Aero Vodochody is awaiting its fate. Once the pride of the Czech aircraft industry and the largest producer of fighter-training jets in the world, the jet maker is now foundering in 10 billion Kč ($458.5 million) of debt. Its future will soon be in the hands of one of eight bidders in a tender for the government's nearly 100 percent stake.

The Cabinet gave AERO Kilcullen Consortium, Benson RPG consortium, Český letecký průmysl, Eco-Investment, HTC holding, Oakfield, Slovácké strojírny and a consortium of financial groups PPF and J&T the go-ahead to start due diligence proceedings at the company Aug. 8. In due diligence, bidders get access to financial and other data crucial to the operation of a potential acquisition before making an offer.

The bidders are tight-lipped on their plans for Aero Vodochody, which employs more than 1,600 people. A lot is at stake because there's widely held speculation that some of the suitors, the financial groups in particular, are more interested in the runway at the company's facilities 15 kilometers (9 miles) outside of Prague than Aero Vodochody itself.

The government put the privatization on hold in March, amid fears that the winner would discontinue production at the company and transform its runway into a commercial airport to rival Prague Ruzyně International Airport.

Though a Transportation Ministry study concluded that a rival airport wouldn't be a problem, many observers are still concerned that some bidders might want to shut the money-losing company down and focus on building only the airport.

Its future "depends on whether they maintain aircraft production," says Milan Holl, director of the Research and Testing Aircraft Institute. "The company has a huge tradition. They have a great team."

The Finance Ministry would not comment on whether the government is still concerned that production could be halted, but Finance Minister Bohuslav Sobotka said earlier this month that the company would go to the highest bidder, bottom line.

The ministry wouldn't say how much it is expecting to get from the deal, but some estimates put Aero Vodochody's worth at around 1 billion Kč.

Dušan Palcr, spokesman for the consortium of PPF and J&T, said the group did not want to discontinue production when it made its initial bid late last year. Now, though, the consortium won't make a final decision until after due diligence.

"Our bid did not call for shutting down production," he said. "Of course, it was several months ago and we don't know what condition the company is in now. It will be obvious when the due diligence is over."

Palcr declined to provide further details.

For its part, the AERO Kilcullen Consortium seems interested in more than just the runway.

"We have a clear strategic plan that calls for development of the Czech aerospace industry and the facility," said partner Enda O'Coineen. He declined to give further details.

truggling company

Turning around Aero Vodochody, which produces both jets and helicopters in cooperation with Sikorsky, would likely require a significant investment of time and money, considering it has been on a downward spiral since the end of communism.

Founded in 1919 by Prague industrialist Vladimír Kabeš, Aero Vodochody was a key supplier of the Warsaw Pact countries and the largest fighter-training jet producer in the world. But after the collapse of communism, the military's budget went down and so did business. It has been struggling to stay out of the red ever since, and many industry experts says it needs a strong partner to survive.

"Doing business without a strong partner who will help conquer new markets is very hard in this industry," said Jiří Hynek, president of the Association of the Defense Industry.

Aero Vodochody got a partner in 1998, when the government sold 35 percent to Boeing Česká, a consortium of Czech Airlines and Boeing. The government expected Boeing to help Aero Vodochody expand and get into the black.

"This plan was not fulfilled any single year," company spokesman Vitězslav Kulich said.

Boeing did not sell a single one of Aero Vodochody's L-159 and Ae 270 aircraft, and the government forced the Americans to sell back the stake for 2 billion Kč.

Today, some experts say Aero Vodochody's planes are simply outdated and that there's no market for them. The Army has been trying to sell 47 L-159 jets for years but hasn't been able to find a buyer.

"Their product is clearly not competitive. It has a 30-year-old design," said Chip Erwin, the founder and director of Czech Aircraft Works, a manufacturer of sports aircraft.

Aero Vodochody lost a record 1.3 billion Kč last year, prompting management to say that the privatization needs to be fast-tracked.

The company started preparing for the privatization after the government's study found that a facility servicing fewer than 10 million people a year would not threaten Ruzyně.

Aero Vodochody recently prepared a feasibility study that found it would cost several hundreds of millions of crowns to construct a small to midsize airport at its facility.

The final decision on what to do with the company will be up to the new owner, company spokesman Kulich said. One should be selected by mid-October.