Croatia Airlines seeks model for state aid
Croatia Airlines and the Croatian government are still searching for a model within the European Union regulatory framework, which would allow the state to provide aid to the carrier to cover losses incurred thus far during the coronavirus pandemic. Complicating matters is state aid the company received in 2012, as well as the government loan it took out last year. “We are in a complex situation. It is easy for Germany to help its airlines when it can become a shareholder in return. In Croatia, the government can no longer do that”, Slaven Žabo, the carrier’s Chief Commercial Officer, said. He added, “We are still looking for an appropriate model for aid within EU rules”.
By mid-October, Croatia Airlines had paid compensation to passengers for unused tickets amounting to over 600.000 euros. The airline has also spent some 118.700 euros on the disinfection of its aircraft, 158.240 euros for the purchase of personal protective equipment and almost 11.000 euros on pens and entry forms . The company has drafted three different scenarios as to how the ongoing pandemic may affect its business, with estimates ranging between a loss of thirty million to 73 million euros by year’s end. The Croatian Chamber of Economy now estimates Croatia Airlines will register a 52.5 million euro net loss this year, while it predicts losses during the first half of 2021 will amount to 25 million euros.
Croatia Airlines has reiterated its importance for the country’s economy. “We are and remain the wings of Croatia’s tourism and economy, creating a better tomorrow for all of us. By purchasing goods and services from local suppliers, Croatia Airlines, as well as the entire sector, supports an additional 3.000 jobs. Through the salaries of its employees, some or all of which are spent on consumer goods and services, it is estimated the sector supports yet another 3.000 jobs. Foreign tourists arriving in Croatia by air also contribute to the local economy, with their spending, which is estimated to support an additional 19.000 jobs. In total, 35.000 jobs are connected with the air transport sector, as well as tourists coming to Croatia by air, making the role of each participant in the sector even greater. The air transport industry, including airlines such as ours, and the entire supply chain, is estimated to contribute $456 million to Croatia’s GDP”. It added, “The role of Croatia’s flag carrier is indisputable because each of our flights connects Croatian destinations and Croatia with the world, making the inaccessible accessible and sets new standards for all of us. If we take into account the exceptional seasonality in demand for airline services, with competition being fierce in summer, yet almost non-existent in the winter, our role as Croatia’s flag carrier is truly important because Croatia Airlines enables Croatian airports to stay open all year round and provides passengers with excellent connections 365 days per year”.
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