Air France-KLM pulls out of Czech deal

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Air France-KLM has pulled out of the bidding for state-owned Czech Airlines (CSA), blaming the economic downturn.

"The current economic environment has significantly impacted the airline business," the Franco-Dutch giant said. "Under such circumstances, Air France-KLM believes that CSA might focus on developing and implementing a stand-alone recovery plan aimed at restoring its profitability."

CSA reported first-quarter losses of 1.32bn koruna (£44m) in May, even worse than the 844m-koruna loss the year before. But the company says it will return to profitability in 2010.

Czech officials said yesterday that privatisation will continue, with offers due by the end of next month. But Air France-KLM's withdrawal leaves only one bidder, a consortium of Unimex and Travel Service.

Meanwhile, there are signs from the other side of the world that the worst may be over for the airlines. In Australia, the flag-carrier Qantas posted its first half-year loss in six years, and only the second since it listed in 1995. But the A$93m (£47m) loss came in lower than expected, and improving passenger numbers sent the group's shares to a nine-month high.

Recent weeks have also seen some tentative green shoots in Europe. British Airways (BA) – which chief executive Willie Walsh recently described as "fighting for survival" – flew 1 per cent more people this July than last, with the 11 per cent fall in business and first-class travel offset by growth of 3.5 per cent in economy.

The July figures from BAA, the UK airports operator, painted a similar picture. Last month was Heathrow's third-busiest ever, with 6.5 million passengers flying from the London hub, nearly 1 per cent more than in 2008. And although BAA's six other facilities still saw fewer passengers than in July last year, there were strong signs of improvement.

The economic crisis has put more than 30 airlines out of business in the past 18 months. And the sector is not yet in the clear. The European Regions Airline Association (ERA), which represents 65 of the bloc's smaller carriers, yesterday called for access to European Investment Bank loans to help struggling airlines make it through the tough winter season. The economic crisis has been worse for the airlines than the problems caused by the 9/11 terrorist attacks, and regional airlines need cash to see them through, the ERA says.

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