|Croatia Airlines' CEO in favour of recapitalisation|
The CEO of Croatia Airlines, Krešimir Kučko, has said the Croatian government should avoid adopting similar privatisation models to those used by the Czech Republic and Serbia for the sale of their respective national carriers. Mr. Kučko believes that Croatia Airlines should instead be recapitalised. This would entail changes to the airline’s capital structure (the proportion of equity to debt). This may occur, for instance, as part of a debt restructuring, when a creditor exchanges an outstanding loan for a stake in the company. Croatia Airlines’ CEO believes the part owners of both ČSA Czech Airlines (Korean Air) and Air Serbia (Etihad Airways) are now refunding their investments in the two carriers through the lease of their own aircraft to their acquired subsidiaries.
It has long been tipped that Mr. Kučko and the Croatian government are at odds over Croatia Airlines’ future. Mr. Kučko is believed to be in favour of the national carrier remaining Croatian owned or recapitalised by local companies, while the government has been searching for strategic partners in Asia. It is the first time Mr. Kučko has publicly cautioned the government over its privatisation plans. The government has previously said it will continue the search for a new part owner for Croatia Airlines later in the year, following a failed attempt in 2013. Mr. Kučko says last year’s botched sales attempt was a result of “bad timing”.
Croatia Airlines recently posted its first profit in six year, making it more attractive to potential investors by demonstrating financial stability. According to Mr. Kučko, the carrier has now become a profit oriented company. In addition, he adds, the airline is still undergoing restructuring which, when completed in 2015, should see the company grow its destination network and “redefine” its fleet. Croatia Airlines is the busiest carrier in the former Yugoslavia and a rare profit making airline in the region. However, it faces high seasonality and its success is much dependent on the tourism season in the country.
Do you believe Croatia Airlines should be recapitalised or offered directly to a foreign partner, having in mind previous privatisations in the region such as B&H Airlines and Air Serbia. Send a comment with your thoughts.