15. 10. 2004 - Airbus SAS’ bid won the Czech Airlines’ tender for new generation medium-haul aircraft
Prague, 15 October 2004
Airbus SAS has been selected in response to the Czech Airlines tender for 12 new generation medium-haul aircraft. In the coming years, Czech Airlines will be adding the most modern Airbus A320 and Airbus A319 medium-haul aircraft to its fleet. The airplanes will be powered by engines manufactured by the CFM International S.A.* consortium, whose proposal was selected as the most favourable.
Jaroslav Tvrdík, President and Chairman of the Board of Directors says about the tender: “The winning bid is unambiguously the most favourable approach Czech Airlines could have taken regarding the modernization of its medium-haul fleet from an economic point of view. The decision resulted from an assessment model calculations and also the agreement of committee members – including representatives from the McKinsey consulting company and legal advisors from Weil, Gotshal Manges.“
During the almost seven-month long tender, the economic value of the offer for CSA significantly improved. The winning offer far exceeded the expectations CSA had compared with the previous tenders, and it is close to the best of such deals that have been concluded in the industry. Jan Váňa, CSA Executive Director for Strategic Planning and Development, and chairman of the selection board says: “The overall advantage of the winning offer can be illustrated by the projected rate of return which is 14%, before financial benefits are counted in.“
The total value of the contract ranges between 10 -12.5 billion Czech crowns and will be paid for in the form of financial leasing. In addition to the 12 new Airbus A320 and A319 aircraft, Czech Airlines will also acquire a training simulator worth 300 million Czech crowns from Airbus SAS, free of charge. The simulator will be used for CSA pilot training as well as for the training of pilots from other carriers that wish to purchase pilot training. Airbus SAS and CFM International have also agreed to provide CSA with extensive customer service, spare parts at favourable prices and additional services, e.g., air crew training.
The complete new aircraft delivery will contain:
- 6 Airbus A320 aircraft for 162 passengers in two-class configuration
- 6 Airbus A319 aircraft for 135 passengers in two-class configuration
Both Conversion Rights and Purchase Rights formed a part of the bid and they potentially allow CSA to purchase up to twelve additional aircraft under the same commercial conditions.
The new generation aircraft will further add to CSA competitiveness
All 12 new airplanes will be equipped with the most modern avionics and will fully comply with the strict technical and operational criteria of Czech Airlines. In addition to more economical operation, the new airplanes will offer higher comfort and a higher quality of passenger service – including the possibility of adding top-of-the-line communication technologies, such as in-flight video or the Internet. The new aircraft will also have a wider range of operation (by approximately 1200km), which will allow for the opening of new flights to destinations with considerable business potential where CSA could not fly with its current medium-haul fleet.
Czech Airlines plans to put the new-generation medium-haul aircraft into operation as soon as possible. Because of this – along with the talks with Airbus SAS - CSA will also initiate talks with leasing companies regarding the operative leasing of two A321 airplanes for charter flights and three A320 airplanes for regular flights. The aircraft will be added to the fleet in 2005, and thus help bridge the period before the first of the 12 new A320 and A319 aircraft are delivered. Three airplanes will be added to the fleet in 2006, five airplanes in 2007 and four airplanes in 2008.
Czech Airlines will now initiate talks with the pre-selected companies and the discussions will be completed in November 2004 by the signing the purchase agreements.
In keeping with the CSA Strategy for the period of 2004 – 2014, approved by the CSA shareholders, Czech Airlines launched its tender for 12 medium-haul aircraft on 30 April 2004 and requested proposals from two aircraft manufactures - Airbus and Boeing, as well as from the engine manufacturers - International Aero Engines and CFMI. There were several rounds of the tender and the manufacturers were requested to fine-tune their offers. The manufacturers submitted their final bids on 15 September.
The key criterion for the final decision were the economic and commercial advantages of the submitted offers for CSA. It was assessed using the net present value method. The assessment model was prepared by CSA in cooperation with McKinsey&Company financial adviser.
* CFM International is SNECMA and General Electric consortium