Czech Airlines, on the verge of bankruptcy.
Czech Airlines, an airline that is part of the Smartwings group, is on the verge of bankruptcy because it cannot pay its debts. The airline will not receive any state loan from the Czech Government, and the unions have been told that all employees could be fired.
According to information from the Czech newspaper Hospodárske Noviny, the financial situation of the national airline has never been as bad as now. Because travel restrictions imposed globally due to the pandemic, the company's revenues were reduced to a minimum, the cargo transport not bringing enough profit.
Therefore, the group applied for government support last year through a non-reimbursable state loan of CZK 1 billion (EUR 3.8 million), the loan being mostly for Czech Airlines.
The government refused to grant the state loan, partly for political reasons.
However, the government refused, partly for political reasons: the Czech leadership did not like the fact that the company's Chinese investor, the state-controlled group CITIC Group, did not want to raise capital.
This is also supported by the information according to which the Chinese even wanted to sell the shares to Smartwings last year, but they did not agree with the price offered.
From the market, Czech Airlines he will not be able to obtain another loan, even with a state guarantee. A spokesman for the Department of Transportation and Industry said there was no support program to support the Smartwings group.
Czech Airlines informed the staff union that it could lay off all 430 employees. Tereza Löffelmanová, head of advocacy, confirmed that they had received such a notification from the company. She said employees were not informed about how the company wants to go through the coming weeks.
During this period, the company will not have to pay its debts.
The bankruptcy of Czech Airlines could also be caused by the fact that Smartwings could sacrifice the state airline for the group's survival. The airline spokesman declined to comment.
During this period, the company will not have to pay its debts, according to sources, and this saved Czech Airlines from bankruptcy in the first wave of the pandemic.
However, there are no official figures on exactly what loan portfolio Smartwings or Czech Airlines has. Last year, the Smartwings Group's passenger traffic fell by 80% to 1.8 million passengers.