Aeroflot confirms participation in CSA tender

Aeroflot Officially Confirms Participation In Czech Airlines Tender

As the application deadline for the tender for a 91.5 per cent share of Czech Airlines (CSA) closes today, Aeroflot reaffirms its commitment to the long-standing partnership of both companies by submitting all necessary documents for the tender at the Czech Ministry of Finance.

In full conformity with the conditions of the tender, Aeroflot submitted the application in conjunction with a Czech legal entity fully controlled by the airline. The application contains the initial business plan, which reaffirms Aeroflot’s intention to maintain CSA’s status as a national Czech airline with its base at Ruzyne Prague airport. The document also outlines the two companies’ future plans for joint development as a result of a possible deal.

According to European regulations, Aeroflot, coming from a non-EU member state, cannot seek more than a 49 per cent stake in CSA. Therefore, Aeroflot aims to enter a joint partnership with a Czech-owned company or legal entity as part of the second stage of the privatisation deal.

“If Aeroflot is confirmed as a participant in the second stage of the tender we would analyze information gathered from the financial audit, and on the basis of a detailed business plan make a binding offer as required by the tender conditions,” says Aeroflot’s CEO Valery Okulov.

Aeroflot is one of the fastest growing European carriers. Through the synergy effect of this partnership, both Aeroflot and Czech Airlines will become more profitable.

Aeroflot plans with CSA
If Aeroflot wins the CSA tender, the airline will retain its status as the Czech flag carrier. CSA will preserve its brand, identity and traditions. It will achieve an ability to operate on a much wider scale, with better access to transit in Russia and CIS countries. CSA is supposed to fly far beyond Moscow. At the same time, Aeroflot passengers will benefit from better access to a number of destinations in Europe.

“CSA is the largest and most stable airline in Central Europe in economic and market terms. By joining and mutually expanding their route networks, Aeroflot and CSA will be able to become more profitable. The synergy is certainly there. We started our co-operation long before any global alliances appeared. We have even more in common now that both belong to the same global alliance, SkyTeam,” claims Okulov.

Aeroflot and Ruzyne airport
Aeroflot intends to privatize only CSA. There are no such plans for Prague’s Ruzyne International Airport, although it may expect significant growth in business. Aeroflot will stick to its business which is to run air transportation, not airports.

Russian Government’s role in Aeroflot
Board of Directors: Out of its 11 members, just three represent the Russian government. The remaining eight are independent directors and representatives of minority stakeholders. Thus, the Russian state is represented by less than 30 per cent of the directors on Aeroflot?s Board while possessing a 51 per cent stake of the company. This is a result of Aeroflot’s intentional policy of attracting independent directors, so that the commercial interests of the company are not overshadowed by the political interests of the government. This is a core principle of Aeroflot?s corporate policy and culture based on internationally recognized rules of corporate governance.
According to EU regulations, Aeroflot, not being an EU-based company, cannot seek more than a 49 per cent stake in CSA. The same thing pertains to CSA’s executive bodies.

Safety and quality in Aeroflot
Aeroflot has undergone necessary audits according to the most stringent international standards. Aeroflot is included in the IOSA (IATA’s Operational Safety Audit) Registry. It has an up-to-date quality management system. Our flight personnel school is well known and recognized in the world. No major incident with loss of life has been recorded for the last 15 years.

Aeroflot?s financial situation
Aeroflot is in good financial health. The company has a healthy credit portfolio, and it finished the year 2008 with a profit of about USD 300 million.

Editor’s Notes:
OJSC “Aeroflot – Russian Airlines” is based in Moscow, Russia, at the Sheremetyevo Airport. The company was established in 1923. It is Russia’s largest air carrier with 45% of international and 12.5% (17% counting affiliated companies) of domestic carriages in Russia. In 2007 it carried eight million passengers (10 million together with its subsidiaries) to 96 locations in 49 countries. It operates a fleet of 88 aircraft. Aeroflot is a member of the global airline alliance SkyTeam.
The International Airline Trade Association (IATA) is aimed at positively impacting the aviation industry’s agenda on safety, security, environment issues as well as simplifying business and government regulations, represents 230 airlines from 126 countries and comprises 93 per cent of scheduled international air traffic.