The lone bidder for loss-making CSA Czech Airlines offered CZK1 billion koruny (USD$58.3 million) for the state carrier Wednesday, but attached strings that may make the deal unacceptable for the government.
A consortium of Czech companies Unimex and Travel Service said its bid price was based on the company having zero equity value, which analysts said may imply a cash injection by the government and which in turn made the bid look low.
The Czech carrier has slumped into deep losses after a poorly executed expansion in recent years and due to the global financial crisis that badly hurt the airline industry.
The Finance Ministry has said it would make its sale recommendation to the government by October 20.
Under Czech accounting standards, the airline had a negative equity value of CZK708 million at the end of June, according to internal documents quoted by analysts and media.
Under international standards, which better reflect the value of leased planes, the company's net equity was over USD$200 million, CEO Radomir Lasak said earlier this year.
Analysts said it was not clear how the equity position had developed due to further losses at the airline, made as passenger numbers and revenue sink in the economic crisis.
CSA posted a USD$99.6 million loss in the first half as revenue dropped by 30 percent to USD$487 million and the airline said it planned to sell three Boeing 737s by the end of this year.
However, analysts said the bid still looked low.
"If they would want to pour in CZK700 million and then get CZK1 billion, it would seem to me as an unacceptable bid," said Jan Prochazka, analyst and partner at brokerage Cyrrus. "Even if it was a CZK1 billion offer without conditions, I don't think the state would accept."
Prochazka added the ministry would probably view a bid somewhere between CZK2 billion to CZK3 billion as fair.
Earlier this month, the government brought to CSA a new supervisory board chief who said a drastic restructuring would be necessary.
Privately owned Unimex holds interests in travel, housing and development sectors. It holds a stake in Travel Service, a charter and low-cost air carrier. Icelandair holds a stake in Travel Service along with Unimex.
The consortium remained as the sole bidder for the airline after Air France-KLM pulled out of the tender in August.
