State boosts Croatia Airlines aid to €79.7 million
The Croatian government has approved a 79.7-million-euro injection into its national carrier in order to mitigate the effects of the coronavirus pandemic. As previously announced, the state recapitalised the airline with 46.5 million euros yesterday but will also provide 33.2 million euros as an equity loan. As a result, Croatia Airlines has issued 35 million new shares which have been acquired by the state in order to “return the carrier’s capital to pre-Covid levels i.e. to the same levels as on December 31, 2019”. The Croatian government already holds a 99% stake in the national airline. These funds are on top of the 11.7 million euros in direct aid provided by the state earlier this month to compensate the airline for its losses between March 19, 2020 and June 30, 2020.
Commenting on its decision to grant the aid, the Croatian government said, “The funds are being directed towards settling low liquidity and capital at Croatia Airlines, which have been caused by the coronavirus pandemic. This measure is aimed at strengthening Croatia Airlines’ capital and mitigating urgent liquidity problems caused by Covid-19. The aid will secure the continuity of the airline’s business during and after the pandemic”. It added, “The government identified Croatia Airlines would be short on funds over the next twelve months in order meet its regular operations and maintain flights. Through the equity loan, the company will be stabilised, which will prevent a negative knock-on effect on the Croatian economy and its people”.
Croatia Airlines registered a net loss of 32.1 million euros during the first nine months of the year, up from its loss of 6.5 million over the same period in 2019. The company has drafted three different scenarios as to how the ongoing pandemic may affect its business, with estimates ranging between an annual loss of thirty million to 73 million euros by year’s end. It previously said, “In order to secure liquidity and sustainability, the company is in urgent need of additional financial resources that would cover the damage caused by Covid-19, in the form of subsidies or donations on behalf of the owner - the Republic of Croatia”.
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