Croatia Airlines gets first €13.5 million injection
Croatia Airlines has received the first tranche of a planned 33.7 million euro injection from Croatia's budget to stabilise the carrier prior to recapitalisation. Last Thursday, the government advanced 13.5 million euros to the company’s accounts, with a further 20.2 million to be paid in 2020. Finance Minister Zdravko Marić said the decision to provide funds to the carrier is aimed at helping the country's tourism sector. "In the case of Croatia Airlines, it is well known that the company plays a great role in tourism and in connecting Croatia with the rest of the world. I am not happy or satisfied with the situation, but we have assessed that Croatia Airlines and Croatia's airports have great potential”, Mr Marić said.
Financial projections for the next two years showed that Croatia Airlines would be unable to do the repair and overhaul of two aircraft engines without the support of the government, pay its debt to Croatian suppliers and finance other necessary investments. The state last recapitalised Croatia Airlines in 2013 with 106 million euros, barring it from providing further aid until 2023 under European Union regulation. It is believed the government has found a way around this by claiming the Croatian carrier paid excess tax since its last restructuring process and is now being compensated for it. The development comes after the Slovenian government refused to provide extra funding for the privately-owned Adria Airways, which subsequently declared bankruptcy.
Croatia’s Prime Minister, Andrej Plenković, noted, "We are sending a strong message to our national carrier, because it is important for Croatian tourism. We expect the company to be consolidated and financially ready to make new forward strides, while also bearing in mind its existing partnerships that are vital”. Under the terms of the capital injection, a model for the company’s privatisation process must be drafted and presented to the government by December 31, 2019, while the selling of shares must begin by June 1, 2020. A consortium made up of the Privredna banka Zagreb and Germany's DVB Bank are acting as the company’s privatisation advisors.
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