hub Amsterdam is only served thrice weekly with A332, the smallest possible equipment
All mentioned above are higher yield markets than Prague. If KE were to proceed as you suggest, the carrier is likely to lose majority of corporate customer base.
flyingalex From Germany, joined Jul 2010, 1005 posts, RR: 1 Reply 24, posted (2 months 2 weeks 1 day 1 hour ago) and read 4477 times:
Quoting mesaflyguy (Reply 16): I know, but what I meant was if there would be any non Prague-Seoul flying on KE metal, such as PRG- North America, South America, Africa, Asia, etc. Perhaps I should have been more clear in my question.
Ah, that is what you meant.
Leaving aside the question of whether or not they even have the necessary fifth freedom rights, the only service that would make sense geographically is South America. ICN-PRG-GRU for example is only 0.2% longer than the Great Circle Route ICN-GRU (their present ICN-LAX-GRU routing adds 6.8%). However, the problem is that PRG (and Eastern Europe in general) does not have particularly strong ties to South America, and neither does the rest of Eastern Europe.
For most of Africa, going via Europe is quite a detour.
The biggest problem, however, is that PRG is not a particularly strong market for longhaul. Case in point is OK's own longhaul operations, which they got rid of because they were unprofitable. DL's JFK service is seasonal. KE's ICN-PRG works well because there are strong industrial ties between Korea and the Czech Republic/Slovakia, especially in the automotive industry. The only other longhaul is EK's DXB-PRG, and Emirates can make pretty much anything work nowadays.
So to answer your question, I'd be surprised if KE were to make that move.
Public service announcement: "It's" = "it is". To indicate posession, write "its." Looks wrong, but it's correct grammar
25 HeeseokKoo: In the meantime, LH broke interline agreement with KE from this weekend, and it was announced a couple of days after this KE buys CSA incident. Anyone
27 rampart: Now is the time for A.net armchair CEOs to take action. Organize a pool amongst members, raise the cash (only 3.33 Euros per A.net member, based on wh
28 andrej: As expected, the Czech government issued positive statement on the offer (EUR 2.64M for 44% stake). According to further information, Korean Air based
29 SKY1: ... It looks like LH dislike KE can buy OK, this is not the first time where LH pokes nose into business which don't concern them.... LH also dislike
30 HeeseokKoo: Yes, but discontinuing interline agreement between legacy airlines is very rare (is there any other case like this?). Asiana has much weaker domestic
31 sankaps: What is in it for KE though? A cheap price no doubt, but what value does PRG and CSA bring to them that can't be had through their Skyteam partners in
32 Fly2yyz: I think this may increase the number of options there are for KE pax to destinations they do not offer on their own metal. Anyone know where I can fi
33 sankaps: They can add their flight number to any flight they want as a SkyTeam member, but there is a cost to it (GDS costs, revenue credit negotiations, etc)
34 WROORD: Connecting through AMS or CDG to places like OSL, BUD, WAW, VIE, CPH, HEL to name a few would mean the passanger would have to backtrack usually addi
35 JU068: Could we see some routes such as Seoul to Nairobi routed via Prague? It was mentioned on here that the loads are never over 20% but they keep it becau
36 Homobohemicus: Greetings to all aviation nutters and enthusiasts ... I have been accessing Airliners.net for quite some time, however this is my first post. I am Cze
37 sankaps: Wow, fantastic post, Homobohemicus! Almost a mini-dissertation! Thanks and much appreciated!
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