Croatia Airlines set for new restructuring, sale
The Croatian Minister for Sea, Transport and Infrastructure, Oleg Butković, has said the country’s national carrier will have to undergo restructuring and a fresh attempt will be made at privatising the airline once the effects of the coronavirus pandemic subside. Mr Butković said, “Croatia Airlines had issues even before Covid. Prior to the health emergency, the airline was in the final stages of securing a strategic partner. We had two very serious offers, but the pandemic halted all activities. We expect that with the return to normality, Croatia Airlines’ business will stabilise but not in its entirety. The challenge remains finding a strategic partner. If we fail to succeed, the state will be responsible”.
Croatia Airlines was last restructured between 2011 and 2015, which enabled it to receive over a 100 million euros in state aid just prior to the country entering the European Union in 2013. In the period between 2003 and 2011, Croatia Airlines generated operating losses which reached the level of the company’s capital. Liquidity problems, high level of debt, negative working capital and negative net assets brought into question the company’s operations, which necessitated the implementation of restructuring measures, reprograming loan liabilities and a capital increase. Seven years after completing its restructuring, Croatia Airlines is once again facing similar issues. It recently drafted a post-Covid strategy, which it has dubbed as a “strategy for success”, which foresees fleet renewal, increased efficiency and competitiveness. The company is also expected to benefit from a 45.4-million-euro aid package the Croatian government will distribute amongst the country’s aviation stakeholder as a way of alleviating the effects of the Covid pandemic.
Croatia’s Prime Minister, Andrej Plenković, said last September that negotiations between Croatia Airlines and Greece’s Aegean Airlines over a strategic partnership agreement would be renewed in the coming months, although this is yet to occur. Prior to the pandemic, the Croatian government set a deadline to privatise or recapitalise its national carrier by June 2020, however, the target was scrapped at the onset of the global health emergency. Aegean Airlines and Spanish regional carrier Air Nostrum had both expressed interest in acquiring shares in Croatia Airlines at the time. The Croatian carrier generated a net loss of 15.2 million euros during the first quarter of this year. Its second quarter results are expected by the end of this month.
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