State expects EU leniency over Croatia Airlines aid
The Croatian Prime Minister, Andrej Plenković, has said he anticipates no difficulties with the European Union over the government’s decision to provide Croatia Airlines with 33.7 million euros in aid, despite the measure being contrary to the block's regulations. The airline has been advanced 13.5 million euros so far, with a further 20.2 million euros to be paid in 2020. Mr Plenković noted there would be “no issues” with the European Commission over the capital injection, adding, “We explained the situation”. The state last recapitalised Croatia Airlines in 2013 with 106 million euros, just before the country joined the European Union. As a result, the carrier was forced to restructure. Under EU policy, the state is barred from providing further financial assistance to the airline until 2023.
The Croatian government has said it will strictly monitor spending at the country’s national carrier as part of the capital injection. The company will be obligated to submit expenditure reports to the Ministry for Sea, Transport and Infrastructure, and will need to include statements of purpose and copies of invoices. In turn, the ministry will be required to forward its assessment on whether the funds are being spent appropriately to the Ministry for Finance. Financial projections for the next two years showed that Croatia Airlines would be unable to repair and overhaul two aircraft engines without the support of the government, as well as pay its debts to Croatian suppliers and finance other necessary investments.
Mr Plenković said the government believes Croatia "needs a national carrier" to provide connectivity and to strengthen trade and tourism, while the company’s stabilisation is intended to precede an effort to provide further funding by the state. “We know how important Croatia Airlines is for our economy and tourism industry, especially during the slower winter months when foreign carriers reduce their operations”, Mr Plenković said. Finance Minister Zdravko Mamić previously noted, “I am not happy or satisfied with this situation, but we have assessed that Croatia Airlines and Croatia's airports have great potential”. 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.
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