State to inject €39.2 million into Croatia Airlines
The Croatian government will inject 39.2 million euros into its national carrier through a capital hike. Croatia Airlines will issue 29.6 million new shares which will be acquired by the state. It comes two years after the government previously recapitalised the company by acquiring 35 million shares for 46 million euros. Since then, the airline has also been the beneficiary of several financial injections, both through direct aid and equity loans. Croatia Airlines will authorise the latest capital hike on December 22 at its shareholders meeting. The Croatian government is the company’s largest shareholder, with a 97.7% stake, while the remainder is mostly owned by state-owned or public companies such as the Croatian Postal Bank, oil transportation company JANAF and the former state operator of Zagreb Airport.
Croatia Airlines has not disclosed the purpose of the financial injection. The carrier registered a net loss of 13.1 million euros during the first three quarters of the year, up from a loss of 6.5 million euros during the pre-pandemic 2019. However, the company saw its first profitable quarter in Q3 2022 since Q3 2019. On the other hand, the airline is yet to firm up an announced order for six Airbus A220 aircraft. It is believed the carrier is in the process of securing the finances for the deal in order to enable deliveries of the aircraft from 2024 as part of its post-Covid strategy.
Croatia Airlines recently warned that it may require additional state support. It said, “Considerable positive steps have been made compared to 2021, however, the increase in fuel prices significantly effects operating costs and the amount of cash outflow. The continuation of the war in Ukraine and the unpredictable nature of the pandemic continue to have a major impact on demand and, consequently, on income”. It added, “All of these may again raise questions about maintaining liquidity. The company is taking all necessary measures to actively manage liquidity and optimise the business. It continues to implement rigorous cost cutting measures, which is in line with Croatia Airlines’ post-Covid strategy”. A recent report by analytics company Credit Analyst, which reviewed Croatia Airlines’ financial reports, said, “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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