Airline Industry

Government loan to Czech Airlines under EU scrutiny

Image mythicalireland.com

BRUSSELS - The European Commission Wednesday said it is probing a EUR94 million government loan given to Czech Airlines on suspicion that it may be an illegal state subsidy.

The loan was granted to the airline by the state-owned entity Osinek AS in April 2009. It was initially backed by some of the airline's assets, but the Czech government subsequently decided to free up the assets to allow the airline to use the collateral to secure other commercial loans and continue to operate, the commission said.

At this stage, the commission considers that these measures favoring the airline may constitute an illegal government subsidy, giving it an advantage over its European competitors.

During the in-depth investigation, the commission will look in detail at the exact nature and conditions of these measures, in particular whether a private investor would have acted in the same way as the Czech government.

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