Czech Airlines (CSA) has informed all remaining staff members they will be laid off. The future looks grim for one of the oldest airlines in the world. But CSA claims the move is simply a necessary part of its efforts to restructure.
Will Czech Airlines Survive The Pandemic?
Founded in 1923, Czech Airlines is one of the oldest airlines in the world. It joined the SkyTeam alliance in 2000. Like most carriers, it was hit hard in 2020 when the pandemic led to an 84% drop in traffic.
Czech Airlines is a subsidiary of Smartwings, a Czech budget airline that is 49.9% owned by Chinese investment group CEFC China Energy. Smartwings CEO Roman Vik recently expressed optimism:
“Early last year, Smartwings Group seemed to be heading for the best results in its history. Instead, it had to face an unexpected and unprecedented aviation industry crisis. A dramatic decline in demand caused by the extraordinary circumstances forced us to adopt severe austerity measures and take many radical steps.
“A key factor for a revival of travel is successful vaccination of the population. Our goal is to regain a position of a major player on the European aviation market and a competitive air carrier. We still believe we can make it, mainly thanks to our employees who have done extremely well during the crisis. Big thanks to them!”
Staff Layoffs Raise Questions
But the move to make all staff redundant is sure to raise questions, even as CSA continues to sell tickets on its website. Lidovky, the oldest Czech newspaper still in print, issued a report this morning that CSA will not cease operations. Rather, a spokesperson noted that making all staff members redundant is part of the restructuring process and that many jobs will likely be saved.
“CSA will not stop operations. In any case, the restructuring process aimed at rescuing CSA continues. The plan for collective redundancies, which CSA announced to the Labor Office, is one of the steps in the restructuring measures.”
Czech Airlines is currently under a protective moratorium against creditors which is set to expire at the end of February. The airlines’ future may depend upon whether it receives a bailout from the Czech government.
CONCLUSION
Conflicting reports make it too early to tell whether CSA is just embarking upon a bankruptcy-like restructuring process or whether it faces a serious threat to cease operations.
A government bailout is unlikely at this point, despite a very emotional social media campaign started by Smartwings last year. Even popular opinion is not generally in favor of bailing them out, since there are obviously more pressing matters right now and the public isn’t keen on Smartwings and what they did to CSA. Lastly, people feel that the Chinese shareholder should step up, which they haven’t done and likely won’t do.
Sad as it is, CSA turned itself into a marginal airline and the Smartwings takeover really didn’t help, it just watered down the brand further. Czech Republic doesn’t really need a ‘national carrier’ for reasons other than prestige, and even that is overrated.
Malev collapsed in Hungary years ago and travelers in Budapest are doing just fine. The same can be said for Ljubljana with the collapse of Adria. Prague itself is very well connected with flights from every major European hub, and beyond that, is well connected by rail to both Berlin and Vienna, and points in between. I agree with Juraj that it doesn’t really need a national carrier. The same can be said for other struggling airlines across Eastern Europe (e.g., Air Serbia, TAROM, etc.).
It’s true that not every country needs a national carrier. Unfortunately that means KLM-AF, IAG, and LH Group will well and truly control European aviation before long.
If anything, this is why national carriers are needed.
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