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European Commission launches investigation into state loan granted to Czech Airlines

25-Feb-2010 8:55 AM

European Commission (EC) launched (24-Feb-2010) an investigation into a loan granted to ČSA Czech Airlines by the State-owned entity, Osinek, to determine if these actions are compatible with the EU State aid rules. The EC stated that it currently "cannot exclude that the loan and its subsequent de-collateralisation - which the airline will use to finance costs linked to the operation of the company - constitutes aid that is incompatible with the internal market". On the basis of a loan agreement which was concluded between Osinek and ČSA–Czech Airlines on 30-Apr-2009, a loan amounting to CZK2.5 billion (EUR94 million) was granted by Osinek. Subsequently, on 26-Oct-2009, the Czech Government decided to free up the assets which secured the loan provided by Osinek in order to allow ČSA to use this collateral to secure commercial loans and continue in business, meaning that the Osinek loan is no longer secured by assets. Accordingly, the EC will "particularly assess whether a private investor would have acted in the same way as the Czech Government".[more]