|Croatia Airlines sale process likely to begin this autumn|
The Croatian government is planning to resume the stalled privatisation process of its national carrier this autumn. According to local media reports, the push to sell Croatia Airlines will begin in several months with a consultancy firm to be selected first in order to oversee the process. It comes after the European Union urged the Croatian government to submit a privatisation strategy for 2015 within the next three months. According to initial plans, the Croatian carrier, which celebrates its 25th anniversary next month, will be sold in the first half of 2015 if a suitable strategic partner is found. Commenting on the EU’s deadline, a source close to the Croatian government said, “The European Union has requested us to prepare the privatisation document by the end of October. Brussels isn’t looking for empty promises, it’s looking for the action”.
The first attempt to sell Croatia Airline began just over a year ago and failed after nobody responded to the tender call. The Croatian Minister for Sea, Transport and Infrastructure, Siniša Hajdaš Dončić, recently outlined the government’s plan to conduct a thorough analysis of the aviation market in order to identify potential investors, adding that Croatia Airlines must expand in the region and avoid a possible purchase by “predator” carriers. According to the minister, if required, the government will adopt a special Croatia Airlines privatisation bill in order to sell the company swiftly. A minority 49% stake will be offered to potential bidders. Since the failed sales attempt late last year, Croatia Airlines has managed to post an annual profit, the first in years. However, its passenger numbers have been steadily declining throughout the year and its market share has been decreasing as it faces tougher competition.
Croatia Airlines’ CEO, Krešimir Kučko, has said the carrier should 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. 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 remains to be seen whether Croatia Airlines’ 25th birthday will be its last under the current ownership structure.