Smartwings has received a rating from the State Export Guarantee and Insurance Company (EGAP), which is a condition for obtaining a state-guaranteed loan from the COVID Plus program. The company, which also includes CSA, will now negotiate with the banks about the loan. They wrote it today People’s Newspaper (LN). The company previously stated that in order to survive the cessation of air traffic during the coronavirus pandemic, it needs a loan or guarantee from the state for a loan of around two billion crowns.
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The Minister of Transport and Industry and Trade Karel Havlíček (for YES) said in mid-June that the condition for obtaining a state guarantee is that all 2,500 employees will remain in Smartwings. At the end of June, the government approved that guarantees from the COVID Plus program will also be available to companies from transport and tourism. Smartwings immediately announced the dismissal of up to 600 pilots, stewards and operational and administrative staff. The Czech and Chinese co-owners are to contribute to the rescue of the company by investing capital.
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The rating from EGAP, which indicates the reliability of the company as a debtor, was published for Smartwings at the lower end of the scale, in a band marked as “highly speculative”. The airline can thus achieve a guarantee of 70 percent of the principal, writes LN. If the evaluators ranked the company only one notch lower, EGAP would reject the application for a state guarantee.
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EGAP spokesman Jan Černý declined to comment. However, Smartwings representatives are already communicating with banks, which can provide a loan with a standing guarantee. “We are working on the preparation of the document,” Smartwings chief Jiří Šimáně told the daily. “It will be very important on CITIC’s position. If it fulfills the promise it made to shareholders and banks to participate in financing, it is very likely, “said Šimáně when asked whether the company will use a loan with a state guarantee. The Chinese state-owned company CITIC Europe holds almost half of the shares in Smartwings.
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Possible state aid for Smartwings at a time when it was supposed to go outside programs to support companies affected by the effects of the coronavirus pandemic, was criticized by opposition representatives. They pointed out, among other things, that half of Smartwings are in foreign hands or that a company co-owned by the Hartenberg fund from the trust fund of Prime Minister Andrej Babiš (ANO) works for the airline. In mid-June, Deputy Prime Minister and Minister of the Interior Jan Hamáček (CSSD) stated that if CSA went bankrupt, the state would pay out roughly 1.2 billion crowns in benefits and support.
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