Korean Air has taken a forty four percent stake in Czech Airlines (CSA).
That provides a financial lifeline for the state-owned carrier which was facing bankruptcy.
The Koreans paid a nominal price of 2.64 million euros and will help restructure the loss-making airline, but will not be involved with day-to-day management.
Prague will become one of Korea Air’s transfer points in Europe, bringing new business to the city’s airport.
“We only had two options: either find a strategic partner or consider liquidation of CSA,” Czech Finance Minister Miroslav Kalousek said.
Czech Airlines is faces with difficult conditions in Europe as a result of the economic crisis, high fuel costs and competition from low-cost carriers.
Smaller airlines in central Europe have had a tough time, with Austrian Airlines taken over by Lufthansa, Hungary’s Malev going bankrupt and Poland’s LOT struggling with mounting debts.
Czech Airlines carried 4.25 million passengers in 2011 and lost 241 million crowns (9.3 million euros) that year, the most recent period for which results are available. It has cut its fleet to 26 planes.
An attempt to privatise the airline in 2009 collapsed after the bidder, Czech charter airline Travel Service, refused to proceed without securing a capital injection from the government.