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AF KLM withdrawal could hit price
The Czech Republic government is to press on with the sale of its national carrier despite the withdrawal from the bidding of Air France KLM.
The decision of AF KLM to pull out from bidding for Czech Airlines (CSA) leaves only one potential buyer in the field.
This is a consortium of Czech companies Unimex and Travel Service.
The Czech government has also further extended the deadline for offers from September 15 - it had previously been July 13 - to September from what is a major privatisation in central Europe.
A statement by the Czech ministry of finance said it had "received Air France-KLM's decision... (and) will continue in the tender and is not changing its proceedings."
But analysts believe that the AF KLM withdrawal could hit the price of the carrier which previously was said to be valued at about CZK5bn (€195m).
Air France KLM pulled out of the bidding citing the current economic climate.
It said in a statement that it had informed the Czech Ministry of Finance of its decision.
It added: "The current economic environment has significantly impacted the airline business.
"Under such circumstances, Air France KLM believes that CSA might focus on developing and implementing a stand-alone recovery plan aimed at restoring its profitability.
"In this context Air France KLM wishes to further strengthen the existing partnership between the two groups and to continue to explore with CSA any new areas of cooperation that could be of mutual benefit to each company."
AF KLM reported a net loss of €426m at the end of last month for the first quarter of its financial year, compared with a €211m profit for the same period in 2008.
CSA launched an Action Plan last December to cut costs and increase revenues. Measures included a cut in staff wages and some lay offs.
It announced the "acceleration" of the Plan in July to cope with an estimated "double digit drop" in passengers numbers.
The airline said it was cutting the frequency or scrapping altogether some of its European routes.
The AF KLM withdrawal came amid a report in the Czech press that CSA is planning more job losses.
The Mlada fronta DNES newspaper said 860 of it CSA's 4,600 employees would be let go, including 140 pilots, 240 flight attendants and 15% of the management staff.
www.airfrance.com www.klm.com www.czechairlines.com