Czech government accepts Korean bid for flag carrier

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The government of the Czech Republic has agreed to sell a 44% stake in Czech Airlines to Korean Air for €2.64 million ($3.42 million).

The Czech flag carrier - which is 95.7% state-owned - confirms that 460,725 of its shares will be transferred over the strategic investor, pending the signing of final contracts.

"Korean Air plans to use its ties to Czech Airlines to make Prague one of its European aviation hubs," the airline says.

It adds that the partnership will result in higher capacity on Czech Airlines' services from across Europe, in turn advancing "the development of Vaclav Havel Airport Prague as a transit point" for the region.

Korean Air will "help develop Czech Airlines' long-distance transport capabilities", it says. The South Korean flag carrier already operates four weekly flights between Seoul and Prague, according to Innovata schedules.

Czech Airlines posted a pre-tax loss of koruna (Kc) 241 million ($11.6 million) in its 2011/12 financial year.

State-owned Czech Aeroholding and Korean Air will sign the sale contract in late April, with stock and fund transfers due to be completed by the end of the second quarter.