Prime Minister Jiří Paroubek has even gone as far as to say the AV privatization, which opened to bids late last year and is worth around 1 billion Kč ($42 million), could be cancelled.

On March 15, the same day it was to announce which of the six bidders in the AV deal would proceed to the next round, the Cabinet said the privatization would be suspended until July 19. It ordered an independent analysis of how the sale of AV would impact the privatization of Letiště Praha, the state run company that operates Ruzyně Airport.

"We've received serious reports that the Aero privatization could significantly affect the privatization of Letiště Praha," Finance Minister Bohuslav Sobotka said.

The government is concerned the bidders pursuing the government's nearly 100 percent stake in AV — Eco-Investment, Oakfield, the Aero Kilcullen consortium, Benson RPG, Český letecký průmysl and the consortium of PPF and J&T — will extend the runway at its airport in Vodochody so it could be used as a commercial international air strip.

The Cabinet worries that building a new airport in Vodochody, close to Ruzyně, could prompt suitors to offer lower bids in the privatization of Letiště Praha because bidders wouldn't want to pay as much for an airport with a competitor so close by.

The government hopes to sell its Letiště Praha stake for 8 billion Kč. The Transportation Ministry should present the results of its analysis of how the AV privatization will affect the sale of Letiště Praha in June.

The Cabinet took the first step toward privatizing Ruzyně in January. Although the privatization was slated to be finished by June, the date has been pushed back, and the government hasn't specified a time frame for the proceedings.

The Cabinet is also concerned the new owner of AV will shut down production at the military jet maker to focus on developing a new airport.

"It's clear that the bidders are [interested] in the airport, not the manufacturing plant," said Miloslav Kala, board member the Czech Consolidation Agency, the state bailout bank.

Aero Vodochody manufactures L-39 and L-159 subsonic jets for the Czech military, among other things.

The Defense Ministry proposed in early February that the military production wing of AV stay in government hands, but the Cabinet disregarded the request.

Paroubek now says, however, that aircraft production must continue at AV after it is sold and that the privatization could be cancelled if bidders fail to comply with this stipulation.