Czech Airlines restructuring, laying off staff due to COVID crisis

The airline has asked the govt. to create an aviation compensation program due to canceled flights.

Raymond Johnston

Written by Raymond Johnston
Published on 24.02.2021 16:22 (updated on 24.02.2021)

Czech Airlines (ČSA) is preparing a restructuring in an effort to save the company. The airline, which as hard hit by the effects of the coronavirus epidemic, has not received state aid.

ČSA has been under a protective moratorium against creditors, which expires at the end of February. Company spokeswoman Vladimíra Dufková said the airline is not ceasing operations.

As part of the restructuring, the airline intends to have mass layoffs, and the company has notified to the Czech Labor Office. This step does not necessarily mean the dismissal of all employees, Dufková said. Economic newspaper Hospodářské noviny (HN) said ČSA could lay off all 430 employees.

"ČSA will not stop operations in any case; the restructuring process aimed at rescuing ČSA continues. The possibility of mass layoffs, which ČSA announced to the Labor Office, is one of the steps in the restructuring measures," Dufková said.

The airline plans to maintain its current flight schedule and even plans to renew some routes when the epidemiological situation allows. "ČSA will continue to operate its flights in the most economical mode with regard to the market situation," Dufková said.

Tereza Löffelmanová, chairwoman of the Trade Union for Aircraft Crews, confirmed to HN that the union received a notice of mass layoffs. According to her, employees do not yet know the plan for how the company wants to survive the coming weeks.

News server Seznam Zprávy said Smartwings a.s., which is the owner of Czech Airlines, asked the state for the help of CZK 1.1 billion for ČSA at the beginning of February.

Smartwings previously called on the government to create a compensation program for aviation, from which Smartwings and ČSA would probably be the only eligible companies. ČSA group co-owner Jiří Šimáně said the compensation was to cover the canceled flights during the state of emergency last spring, the group estimated the compensation at about half a billion crowns.

The government, though, does not intend to offer specific help for aviation. "We are not preparing any specific support for the Smartwings Group," Minister of Transport and Industry and Trade Karel Havlíček, who is both minister of transport and minister of industry and trade, told HN.

The Ministry of Transport previously announced that the COVID Plus program, which allows companies to draw on guarantees from transport and tourism, can be used by Smartwings as the majority owner of ČSA.

The ministry said the COVID Plus program also allows companies and transport companies to draw on guarantees. "Smartwings a.s., as the majority owner of ČSA, also has the opportunity to use this program," ministry spokesman František Jemelka said.

Last summer, ČSA announced that it planned to reduce the number of employees by more than 300 by February this year. At that time, the company had about 700 people. Employees were also laid off by sister airline Smartwings.

ČSA recorded a loss of about CZK 1.5 billion last year, according to Šimáně. In addition, they do not have a leasing company that would support them, as happened in the case of Smartwings, he added. A possible bankruptcy and insolvency proceedings may also affect ČSA clients who bought tickets for CZK 1 billion and have not yet used them.