"Maintaining production of new planes costs us a lot of money," Klimeš explained June 20. "We may be forced to reduce some capacities and close down programs not making immediate profit" if the privatization isn't completed quickly.

The company released financial figures June 21.

The Cabinet put AV up for sale last year but halted the privatization, expected to bring the state around 1 billion Kč, in March, fearing it would interfere with the sale of the government's stake in Prague Ruzyně International Airport.

The government was concerned that bidders pursuing the nearly 100 percent stake in AV would stop production at the struggling company and extend the runway at its facilities to create a commercial international air strip to compete with Ruzyně.

Outgoing Prime Minister Jiří Paroubek said the privatization could be canceled, but the Cabinet has voted to reopen it July 15. The bidders are Eco-Investment, Oakfield, the Aero Kilcullen consortium, Benson RPG, Český letecký průmysl and a consortium of PPF and J&T financial groups.

The government's concerns about the possibility of the eventual winner shutting down jet production may be justified, according to experts. That's because AV, a former supplier of test planes to the Soviet Union and former Warsaw Pact countries, lost its markets after the fall of communism.

"AV has been staying afloat mainly thanks to its cooperation programs," said Jan Čadil, editor-in-chief of Letectví a kosmonautika, a magazine covering the aircraft industry. "Its own products are yet to find a place on the market."

Čadil added that the stalled privatization will hurt AV.

"Every company interested in AV will wait to know who the new owner will be," he said. "The longer the vacuum lasts, the more it will damage AV's business."

AV posted such poor results last year because it had to make payments on bonds issued in 1998. But the company is bringing in business.

Its exports increased 24 percent last year to 2.2 billion Kč, according to the company. Production of helicopters for the U.S.-based Sikorsky company accounted for 87 percent.

On June 26, AV signed a contract with the Defense Ministry for transforming eight L-159A aircraft into four two-seater planes. It will also supply spare parts for the planes and provide personnel training in 2007 as part of the deal.