Croatia Airlines defers €33.7 million state loan repayment
Croatia Airlines has successfully postponed the repayment of a 33.7-million-euro shareholders loan it received from the Croatian government in 2019, which was aimed at financially stabilising the carrier prior to its privatisation, which was later shelved due to complications resulting from the coronavirus pandemic. The loan, which received European Commission approval, was to be repaid in full last year at a 2% fixed default interest rate. However, the Croatian flag carrier requested for a deferral, which has been approved by the Croatian Ministry for Finance. The shareholders loan will now mature in January 2025 instead. The airline has since been the recipient of several direct state aid packages to alleviate the impacts of the Covid-19 pandemic and will soon receive a 39.2-million-euro state injection in form of a recapitalisation package, which was approved by both the state and Croatia Airlines two weeks ago.
The Croatian government previously said it would strictly monitor spending at the country’s national carrier as part of the 2019 loan agreement, in arrangement with the European Commission. However, the state auditor has warned that this obligation has not been met. Under the agreement, Croatia Airlines was to submit a report on where the funds were being spent each fifteenth of the month, which has not occurred. According to the auditor, only two reports have been submitted by the airline. By the end of the third quarter of last year, Croatia Airlines had 3.2 million euros worth of long-term loan repayments and 67 million euros worth of shareholder loan repayments.
Croatia Airlines is looking to improve its finances through its ongoing post-Covid strategy. The carrier recently ordered six Airbus A220-300 aircraft, with the company telling EX-YU Aviation News last month that a financing model for the acquisition of the jets is still under consideration. Delivery of the planes is due to commence next year. Potential financing options include an operating lease, finance lease, as well as sale and leaseback agreements. The A220-300 aircraft is valued at approximately 91.5 million US dollars per unit at list price, before the customary discounts, bringing the Croatian carrier’s order for six to over half a billion dollars at list price. The airline also has plans to lease an additional nine A220 jets in order to operate a single-type fleet by 2026. The pace of deliveries over the two-year period has not been disclosed.
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