Changes are coming to the ownership structure of Czech Airlines, the flag carrier of the Czech Republic. The airline will see a new investor, Prague City Air, a company founded by the founders of Smartwings, which currently owns Czech Airlines. It plans to have its own A319, four leased A220s, and one leased A320.

A light at the end of the tunnel for Czech Airlines

Czech Airlines (CSA), the Czech flag carrier, has been undergoing business restructuring since last year. Plagued by covid-related travel restrictions and a lack of state aid, the airline had notified the Czech Republic's Employment Office in February 2021 that it intended to lay off its entire workforce of 430 staff.

Things are now looking up. According to a partially-redacted document seen by Simple Flying and published by the Ministry of Justice of the Czech Republic, CSA now has a plan to make its way out of restructuring, albeit as a severely diminished business.

Not all creditors will be happy with the plan though. The most that any creditor will get from the amount they are asking for is 50%, according to the Czech News Agency. This will be Lufthansa Technik. Others will get just 4.6% of the receivables they are requesting from Czech Airlines. Airbus will seek its debts from payments made for undelivered aircraft.

CSA
Czech Airlines will retain one Airbus A319. Photo: Getty Images

Prague City Air to invest in Czech Airlines

The currently-available information suggests that a brand new company called Prague City Air will become an investor in Czech Airlines.

Prague City Air was founded by Canaria Travel Group, which is owned by the owners of Smartwings: Jiří Šimáně and the Vik family. However, Smartwings, which owns Czech Airlines, also has additional investors from China as part of its ownership structure. Thus, Šimáně and the Viks are set to emerge from Czech Airlines' restructuring as the sole owners of CSA once again.

Prague City Air will provide a loan to Czech Airlines in the amount of 125 million Czech Koruna ($5.8 million). Most interestingly, all current shareholders of Czech Airlines will lose their ownership of the airline. Almost 98% of Czech Airlines is owned by the Smartwings Group.

However, the plan does envisage that Czech Airlines will once again be linked up with Smartwings, but just not through ownership.

Smart Wings Boeing 737 Getty
Photo: Getty Images

What about the fleet?

Czech Airlines will retain the only aircraft that it owns. This is an Airbus A319 registered as OK-REQ. The plan is that this A319 will be used as collateral for the loan.

To meet its planned operations, Czech Airlines will also lease a further Airbus A320 aircraft this year.

Furthermore, in 2023, CSA will then acquire four new Airbus A220 aircraft through a long-term lease. These are the same A220s that Czech Airlines had ordered from Airbus but ended up canceling once it came into its financial problems.

What do you think of Smartwings losing ownership of Czech Airlines and it being transferred to Prague City Air? Do you think Czech Airlines can emerge as a strong airline out of this process? Let us know what you think of this story in the comments below.