|Croatia Airlines expected to be privatised in the summer of 2016|
Croatia Airlines' privatisation process is likely to be finalised during the summer of 2016, with the government to decide whether the carrier will be sold or recapitalised next spring. Following the decision, an international tender will be launched for interested parties to submit binding bids. In addition, the state will also determine the amount of shares it will offer to foreign investors. The International Finance Corporation (IFC), the World Bank’s investment arm, has found potential buyers which include Lufthansa, Aegean Airlines and Turkish Airlines, the daily "Večernji list" writes. Earlier this year, both Korean Air and Taiwan's EVA Air submitted letters of intent to participate in Croatia Airlines' privatisation process, but both have since withdrawn from the race.
The German and Greek carriers have been identified as the most serious candidates, with the IFC to intensify talks with both parties over the coming months. According to sources close to the process, Lufthansa is pushing for Croatia Airlines, a fellow Star Alliance member, to join the Lufthansa Group, which includes Austrian, Swiss International Air Lines, Brussels Airlines, Germanwings, Eurowings and SunExpress, along with a further 540 non-airline subsidiaries. As a result, Lufthansa would offer Croatia Airlines necessary capital in return for a stake, with the carrier to have its own member on the Lufthansa Group board while at the same time retaining its own separate brand, similar to Lufthansa's other airline acquisitions. On the other hand, Aegean is interested in purchasing an outright stake in return for effective control over the carrier. While Turkish Airlines is being courted to participate in the privatisation, the airline previously ruled out any interest in acquiring stakes in carriers in the former Yugoslavia following its experience with B&H Airlines several years ago. Furthermore, Turkish has said European Union laws and regulations forbid it from becoming a majority shareholder and, as a result, makes it unable to effectively enforce its strategy, as was the case at B&H Airlines.
The Croatian government resumed its national carrier's privatisation process in November last year following a failed attempt in 2013. Croatia Airlines' CEO, Krešimir Kučko, is in favour of the airline being recapitalised, rather than taken over by another carrier. Recapitalisation would entail changes to the airline’s capital. This may occur, for instance, when a creditor exchanges a loan for a stake in the company. Mr Kučko believes a thirty million euro investment would be appropriate for the airline. Croatia Airlines is in the final months of a four year restructuring program, which has seen the carrier return to profitability but also limit its opportunities for growth. It plans to expand operations early next year with the lease of Embraer jets and the development of its east European network.