State aid for Czech Airlines (CSA) is to be investigated by the European Commission (EC), which has opened an inquiry into whether the carrier's restructuring plan breaches EU competition rules.
Announcing the investigation, the EC's vice-president for competition policy, Joaquin Almunia, says: "Rescue and restructuring aid is one of the most distortive types of state support. When this happens, the Commission must make sure the company contributes its fair share of the burden and that it is ultimately viable without further state support."
Measures to offset the distorting effect of state aid could include the airline cutting capacity, as well as making a "significant" financial contribution to the restructuring costs.
Last November's Czech Government rescue package aims to bring CSA and the operator of Prague Airport under a single, state-run holding company. The aim is to achieve significant savings through financial synergies. It also includes a loan of Kc2.5 billion ($129 million) from state-owned enterprise Osinek.
Czech Airlines said at the time that the development was in line with EU competition regulations, an assertion the EC has now cast doubt over.
It has doubts over several parts of the package, including aspects of the Osinek loan and the extent to which Prague Airport can contribute to the restructuring process.
Last December, the EC launched a similar investigation into Malev of Hungary.
Source: Air Transport Intelligence news
