|IFC to find Croatia Airlines' strategic partner by the end of October|
Croatia Airlines’ privatisation process is advancing with its external consultant, the International Finance Corporation (IFC), expected to seek out potential new investors by the end of October this year. The Croatian Minister for Sea, Transport and Infrastructure, Siniša Hajdaš Dončić, who heads the carrier’s privatisation committee, said yesterday, “Following the stabilisation of the airline’s business, the Ministry signed an agreement with the World Bank, more precisely its fund [IFC], which is assisting us in the search for a strategic partner. By the end of October, they will list potential investors”. Mr Hajdaš Dončić admitted that the government has not selected a privatisation model for the airline. “We are looking for partners that would enter Croatia Airlines in any way. By that I mean, either through recapitalisation, with the expansion of the carrier’s destination network, or through the purchase of a 49% stake”. It is the first time the government has mentioned recapitalisation as an option.
Croatia Airlines’ CEO, Krešimir Kučko, has repeatedly called on the government to recapitalise the company, rather than sell a controlling stake. Recapitalisation would entail changes to the airline’s capital. This may occur, for instance, when a creditor exchanges a loan for a stake but does not require changes to the company’s management structure. Commenting on the privatisation process recently, Mr. Kučko said, “An ideal partner would be someone that would recapitalise the company. A takeover, like the ones we saw in the region and beyond, would not benefit Croatia Airlines”. He added, “It will be difficult to find a partner from the Far East as they generally do not buy European carriers. On the other hand, companies from the Middle East could show interest. In our view, a strategic partnership should be purely financial. As a company, we no longer have losses and neither are we producing any. Both our international and local suppliers are payed for on time”.
Last October, the government formally relaunched the airline’s privatisation process, following a failed attempt in 2013. Minister Hajdaš Dončić is adamant that the carrier will have better luck this time around. “We are not backing down. Each year ten airlines declare bankruptcy and a fifty new ones are established. Our aim is to empower Croatia Airlines but this is only possible with a strategic partner”. Over the course of last year, both Turkish Airlines and Etihad Airways ruled out any interest in acquiring the Croatian carrier. On the other hand, Qatar Airways says it is again pursuing acquisitions in foreign airlines, preferring a similar model to the one proposed by Croatia Airlines’ CEO. Croatia Airlines posted a profit for a second year running in 2014, boosting its prospects of a successful privatisation.