20. 12. 2007 - Supervisory Board Agrees to the Sale of Air Czech Catering; the Sale Is Now Subject to Approval by the General Meeting
Prague, December 20, 2007
The Board of Directors and Supervisory Board of Czech Airlines has approved the sale of its subsidiary, Air Czech Catering, to Alpha Overseas Holdings Limited, which ranks among the five largest providers of aviation catering in the world. The execution of the sale is subject to approval by the shareholder. An extraordinary general meeting has been called for the end of January 2008.
The divestment of catering activities and a focus on its core business is part of the CSA OK Recovery Strategy 2006 – 2008, approved by the general meeting of Czech Airlines in June 2006 as a three-year concept for the rescue, stabilisation and development of the company. “CSA has managed to increase its year-on-year transportation revenues by almost CZK 1 billion. By the end of the year we will have achieved figures of more than CZK 100 million in excess of the planned sum. However, even this excellent improvement is not sufficient to bridge over the financially weakest period, namely the start of 2008, together with the liabilities represented by payments for the financial leasing of aircraft. By selling the catering service we will succeed in disengaging ourselves from past debts and freeing up funds for the further development of the company without the help of the owner,” said President of Czech Airlines Radomír Lašák about the sale. For Czech Airlines, catering is a subsidiary activity, a service for the core business – air passenger transport.
Course of the Divestment
The divestment decision was made in the spring of 2006, when catering was initially to be separated into an independent subsidiary and then be offered for possible sale. Information about the catering service was provided to a total of 67 potential buyers, including financial investors as well as domestic and foreign catering companies. 24 of these expressed an interest in participating in the sale process. After the provision of the information package a total of 17 investors submitted preliminary offers in January 2007. On April 1, 2007 a separate subsidiary under the name of Air Czech Catering was set up. Seven companies that had demonstrated their adequate financial soundness were permitted to carry out due diligence. Since the investors made the provision of the economic results of the newly created Air Czech Catering for at least the first three months of its independent operation a condition for their further participation in the sale process, due diligence was extended until the end of September 2007. Two companies submitted final bids in October. In order to enable Czech Airlines to obtain the best conditions from the sale, the parties interested in the purchase were invited to send their comments concerning the contractual documentation together with their bids. CSA was offered the best and most advantageous conditions by Alpha Overseas Holdings Limited. The agreed price significantly exceeds the independent market valuation.
The contractual documentation that Czech Airlines negotiated with the winner of the tender includes a long-term agreement on the basis of which Air Czech Catering will provide services to Czech Airlines at the current prices and conditions. Moreover, the agreement guarantees the high quality of meals including compliance with strict hygiene procedures specific for air catering. Czech Airlines will continue to determine the composition of meals for passengers on board its aircraft. The quality of meals offered on board Czech Airlines has been rated as one of the best among European air carriers in independent surveys, and also as one of the decisive factors for passengers when choosing the airline.
Alpha Overseas Holdings Limited
A 100% subsidiary of Alpha Airports Group, owned by the Italian listed company Autogrill, which is an international provider of meals, drinks and retail services for passengers. The Alpha Airports Group provides in-flight catering, catering logistics and in-flight sales services for more than 100 airlines and at 81 airports in 17 countries spread over 5 continents. Alpha Airports Group ranks among the 5 largest providers of airline catering.
Czech Airlines Spokesperson