27-03-2009

In Business News this week: few get on board for the Czech Airlines sale; a cloudy future for key government measures; more developments around Orco; business index gives a glimmer of hope; and Time Warner tunes into TV Nova.

Muted response to Czech Airlines’ sale

Four bidders expressed interest in buying state-owned carrier Czech Airlines, a turnout which was interpreted as disappointing by media and analysts alike. Three airlines are in the running for the state’s 91.5 percent stake. These are Air France-KLM, Russia’s Aeroflot and a Czech consortium that includes the country’s biggest charter airline Travel Service. The fourth bid is from Odien, a private equity fund active in the region. Some commentators had fuelled expectations that a major Asian or US airline would have been on board for the initial expressions of interest. The government originally expected to choose Czech Airlines’ new owner by the end of September with an eye on the hoped for 3 billion crowns that could flow into state coffers.

Privatisations and government crisis measures threatened

While Czech Airlines’ sale looks like it could stay on course, other key measures are up in the air following the fall of the three way centre-right coalition government this week. The privatisation of Prague’s main airport, disliked by the main opposition party, the Social Democrats, now looks like it will be grounded. And the fate of the government’s package to tackle the economic crisis looks uncertain. Members of the outgoing government have expressed hopes that its hallmark crisis measure - cuts in employers’ social insurance payments - could still proceed.

Doubts deepen over developer Orco’s future

The future of international property developer Orco, quoted on the Prague stock exchange and with a series of major projects in the Czech Republic, looks increasingly doubtful. It’s French parent company called for protection against its creditors on Thursday, leading to a suspension of trading in the company’s shares. The Czech and Slovak branch has said a host of Czech projects underway are not threatened. The main company is said to have debts of about two billion euros which nearly matches the value of its assets. Orco shares fell around 40 percent when they resumed activity on the Prague exchange on Friday before a partial recovery.

Economic confidence index rises for first time in over a year

But there has been some interruption in the flow of gloomy economic figures coming out of the office of the state number crunchers. Confidence in the Czech economy rose in March according to the monthly survey carried out by the Czech Statistical Office. It is the first time sentiment has improved since February 2008. Confidence rose by 1.7 points compared with February but the index is still 33 points lower over the last 12 months. The index was set at 100 in 2005. The survey showed a mixed outlook from different sectors with construction and services still pessimistic about an early pick up but trade and industry seeing signs of recovery over the next three months.

Time Warner gives cash boost to TV Nova owner

And the picture looks a little brighter, at least through the lens of the Czech Republic’s biggest commercial television company, TV Nova. US multimedia giant Time Warner has bought into Nova’ s owner, Central European Media Enterprises (CME), in a move which has been seen as an important cash boost during a period when tv ad revenue has fallen off dramatically due to the financial crisis. Time Warner will take a 31 percent stake for a bargain price of 241 million dollars. Analysts say the move should help Nova make the switchover to the upcoming multi-channel Czech digital tv environment by launching new channels. CME also owns tv stations in Slovakia, Bulgaria, Croatia, Slovenia, Rumania and Ukraine.

27-03-2009