Croatia to grant €45.4 million in airline aid
The Croatian government will distribute 45.4 million euros in aid to local airlines as a means to support the civil aviation sector affected by the coronavirus pandemic. Contracts with carriers are to be concluded by the end of the month. The European Commission has approved the scheme. “Due to the coronavirus pandemic and the travel restrictions that Croatia and other countries had to impose to limit the spread of the virus, companies active in the civil aviation sector incurred significant operating losses and experienced a steep decline in traffic and profitability. The purpose of the measure is to support the activity of the beneficiaries and their economic recovery and structural viability”, the Commission said.
Under the scheme, the public support will take the form of loans with subsidised interest rates provided by the Croatian Ministry for Sea, Transport and Infrastructure. The maturity of the loans is limited to six years. Furthermore, the loans relate to working capital needs, while the loan contracts will be signed by June 30 at the latest. “The Commission concluded that the scheme is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state”, the executive body of the European Union noted. The Croatian government has not specified which carriers will be the beneficiaries of the contracts and to what amount.
Croatia Airlines, which registered a 38-million-euro loss in 2021, warned at the end of last year that, “The company continues to face reduced demand, resulting in low levels of revenue which may raise issues of maintaining liquidity in the coming period". During the first quarter, the carrier registered a loss of 15.2 million euros. It represents the airline’s worst first quarter financial result in at least eight years. According to analytics company Credit Analyst, which reviewed Croatia Airlines’ recent financial reports, “It is likely that the company will need more external support to stay afloat. Liquidity will likely remain stretched during this year, absent of any additional external support”.
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