Czech authorities picked Air France-KLM to bid in a tender for flag carrier Czech Airlines but ruled out Russia‘s Aeroflot, which blamed "politicised and artificial" security concerns for its exclusion. A consortium comprising Czech companies Unimex and Travel Service also advanced to the second round of bidding while private equity firm Odien did not.

Finance Minister Miroslav Kalousek told a news conference the cabinet had used "formal, security, and international" qualification criteria to make its decision. Both he and Prime Minister Mirek Topolanek declined to comment further on why it had rejected Aeroflot and Odien, which has offices in the Czech Republic and Turkey. Czech politicians have voiced concerns Aeroflot may not be an ideal buyer for the carrier from the security point of view as the Russian carrier’s ownership structure was unclear. Prague has in general been wary about Russian involvement in Czech industries, especially ones that are considered strategic.

Topolanek’s outgoing centre-right administration, a close ally of the United States, also backed Washington’s plans to build a missile defence base in the central European country, a project vehemently opposed by Russia. Aeroflot said any security concerns surrounding its bid were unfounded. "If we took decisions (not to bid) ourselves in the past, now someone else took that decision for us," the carrier’s deputy general director Lev Koshlyakov told Reuters. "It was alarming that (Czech officials) have expressed concerns about threats to national security because of Aeroflot’s bid… We think those remarks look absolutely politicised and artificial."

CARETAKER GOVT TO COMPLETE SALE

The government is offering a 91.5 percent stake in Czech Airlines (CSA) and the sale is expected to continue despite Topolanek’s resignation last month. New Prime Minister Jan Fischer is building a caretaker cabinet that will take the country to an early election expected in October and Kalousek said he expected that cabinet to make the decision on the sale. Analysts expect the sale of the relatively small European airline, hit by leasing costs as well as the impact of the global economic downturn on demand for air travel, to fetch up to 5 billion Czech crowns ($240 million).

Government officials had said it was necessary to privatise the airline quickly as the economic crisis could further worsen its weak financial position, hurt by the previous management’s ambitious expansion plans. CSA, Air France and Aeroflot are all part of Sky Team, an alliance of carriers led by Delta Airlines. Air France acquired a nearly 40 percent stake in CSA in early 1990s for $60 million but sold it back to the Czech state for $27 million in 1992. CSA’s 50-aircraft fleet flies to most European capitals.