EU exec opens probe into Czech Airlines revamp aid

BRUSSELS Wed Feb 23, 2011 5:14pm IST

BRUSSELS Feb 23 (Reuters) - EU competition regulators opened an in-depth investigation into Czech Airlines on Wednesday, saying they doubted the carrier's revamp would return it to viability and also comply with EU state aid rules. The Czech government unveiled plans last November to put the loss-making airline and Prague airport, both of them state-owned, under a single holding company as part of the carrier's restructuring. [ID:nLDE6AN17W]

Czech Airlines' overhaul includes reducing its fleet and network by up to a third and refocusing on its core business.

The European Commission said it was doubtful the merger of the airport and the airline could contribute to the carrier's restructuring.

The watchdog said it also doubted a loan of 2.5 billion crowns (94 million euros) from state-owned firm Osinek and several other measures could be considered as part of the overhaul.

"The Commission must make sure the company contributes its fair share of the burden and that it is ultimately viable without further state support," EU Competition Commissioner Joaquin Almunia said in a statement.

Commission competition investigations typically last several years. (Reporting by Foo Yun Chee, editing by Rex Merrifield and Will Waterman) ($1=17.88 Czech Crown)