22.08.2008 - The Settlement of Land Relations between Czech Airlines and the Prague Airport Authority to Increase the Value of Both Companies Prior to their Privatisation

The settlement of land relations between Czech Airlines and the Prague Airport Authority will increase the value of both companies and allow both Czech Airlines and the PAA to further develop at the Prague – Ryzyně Airport.  Czech Airlines will cede to the Prague Airport Authority land and buildings in the South Grounds in exchange for land in the North Grounds.

The exchange of the land and buildings will remedy several problems that arose in the split-up (delimitation) of the original CSL in 1991.  With the Prague Airport Authority, Czech Airlines will swap its land and buildings in the South Grounds and for land in North Grounds.  The assets obtained in the settlement will allow Czech Airlines to further develop its strategic activities.  It will use the land for building Hangar G.  In the South Grounds, Czech Airlines will exchange only assets that it is not planning to use in the future, in line with the approved strategy.  The only exception is Hangar B and the Training Centre which resides in it, for which standard long-term lease agreements will be concluded.

On the other hand, the Prague Airport Authority will give Czech Airlines land around the main Czech Airlines headquarters, i.e., the APC Building, and Hangar F.  Czech Airlines will thus concentrate its activities at the Airport into one area, the North Grounds, where it plans on further development, for example in the sphere of aircraft maintenance.

Two legal entities were established after the delimitation of the original ČSL: Czech Airlines and the Prague Airport Authority, which have very complicated legal relations concerning property.  For example, Czech Airlines owns a number of buildings and the land under those buildings, but the surrounding land is owned by the PAA.  Czech Airlines therefore has its access to its buildings secured through easements.  The easements are, however, for the benefit of Czech Airlines, and given that they are not transferable, Czech Airlines buildings are difficult to sell.  On the other hand, Czech Airlines has an easement on land on which the building of the parallel runway is being considered, and which is therefore needed by the Airport for its further development.

“The net effect is that both Czech Airlines and the Prague Airport Authority have their hands mutually tied, which complicates their day-to-day operations and possibilities for development, as well as possible savings on operating costs,” said Czech Airlines President, Radomír Lašák.

“Presently, we are discussing the issue of building and land ownership and easements, which have remained unresolved from the past, with a number of companies.  Among those are Czech Airlines and the Air Navigation Services.  But this is a mutual settlement.  For example, the land in the immediate vicinity of Czech Airlines’ Hangar F, required for its operations, is our property at this point, although logic would dictate that it be owned by Czech Airlines.  On the other hand, we should own, for example, the warehouses at the Airport, which are presently owned by the Airline,” added Miroslav Dvořák, CEO of the Prague Airport Authority.

The unresolved property relations and easements reduce the value of both Czech Airlines and the Prague Airport Authority prior to their privatisation.  It is in the interest of both companies as well as the State – the majority owner of Czech Airlines and the Prague Airport Authority – to settle their mutual property relations prior to privatisation.

Eva Krejčí
Communications Director
Press Spokesperson of the Prague Airport Authority
Contact information: eva.krejci@prg.aero

Daniela Hupáková
Communications Director
Press Spokesperson of Czech Airlines
Contact information: daniela.hupakova@csa.cz