Slovak Airlines cruises toward open bid

PRIVATE hands are soon to fly Slovakia's national air carrier Slovenské aerolínie (SA), as the Slovak Cabinet agreed on July 14 to sell the state's majority stake in the company.
"Through the Transport Ministry, the state owns 89.5 percent of SA, representing a share capital of Sk683 million (€17.1 million). The shares should be sold to a strategic partner," said Tomas Šarluška, the ministry's spokesman.
The SA's minority shareholders are Devín Group (5.8 percent), Wili Holding, and the Russian company JAK.


A STRATEGIC investor is soon to come onboard.
photo: Ján Svrček

PRIVATE hands are soon to fly Slovakia's national air carrier Slovenské aerolínie (SA), as the Slovak Cabinet agreed on July 14 to sell the state's majority stake in the company.

"Through the Transport Ministry, the state owns 89.5 percent of SA, representing a share capital of Sk683 million (€17.1 million). The shares should be sold to a strategic partner," said Tomas Šarluška, the ministry's spokesman.

The SA's minority shareholders are Devín Group (5.8 percent), Wili Holding, and the Russian company JAK.

Transport Minister Pavol Prokopovič will submit a blueprint for the sale by August while a tender should be announced in October or November 2004.

The company, which has been plagued by a lack of investments and capital, welcomes the privatisation.

"We welcome the cabinet's approval of the entry of a strategic investor. The new management that entered SA in 2002 has taken steps to stabilise the firm, built a new business plan, launched new flights, and has signed cooperation contracts with important airlines like Austrian Airlines, Polish LOT, and Israeli Isair," SA spokesman Marek Reviľák told The Slovak Spectator.

In his opinion, the entry of a strategic investor will greatly help the firm start new regular flights and purchase additional planes.

The ministry is already considering two or three potential buyers, and the successful candidate will be picked in a direct selection based not only on its bid but also its experience running an airline, the news wire SITA reported.

Statistics also prove some positive developments in the company, which transported over 222,000 passengers in 2003 as opposed to 158,000 passengers in 2002. Its number of flights has moderately increased since the previous year.

The airline transported about 209,000 passengers on charter flights, a growth of almost 48 percent compared with the previous year. The number of charter flights rose by over two-thirds.

International transport accounted for 97.3 percent of the regular flights.

However, the state will perform an audit to monitor the financial situation of the firm. The Transport Ministry was reluctant to provide a number as to the expected privatisation revenues.

"We have registered some interest though it is not as enormous as in the case of the privatisation of the Bratislava airport or highway construction," the minister told the economic daily Hospodárske noviny.

Originally, the privatisation tender should have been announced by March 31.

The ministry has said that the need for more pre-privatisation marketing was behind the delay.

In December 2002, the ministry transferred three state-owned TU-154M passenger airplanes to SA to increase the company's share capital by more than Sk642 million (€16.1 million) to Sk764 million (€19.1 million).

Then the government's share in the company, which was founded in 1995, climbed to 89.5 percent.

Before the transaction, SA's debt to the government was Sk170 million (€4.3 million).

The government got the three planes from the Russian Federation in 1998 as part of the recovery of Soviet-era debts to Slovakia.

The company, which currently flies two Boeing 737-300 airplanes, plans to purchase two Fokker 100 planes. One of the Boeings was purchased this spring.

According to SITA, the company paid for the plane by selling three Russian TU-154 M planes to the Prague-based TKC for $9 million (€7.3 million).

In November 2003, SA launched regular flights from Bratislava to Tel Aviv in cooperation with the Israeli airline Israir to boost the number of Israeli tourists visiting Slovakia.

The company also started regular flights to India, hiring 16 Indian flight attendants - graduates of a special school for stewards, to serve passengers.

"To improve our services and increase passenger security we decided to employ people who can speak the main languages spoken in India," Tibor Varga, the company's commercial director, told SITA.

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