Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
Korean Air Wants CSA  
User currently offlineandrej From United Kingdom, joined Jun 2001, 1015 posts, RR: 0
Posted (1 year 8 months 3 weeks 21 hours ago) and read 14358 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.

Cheers,

Andrej

Korean Air Bids for Czech Airlines Stake

[Edited 2013-03-06 07:14:42 by SA7700]

37 replies: All unread, showing first 25:
 
User currently offlineWildcatYXU From Canada, joined May 2006, 2642 posts, RR: 5
Reply 1, posted (1 year 8 months 3 weeks 20 hours ago) and read 14129 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.

User currently offlineSCQ83 From United States of America, joined Oct 2012, 1096 posts, RR: 0
Reply 2, posted (1 year 8 months 3 weeks 20 hours ago) and read 14030 times:

Quoting WildcatYXU (Reply 1):

The EU has a 49% cap on non-European ownership in airlines.


User currently offlineleftyboarder From Turkey, joined Apr 2008, 693 posts, RR: 1
Reply 3, posted (1 year 8 months 3 weeks 20 hours ago) and read 13898 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.

User currently offlineJU068 From Vanuatu, joined Aug 2009, 2744 posts, RR: 6
Reply 4, posted (1 year 8 months 3 weeks 19 hours ago) and read 13784 times:
Support Airliners.net - become a First Class Member!

If this happens could we see them axing some of their current European routes?

User currently offlineAzure From France, joined Dec 2012, 629 posts, RR: 16
Reply 5, posted (1 year 8 months 3 weeks 19 hours ago) and read 13760 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.



I fly because it releases my mind from the tyranny of petty things - A. de Saint Exupery
User currently offlinemesaflyguy From United States of America, joined Dec 2012, 3279 posts, RR: 6
Reply 6, posted (1 year 8 months 3 weeks 19 hours ago) and read 13651 times:
Support Airliners.net - become a First Class Member!

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?


\________(---)________/ :) World's most beautiful aircraft: 757-200, MD-88/90, E-190, A321
User currently offlineWildcatYXU From Canada, joined May 2006, 2642 posts, RR: 5
Reply 7, posted (1 year 8 months 3 weeks 19 hours ago) and read 13614 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.


User currently offlinelightsaber From United States of America, joined Jan 2005, 13430 posts, RR: 100
Reply 8, posted (1 year 8 months 3 weeks 8 hours ago) and read 10500 times:
Support Airliners.net - become a First Class Member!

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...


Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlineHB-IWC From Indonesia, joined Sep 2000, 4513 posts, RR: 72
Reply 9, posted (1 year 8 months 3 weeks 7 hours ago) and read 10296 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.

User currently offlineandrej From United Kingdom, joined Jun 2001, 1015 posts, RR: 0
Reply 10, posted (1 year 8 months 3 weeks 2 hours ago) and read 8776 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.).

Quoting leftyboarder (Reply 3):
On one hand a 46% ownership seems risky

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.

Cheers,

Andrej


User currently offline777law From Monaco, joined Jul 2006, 203 posts, RR: 0
Reply 11, posted (1 year 8 months 3 weeks 1 hour ago) and read 8723 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
User currently offlinefn1001 From Moldova, joined Sep 2008, 234 posts, RR: 0
Reply 12, posted (1 year 8 months 2 weeks 6 days 22 hours ago) and read 7765 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!



Mai bine să-ţi fie rău decît să-ţi pară rău.
User currently offlineflyingalex From Germany, joined Jul 2010, 1019 posts, RR: 0
Reply 13, posted (1 year 8 months 2 weeks 6 days 16 hours ago) and read 7138 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
User currently offlinekonrad From United States of America, joined Mar 2002, 533 posts, RR: 0
Reply 14, posted (1 year 8 months 2 weeks 6 days 16 hours ago) and read 7128 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?


User currently offlineleftyboarder From Turkey, joined Apr 2008, 693 posts, RR: 1
Reply 15, posted (1 year 8 months 2 weeks 6 days 13 hours ago) and read 6895 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%).


User currently offlinemesaflyguy From United States of America, joined Dec 2012, 3279 posts, RR: 6
Reply 16, posted (1 year 8 months 2 weeks 6 days 13 hours ago) and read 6856 times:
Support Airliners.net - become a First Class Member!

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.



\________(---)________/ :) World's most beautiful aircraft: 757-200, MD-88/90, E-190, A321
User currently offlinekonrad From United States of America, joined Mar 2002, 533 posts, RR: 0
Reply 17, posted (1 year 8 months 2 weeks 6 days 13 hours ago) and read 6834 times:

Quoting leftyboarder (Reply 15):
Umm, I was merely referring to the OP... which has the same info (minus my typo of 46% vs 44%).

In the meantime I found a reliable source at
http://my.news.yahoo.com/czechs-kore...arrier-csa-200648707--finance.html

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.

[Edited 2013-03-07 14:00:46]

User currently onlineL410Turbolet From Czech Republic, joined May 2004, 5739 posts, RR: 19
Reply 18, posted (1 year 8 months 2 weeks 6 days 11 hours ago) and read 6686 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.


User currently offlineWildcatYXU From Canada, joined May 2006, 2642 posts, RR: 5
Reply 19, posted (1 year 8 months 2 weeks 6 days 9 hours ago) and read 6534 times:

Quoting L410Turbolet (Reply 18):
Well, that's quite one-sided narrative of the AF involvement.

Well, there are other, even less favourable narratives. Especially the one 99% of Slovaks believes in   

Quoting L410Turbolet (Reply 18):
where profitable KL is bossed around by loss making AF.

I believe when AF took over KL it was the other way around. But I may be wrong. Happened before.


User currently offlineFly2yyz From Canada, joined Jan 2006, 1046 posts, RR: 2
Reply 20, posted (1 year 8 months 2 weeks 6 days 8 hours ago) and read 6458 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?

User currently offlinehoons90 From Canada, joined Aug 2001, 3046 posts, RR: 52
Reply 21, posted (1 year 8 months 2 weeks 6 days 7 hours ago) and read 6433 times:
AIRLINERS.NET CREW
CHAT OPERATOR

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.
User currently offlineWROORD From United States of America, joined Mar 2009, 962 posts, RR: 0
Reply 22, posted (1 year 8 months 2 weeks 6 days 7 hours ago) and read 6411 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.

User currently offlineely747 From Slovakia, joined Jan 2013, 140 posts, RR: 0
Reply 23, posted (1 year 8 months 2 weeks 6 days 6 hours ago) and read 6321 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.

[Edited 2013-03-07 20:21:59]

User currently offlineflyingalex From Germany, joined Jul 2010, 1019 posts, RR: 0
Reply 24, posted (1 year 8 months 2 weeks 5 days 20 hours ago) and read 6049 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
User currently offlineHeeseokKoo From South Korea, joined Jan 2005, 653 posts, RR: 1
Reply 25, posted (1 year 8 months 2 weeks 2 days 10 hours ago) and read 5683 times:

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 cannot mix LH+KE at one ticket, and I guess baggage won't go through for a separate ticket anymore. KE is operating 380 to FRA and although they are not in the same alliance, there still are lots of passengers transferring to LH intra-Europe flights. Similarly from Seoul, LH passengers should take only Asiana for domestic connection (beside Busan).

User currently offlineairdfw From United States of America, joined Aug 2012, 199 posts, RR: 0
Reply 26, posted (1 year 8 months 2 weeks 1 day 16 hours ago) and read 5278 times:

Quoting L410Turbolet (Reply 18):
(some appeared to have no clue how to run even a dishwasher)
Quoting L410Turbolet (Reply 18):
For some reason it was believed that in the in the land of the blind, the one-eyed airline could be the king.

I love these quotes
 


User currently offlinerampart From United States of America, joined Aug 2005, 3152 posts, RR: 6
Reply 27, posted (1 year 8 months 2 weeks 1 day 16 hours ago) and read 5257 times:

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 what the number of members the "about" page tells me), and A.net owns half an airline. We could easily best Korean's bid with a 0.10 Euro increase per A.net member share. Our braintrust could devise some realistic plan to keep CSA a going concern, which may well involve alliances with Asian, European, or American airlines as we see fit. (no slight to Africa or Australia, I'm simply looking for strategic mileage)

Now, as to how to choose our A.net board of directors, and arrive at a representative to CSA's board... I wouldn't know where to begin.

-Rampart


User currently offlineandrej From United Kingdom, joined Jun 2001, 1015 posts, RR: 0
Reply 28, posted (1 year 8 months 2 weeks 22 hours ago) and read 4821 times:

As expected, the Czech government issued positive statement on the offer (EUR 2.64M for 44% stake). According to further information, Korean Air based its offer on Ernst & Young estimates. E&Y values CSA at EUR 5.794M (CZK 148.5M).

The contract will be signed on April 9, 2013. According to the Czech premier (Nečas), CSA is in 'good hands' and the government believes that this sale will help not only CSA, but also PRG airport (more traffic, further development, etc.).

Andrej


User currently offlineSKY1 From Spain, joined Apr 2006, 879 posts, RR: 4
Reply 29, posted (1 year 8 months 2 weeks 9 hours ago) and read 4436 times:

Quoting HeeseokKoo (Reply 25):
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 cannot mix LH+KE at one ticket

... 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 disliked IB had bought JK, while forcing SK to sell JK.

Fortunately, KE doesn't need LH at all.

Quoting HeeseokKoo (Reply 25):
KE is operating 380 to FRA and although they are not in the same alliance, there still are lots of passengers transferring to LH intra-Europe flights

I don't know right now, but in the 2000's It was used to transfer to LA many KE pax to MAD and other Portugal/Spain points via FRA, because the scheduled does fit.

Quoting HeeseokKoo (Reply 25):
Similarly from Seoul, LH passengers should take only Asiana for domestic connection (beside Busan).

I assume the OZ domestic network is smaller than the KE in both, destinations and frecuencies, right?



Time flies! Enjoy life!
User currently offlineHeeseokKoo From South Korea, joined Jan 2005, 653 posts, RR: 1
Reply 30, posted (1 year 8 months 1 week 6 days 22 hours ago) and read 4126 times:

Quoting SKY1 (Reply 29):
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 disliked IB had bought JK, while forcing SK to sell JK.
Fortunately, KE doesn't need LH at all.

Yes, but discontinuing interline agreement between legacy airlines is very rare (is there any other case like this?).

Asiana has much weaker domestic connection. But this discontinuing woudn't hurt LH.


User currently offlinesankaps From United States of America, joined Jan 2008, 2255 posts, RR: 2
Reply 31, posted (1 year 8 months 1 week 6 days 21 hours ago) and read 4092 times:

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 Europe? Is Eastern Europe really such a big play for Koreans? Are they thinking of establishing a scissor hub in PRG? If just feed and Western / Central Europe connectvity, AF / KL can do that for KE thru AMS and CDG already.

[Edited 2013-03-14 06:18:02]

User currently offlineFly2yyz From Canada, joined Jan 2006, 1046 posts, RR: 2
Reply 32, posted (1 year 8 months 1 week 6 days 20 hours ago) and read 3982 times:

Quoting sankaps (Reply 31):
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 Europe? Is Eastern Europe really such a big play for Koreans? Are they thinking of establishing a scissor hub in PRG? If just feed and Western / Central Europe connectvity, AF / KL can do that for KE thru AMS and CDG already.

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 find a list of the flights operated by KLM and AF that KE codeshare on? I can't seem to find much...


User currently offlinesankaps From United States of America, joined Jan 2008, 2255 posts, RR: 2
Reply 33, posted (1 year 8 months 1 week 6 days 16 hours ago) and read 3777 times:

Quoting Fly2yyz (Reply 32):
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 find a list of the flights operated by KLM and AF that KE codeshare on? I can't seem to find much...

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). So they must have selected the ones it is worth adding their flight number to,


User currently offlineWROORD From United States of America, joined Mar 2009, 962 posts, RR: 0
Reply 34, posted (1 year 8 months 1 week 6 days 8 hours ago) and read 3477 times:

Quoting sankaps (Reply 31):
Are they thinking of establishing a scissor hub in PRG? If just feed and Western / Central Europe connectvity, AF / KL can do that for KE thru AMS and CDG already.

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 adding extra time for the connection. Not to mention that PRG is much cheaper for KE to operate from than CDG or AMS.


User currently offlineJU068 From Vanuatu, joined Aug 2009, 2744 posts, RR: 6
Reply 35, posted (1 year 8 months 1 week 6 days 4 hours ago) and read 3364 times:
Support Airliners.net - become a First Class Member!

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 because of cargo. If they route it via Prague they could attract Europeans to fly with them. After all, Kenya is quite popular among Europeans.

User currently offlineHomobohemicus From Czech Republic, joined Mar 2013, 89 posts, RR: 0
Reply 36, posted (1 year 8 months 1 week 6 days 3 hours ago) and read 3372 times:

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 Czech (and a true Budweiser from the city of Budweis in southern Bohemia who lives far far away in crazed Bangkok) and am following the new developments in connection to Korean air with great interest. Whatever happens, there is no doubt that it is definitely a positive development. A few weeks back we were under the impression that neither Korean nor Qatar would actually place an offer and the whole sale will be a bust and Czech Airlines will free fall into darker skies. The actual offer from KE came almost a week later than the deadline set by the government. I presume they were completing some final "fine print" agreements and concluding the negotiations.

Many around have concrete information about the Czech market as well as the airline but I have noticed that the information was rather incomplete or based on certain stereotypes and outdated facts. Much has changed in terms of the aviation industry and for Europe and any "smaller" airline it's hard times indeed.

So since there is no "Czech Aviation" thread, I guess I can put my facts together here to paint a picture of the present, the past and hopefully the future. I am a frequent flyer and had aviation around me since birth (Father Pilot in MS), however I will still try to avoid any "slapping jam around one's lips" as Czechs say. Meaning "sweetening" things up for better presentation. As much as I love OK, I have to be critical as well.

I will just write and whatever comes to my mind, I'll put down... So my thought process could be messy as I always seem to veer off the main idea and always jump from one topic to another  ))) And might be too long as well...


KOREAN and PRAGUE?

This is one of the few facts that many have hard time contemplating. I have to admit that even I am surprised. Prague is a GREAT airport and flying through and from/to this port is always pleasant, but we all admit that its a regional airport and it's ambition to become a hub were hurt by the situation of CSA.

There are only 10 million of us and a large portion are older, so the market is quite limited. The Charter business is very very good and almost all Czechs do fly away for their summers. Business and economy is doing fairly well compared to other European economies with very low debt rates. Very strong industry and an extremely solid banking sector and one of the most trusted and stable currencies in the region.

After Germany the biggest car manufacturer. Very strong in heavy industry, trains, locomotives, turbines and energy etc,,,This as well sustains the 3x weekly B747 cargo flights from China Airlines as well as Yangtse River Express.

Prague is mainly an A320/B737 airport with high frequency of flights mainly to European destinations and some Long Haul. The "front" portion of the planes are getting more full but Prague is still a holiday destination. We do still believe that a couple of Long Haul links could be sustained, but the market is changing and today so many destinations are so hard to get into due to fierce competition, only larger airlines are able to survive. We usually chat in Czech aviation posts and many present cases for reopening New York and hopping on the "go east" bandwagon that suits PRG so well. Finding the niche is what is required.

The longhaul is alive to Prague but eaten away westwards mainly by Lufthansa, Air France and in a small portion BA. When it comes to eastwards then Turkish, LH, Austrain and other big players.

Lonh hope from Prague conspiracy theories  )) i.e.

- Returning to American Soil with own metal. A route that was doing quite well, however no decent equipment;

- Vietnam where Vietnamese are one of the largest ethnic minorities in the country but HAN/SGN are notoriously low yield. But there are rumours around that Vietnam Airlines are interested and awaiting to have new metal to open such a link;

- One of the strangest info that I have is "Taiwan", where it holds one of the highest numbers of pax from Asia coming to Prague in the last couple of years!

- Many throw in China and Japan, but I think this would be something that Korean is able to use to their benefit. An explosion of Chinese and other asian countries to Prague is visible in the last couple of years;

- Many of the destinations are eaten by Emirates as for Prague it's quite amazing to see a B773 daily! You have to realize that you see nothing around but narrow bodies (except KE);

- I dare say that 50% of the EK flights are for China and mainly to Bangkok (Same as OK's cooperation with Etihad) but I am certain that it would be suicide for CSA to start such a destination (I would welcome it soooooo since I live in Bangkok for 8 years now and love to try a direct flight - almost got my hopes up since Thai airways was looking into a seasonal flights back in 2006. The amount of traffic is increasing incredibly from both sides as I see numbers from both embassies;

Korean has been flying to Prague since 2004 if I am not mistaken. They started at 3 weekly and not at 4 weekly. the flight started with A332 then A333 and upgraded to B772. However few know that in summer while KE flies to many destinations in EU with A33X or B772, Prague gets a fully loaded B747. in 2012 they kept flying with the Jumbo Jet even through winter!

Koreans are very conservative and this investment is their "FIRST" attempt to buy an airlines and invest in this way, so I am under no illusion that it took them a long time to research and make an informed decision, while reaching a conclusion that this venture could prove beneficial and successful. Many factor can help make this a good decision indeed.

There is no doubt that Koreans have somehow created a liking to the Czech Republic and not only in tourism (Always love to fly to Seoul for Czech beer!) but in business as well as Korea seems to be one of the biggest investors. The theory is that they simply got used to the Czech market and decided to use it as a gate to the rest of Europe and it is Western Europe that they are interested in (not only in aviation but in business as well).


PRAGUE AIRPORT and CSA PLANNED / CONTROLLED FALL

The Czech government made a rather controversial step lately and that would be the creation of the "CZECH AEROHOLDING"

The aeroholding covers:

- Czech Airlines (loss making);
- Holidays Czech Airlines (new project. The charter market is extremely strong but OK management is unable to make it happen compared to Travel Service;

- Prague airport (The crown jewel and an extremely profitable and always has been and in the aeroholding considered a way to push some cash into OK legally);

- Czech Airlines Handling;

- Czech Airlines Services (call centres, check-in and other services);

- Czech Airlines Technics (one of the most profitable parts of OK)

This step raised some flags as the aviation sector is going exactly the opposite way, while the Czechs went back to consolidation of these entities under one roof. CSA tried to get cash year on year by selling everything else they had from CSA Catering, Hangars...etc...

Czech Airlines ( CSA / OK ) was doing rather fine in the beginning of our new century with double figure growth for the airline as well as the airport. The future was bright and big plans to made a "central European" Hub. In our region Prague likes to present itself as a competition to Vienna, Budapest and Warsaw. I'm taking Munich out of this list since you need to be able to compare the comparable and these two airports are still worlds apart in their list of destinations and strength of the main national airline. Back then the airport plans for 2018-20 was to be 20 million pax per year, but at the moment we are stuck at 11-12 million with 8-9% fall in the last couple of years or stagnation.

Now with the demise of Malev, Budapest lost the plot and is thrown years backwards in its development. Poland is a very large and attractive market but LOT seems to be in a bad shape and LH is less and less inclined in saving its new daughters. LOT is predicted to slim down considerably, is asking for cash and still preparing steps for restructuring. So CSA seems to have passed that phase and now to a new level of stabilisation and development.

Czech airlines has a great value not only in it's status as a European carrier that seems quite attractive for Korean air, but Prague since their plans seem to be not only for passenger transport but Cargo as well due to a very very good location in the heart of Europe and the most dense railway network in the developed world and good infrastructure allowing to have it as a stepping stone to other countries.

Let410 Turbolet here and andrej seem to know a lot about OK and their information is concrete. Presented in the past partnership with AirFrance, where the relationship even turned sour and many blamed AF but we (mortals) do not have all the facts so it's hard to make a real picture. Let's just say that it was a BIG mess. I do remember how AF stormed out with certain damages caused to OK that took time to resolve.

I am still proud of Czech airlines ... Even today the service is superb only thanks to the cabin, always the saving grace. Some loss in service is visible on short flights as in other airlines but I am hopeful that Korean would be a positive factor as hold flight services on "Asian expectations" and that in my book would be above average for sure compared to other European short flights. Perhaps no more "cookies" and pseudo wanna-be C class seats on narrow bodies, etc...

I have always been vocal about how OK's crew is always great including my inside knowledge of how GOOD the technical service of the planes are in, professional attitudes of CSA technics as well as the training of the deck crew.This always balanced the schizophrenia in the management that got poisoned by its link to politics who were put there without having anything to do with aviation. I might get arrested for inciting violence, but a certain "CEO" of CSA who was mentioned here with initials of M.T was as healthy to Czech airlines as a cyanide injection. So he deserves to be thrown in a hole somewhere to rot. Otherwise of course i am for world peace  

unfortunately OK failed to realize that selling tickets is not the only part of their service and their before and after "customer care" became rather bland with no real attention to business travellers and their specific needs, with an overworked and under-trained call centre. Ground crew that transferred under CSA services with lower salaries and lacking motivation and resulting in an incredible turnover of employees. Marketing that was less the effective and simple waste of money, website that is full of inaccurate info and technically non-intuitive with loads of errors. Very very and I'll add one more "very" - very strange ticket pricing and opening and closing destinations with no real research. And most of all the late company "spokeswoman" who I need to gulp 3 pills of antihistamines when I read or hear her "press releases". Writing information and repeating it so long expecting us to believe it as a fact insulting the very basic intelligence of clients and consumers. It is very sad when using Marketing as simple justification to bad moves.

The situation even if not ideal, changed a bit and through all the criticism of the Czech Aeroholding, the CEO openly admitted what was on our minds. That CSA was being slowly in a controlled fall. They were trying to clean up the company from older employees who were in the Union that seemed to disregard the company's financial situation and adamant on higher benefits and salaries. Prague airport was to be a sponsor while OK was being brought back from the red numbers. the temporary shrinking of the airline was to be gradual allowing other airlines to fill these destinations with their own metal thus causing no sudden drop as seen from the scenario in Hungary. This would have hurt Prague airport.


CSA "GO EAST" ATTEMPT

Czech Airlines is to be considered as a regional European airline. they were strong in the baltic and the near east but the latest political situation changed this as OK used to fly to Cairo, Beirut, Damascus, Allepo, Tel Aviv and even Kuwait for a very short time. Only TLV remains strong and the new "attempt" to work with Etihad throgh AbuDhabi.

CSA was quite popular to take passengers from Scandinavia and the Baltics to the near East.

I am convinced that for an airline can succeed, it needs to specialize with attention to what works best for the Czech market. This is why Czech airlines is trying to distinguish itself. OK's building its image as an airline that is an "expert" (maybe a strong word) on Eastern European, Russian and CIS countries. They are trying to build up a respectable destination list even if the frequencies are still too thin. All is governed by bilaterals. Prague is extremely popular in these countries and PRG is to benefit as mainly its O&D. They probably want as well to add the "connection" factor for European countries to these destinations.

Czech Airlines currently flies to (will need to check the latest schedules in case of any changes):

Moscow SVO 34x weekly (one of the strongest flights from PRG and many are O&D) and well as Saint Petersburg, Novosibirsk, Samara, Rostov on Don, Ufa, Nizhny Novgorod, Yekaterinburg and the new route to Perm

Minsk, Almaty, Astana, Baku, Tashkent, Yerevan, Tbilisi.

With better management, it is quite possible to create a solid ground for having PRG as a hub for these destinations but the talk of open skies with Russia could change the whole reality on the ground and in the skies! But OK has a very good name in these airports, so a brand awareness is as well something valuable.

This is a parallel "strategy" that CSA will have since Korean is openly vocal that it is interested in Western Europe, while Eastern Europe and Russia will be handled as to the European client's interests. KE has it's angle of attack by using Prague for its "Asian" clients preferences. Both in my opinion could work perfectly in harmony.

Step 2 would ofcourse be where business is = Asia.


CSA LAST SALE ATTEMPT AND THE CURRENT ONE

NOTE: The latest European Commission approval of the money given to Czech airlines is great since if a refusal loomed, OK would cease to exist the same way Malev did. As explained here by some informed members, the EU commission could deem "money" given to airlines as legal loans ONLY if a valid, workable and active restructuring plan is in place. Czech airlines had one and was already hard cutting the fat and trimming, while Malev was still lost and the "plans to save MA" were very unconvincing.

CSA will not borrow any money. This decision from the EU commission was in connection to the money it got years ago and was deciding whether it was legal or illegal. No new money is to be given to the airline.

The Czech Government tried to sell CSA a couple of years ago (2009) and some airlines showed interest but the EU commission was still investigating, thus no one would dare make a real offer. Back then AirFrance was on the list along with Turkish, Aeroflot and an unnamed Middle eastern and Asian airline. Aeroflot was really interested however the government decided to exclude them on basis of security reasons. This is a thread on aviation so I dislike bringing politics here as it definitely makes generalizations towards another country, but this was the main explanation for the refusal by the government on basis of the "local Czech National Security" bureau. So not the security of the airline as in technical terms but the use of companies to infiltrate local governments. I know this sounds like a major conspiracy theory but certain proof was submitted.

The only company that made a real offer was Czech Travel Service, a successful charter airline with loads of 737NGs, but they wanted the company for 0.00CZK and no debt. So all fell through as in 2009 the government was hoping for a lot more. I am content this did not go through since this would have offered no real benefit for OK.

The current sale was more sincere in my opinion as no one even tried to pretend that CSA would be worth more in cash, especially after selling all what it had. They sold the Hangars they had for their planes, their catering, Slots to JFK after they got rid of their ageing A310s. Sadly the sale of the LHR slots that BA got from them - a step that is still being criticised today by many aviation experts.

So the value of CSA is surely somewhere else. The Airline even if not at all healthy is not terminally ill since the last activities in the last years were extremely unpopular and painful but were needed. The airline shrunk, less employees, less destinations but from what I gather this was all temporary and once things are in place, a return to growth -with a strong partner- would be a new trend. And what better that an Asian partner indeed!

The "rules" of the sale were extremely concrete and very logical. The price played no importance in this sale attempt (The latest valuation was made by E&Y and the amount corresponds with the actual value). The initial "sale" offer was sent to 52 carriers but who buys airlines these days? They needed someone who knows Prague and is interested in Europe. this combination is not the easiest.

The main requirements were:

- IATA legacy carrier with a strong long haul network;
- Ability to develop OK's network as well as PRG pax numbers;
- Attempt of rebuilding a small Long Haul capability from Prague airport;
- Long term strategy

between the lines they even openly "preferred" an Asian or Middle Eastern Airline. In all honesty there were no other options. When it comes to the winner, KE had the upper hand since it has very strong commercial relationships with the Czech Republic and knows Prague inside out. A healthy amount of pax not only tourism but business as well. KE is able to get passengers from Korea and Japan as well. They are in the same alliance and seems to seek a stronger foothold in Europe. So I believe this could prove very beneficial for both Airlines.

Qatar was active in their process, management visited PRG and OK but they decided not to make the final due diligence after all. I would dare say that the outcome is great and depends on how good both airlines work together and slowly we will see the concrete results from this partnership. I cannot see how would PRG or OK benefit Qatar in any way and their joining One World probably was a point in their decision as well.

One of the benefits of Prague as well is that the airport is simply great and has a big chance and space to grow. A second parallel runway has been finally approved and will be built soon, Train link is approved increasing the capacity of the airport. The rendering of the development of Prague airport also shows an extension of terminal 2. (named "D"). There's a great presentation video of the plans but not certain if I can post here... can I post a link to Youtube???

ENEMIES NOW FRIENDS

One very interesting news this week that surprised me is that Czech Airlines and Travel Service talks on potential European destinations Code-Share for some destinations. For some who do not know about TS, it's like North Korea and South Korea frolicking and holding hands.

It is not sure if the flights to Seoul would be discussed but seems it won't be the case. SO only European destinations. TS flies to so many "leisure" destinations. Could be interesting. Finally I can see OK moving it's ass looking for partners and making individual alliances since SkyTeam hasn't really offered much to OK other than being trampled by AF.

Korean and Czech Airlines seem to be quite comfortable together and I was very curious why there was no more cooperation between the two since KE used the PRG flight for itself. OK never promoted ICN and ticket prices were set stupidly high to allow only KE to have it all for itself. About time I guess!


LATEST INFORMATION IN CZECH MEDIA CONNECTED TO CZECH AIRLINES AND KOREAN

1. Korean Air did make an official offer on 44% of OK valued at almost 2.68 Million Euro; The government already agreed the sale and as a formality the the EU commission was informed (antitrust); Official signing of Contract is on 9th of April;

The Czech Finance Minister conformed that this "sale" is the culmination of the painful restructuring that took several years. Development will ensue.

2. Korean air will have 1 member placed on the Board of Directors. Even though Korean will have a minority stake. "Czech Aeroholding's" CEO that owns OK and Prague Airport confirmed and openly stated that decisions will be made only upon consensus, thus nothing will pass without KE's approval;

3. Korean Air has currently the buying rights to ALL CSA minority shares. It has been reported that KE is interested in a majority (all shares) of OK but the current European laws will not allow this. It seems though that there is already a discussion in the European Commission about on a majority stake by non European entities. If such a situation happens, then KE is reported to want all shares;

4. We already know that CSA will get in a couple of months an Airbus A330-300 and it's confirmed it will be Korean Air HL7701. This plane has a refurbished interior (from 2011) with Prestige C class seats and new Economy with PTVs. It will be flying under Czech Airlines registration and colours (OK-YBA) with fuzzy memories of the Ilyushin Il-62 under the same registration / Named Praha from the 70/80s.

Even though having 1x plane isn't anything to celebrate about but for Czech fans we don't care even if the plane flies Prague-Prague, but seeing a wide body in CSA is a great thing and hopeful it's an indication of better days. We believe OK can sustain 5-6 planes for some long hauls and part of the potential development. And I dare say It'll look great as well...

This plane will be flying 2x a week from PRG to ICN and during the week OK needs to use it so they will be sending it as well to Moscow, Ykatringburg and Almaty. OK's flights to Korea will complement KE to make it 6x weekly between both capitals.

Czech Airlines knew how to use their planes at full capacity since I remember OK received an award from Airbus on how they heavily operated their A310s while keeping them in the air most of the time and having them in great shape.

CSA phased out the last older 3 B737-500s, so it has a fleet of really young A320s and rebuilding their small ATR fleet with the -500 series for regional routes; The company will stay with an all Airbus Fleet and with regionals ATRs

5. Korean Air today closed it's "call centre" in Ireland and transferred it to Prague. CSA Services and Call centre will manage all Korean Air European assistance from its Prague call centre. I'm certain that more training will ensue, but seems like one of the first small steps and visible results of the cooperation;

6. Czech Aeroholding's CEO confirmed that OK and KE is now reworking the flight schedules and routes' destinations to correspond with OK's and KE's flights from/to PRG/ICN allowing the transfers of passengers to onward destinations. From Prague's side, KE is most interested in more frequencies and destinations to Western Europe, thus it looks like Prague will surely be a hub for some extra frequencies and some new cities that KE doesn't serve directly. I seriously doubt KE will stop cease flying to important destinations on own metal, but OK will help in increasing capacity, frequency as well as more smaller destinations. From ICN it seems the interest would be Korea and Japan mainly.

Terminal 1 which serves non-Schengen destinations and where KE lands in Prague will get a face lift. It's still in GREAT shape and no need for any real work but what I understood is certain modification for "transfer" services as well as the "navigation" in the airport. I gather this means more Asian staff to assist the passengers and Korean signing, documentation, etc..

7. Korean Air included in the Contract that the government will NOT change/sell or alter any management ownership of "Czech Aeroholding" for a minimum of 5 years otherwise they would pull back immediately. I believe that they will be interested in Prague airport itself;

So all we need to do is wait and see how this pans out. The decision I believe is positive and of great benefit to OK as well. There will be 2 parallel developments as mentioned. The first will be Korean's needs and destinations in Europe for its clients, Here OK will be the feeder and "bus" to take them onwards from Prague to other destinations in Europe.

Part of this would be using ICN as onward hub for Asia but the majority of the flow will be from Asia to Europe and not the other way around,

The second is OK's position in Europe and the development of its identity in connection to European destinations, Russia and CIS countries which is a gold mine at the moment.


User currently offlinesankaps From United States of America, joined Jan 2008, 2255 posts, RR: 2
Reply 37, posted (1 year 8 months 1 week 6 days 2 hours ago) and read 3239 times:

Quoting Homobohemicus (Reply 36):
Greetings to all aviation nutters and enthusiasts ...

Wow, fantastic post, Homobohemicus! Almost a mini-dissertation! Thanks and much appreciated!


Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
India Bilaterals: Gulf Air Wants To Double Flights posted Sat Feb 2 2008 11:16:57 by Lightsaber
American Air Wants To Turn Cost Center Into Cash posted Wed May 25 2005 02:14:38 by Squirrel83
American Air Wants 5 More Bucks posted Sat Apr 30 2005 14:22:14 by Squirrel83
North Korea's Air Koryo posted Wed Jan 5 2005 20:23:06 by QuestAir
Russia's Sibir Air Wants 100 717's posted Thu Jul 29 2004 16:18:27 by PANAM_DC10
Champion Air Wants To Begin Scheduled Service? posted Sat May 22 2004 09:03:35 by Pilottim747
Korea Air 777 posted Sun Feb 22 2004 03:30:25 by ZONA8
Primaris Air Wants STL-DCA And Mini-hub posted Fri Jan 30 2004 17:17:39 by LambertMan
North Korea's Air Koryo posted Thu Sep 4 2003 15:06:50 by Targowski
Iran Air Wants 10 Airbus Aircraft posted Tue Jun 11 2002 19:48:53 by Flying-Tiger