Czech Airlines has launched an analysis of its auxiliary businesses, which may lead to the decision to sell these activities to a suitable investor at an advantageous price, and under optimal conditions, to ensure further cooperation with CSA. These activities include CSA’s involvement in cargo, duty free, and catering services.  Any revenue from the sale of these activities would support the development and modification of CSA, especially in its key business -passenger air transport.  Given the present conditions of CSA, as well as external market conditions, focusing on one key business activity is the basic prerequisite for CSA to become competitive, and for returning the Company to profitability.

The plan to divest itself of auxiliary business, approved by the CSA Supervisory Board at its meeting of 26 July 2006, is now being considered by a team of CSA employees and the representatives of investment and legal advisors secured through a tender.  “The basic criteria for making a decision about the sale will be the price and an optimal agreement on ensuring co-operation and services for Czech Airlines,” says CSA’s President, Radom’r La?ák, adding: “The team will also oversee the transparency of the process and any tenders; however, it is possible that, if we do not opt for any of the solutions proposed, the selected activities will not be sold off at all.”

At present, operational and economic analyses are underway, on the basis of which the variant optimal for CSA, and for the employees of the operations concerned, will be selected, and the scope of possible divestment determined.  The various economic and legal solutions of sale will also be analysed (selling off a part of the company, shifting the activities to subsidiaries and subsequently selling a business interest, etc.).  The final solution proposed for each business activity will be presented to the company’s Board of Directors and Supervisory Board in the next few months, but by no later than the end of 2006.

Overview of activities which are subject to potential sale:
CSA Cargo
CSA Cargo ensures:
? The air transport of cargo on regular and charter CSA flights
? The operation of one of the most modern cargo terminals in Europe, at Prague Ruzyn? Airport

Cargo activities are not CSA’s main business activity; nevertheless, CSA is the largest cargo handling agent at Prague-Ruzyn? Airport.

CSA Duty Free
CSA Duty Free includes the sale of goods on board CSA airplanes, and in Duty Free Shops at airports.  Presently, CSA operates four Duty Free Shops - three in Prague and one in Karlovy Vary.  From CSA’s point of view, this is an auxiliary business activity not directly related to its main line of business.

CSA Catering
CSA Catering provides a comprehensive air catering product, from the production of meals to supplying them to CSA planes as well as the airplanes of other airlines.  CSA is one of the few airlines of a comparable size which still ensure this service for themselves.  The industry trend is to outsource catering, with the aim of achieving much lower costs for the service.
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