Zagreb Airport secures €57.8 million loan


The European Bank for Reconstruction and Development (EBRD) has extended a 57.786.842 euro loan to Zagreb Airport to support the financial restructuring of the concession. In a statement, the EBRD said, "The Bank's financing would contribute towards the strengthening of the balance sheet structure of the company as part of a wider refinancing package, with a view to ensuring the airport's financial sustainability in the longer term". It added, "Successful balance sheet restructuring of Zagreb Airport will improve the sustainability of the concession arrangements in the medium to longer term, permitting further private concessions and efficient operations by commercial parties. The contribution to the restructuring is expected to maintain confidence in the operation and keep a key infrastructure run by the private sector".

Late last year, the Croatian government gave its approval for Zagreb Airport's operator to refinance some 198 million euros of debt from 2013 under more favourable terms. "Conditions have been met for the refinancing of existing debt which will enable the concessionaire to further strengthen the stability of the project, pave way for investments into the expansion of the passenger terminal and lower future business risks", the Croatian Minister for Sea, Transport and Infrastructure, Oleg Butković, said at the time. Under the agreement between operator Zagreb Airport International Company (ZAIC) and the Croatian government, the concession holder cannot amend or in any way alter the financing agreement prior to approval from the state.

ZAIC is expected to launch the second phase of the airport's terminal expansion in the year it anticipates handling five million passengers. According to the airport operator, the milestone will be reached in 2026. At this point, the main project for the second phase is yet to be finalised, as the airport's masterplan is being updated. Based on the previous model, the second phase will involve an investment of 75 million euros. ZAIC is made up of six shareholders, including Aeroports de Paris Management (20.77%), Bouygues Batiment International (20.77%), Fond Marguerite (20.77%), IFC (17.58%), TAV Airports (15.0%) and Viadukt (5.11%). Viadukt, which is in liquidation, unsuccessfully attempted to sell its stake in the consortium earlier this year.




Comments

  1. I don't get it, are they struggling financially if they needed this loan?

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    Replies
    1. No. The existing loan is now going to be serviced with more favourable terms, i.e. lower interest.

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    2. Koncesija nije placena njihovim novcem ovo je verovatno tzv refinansiranje.

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    3. So they got a loan to refinance a loan?

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    4. Yes 09:09, that is what businesses do when they can get better loan terms like lower interest rates, lower monthly payments etc.

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    5. I see but does that mean they pay interest rates for both loans or just for one?

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    6. Refinancing means that they pay off the old loan with the new loan. So at the end they get to pay the interest rates of the new loan which are lower.

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    7. Look, you go to buy a house (or build a terminal). You need money for that. You go to the bank and ask for money. They give you the money and request 5% interest rate for your loan. You pay back the money. Now someone comes and says they will refinance it and you pay 3% interest.

      Question 1: would you do it or not? Question 2: Why is this newsworths?

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    8. So what? We can't discuss ZAG's business unless it's Bravo Croatia worthy material? There are many things not functioning at the airport as they should be. For a concession where we were promised all sorts of things.

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    9. @ 9:44. Judging the comments here, I would say yes, because a discussion implies the knowledge of the topic (banking and finances) that most commentators here seem not to have.

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    10. And can you explain why no one wants to buy Viadukt's 5% share?

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    11. I think it's newsworthy. Regardless of what it is used for the loan is quite huge. I remember similar news published when Vinci took out the loan from EBRD for BEG reconstruction/development.

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    12. Obviously the concession isnt as great as it was believed at first, July numbers being the best proof or the fact OU dictates who can fly there and who can't.

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    13. @9:50 - Many people don't have knowledge of aviation business, but it doesn't matter :)

      This refinancing should become common knowledge, you can use exactly same when you buy apartment or car. etc.
      Speaking of which, this refinancing doesn't have to be about better interest rate but it can be about longer payment terms. Ie. interest will be the same, but instead of paying loan in 10 years it will be paid in 20 years. Reading this article it looks to me me this is case.
      And, if this is the case, that could mean that there are a cash flow issues, and profit coming from concessions is not as it was expected.

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    14. @Anon at 9:38 Sure, it's a standard credit refinancing loan, but still there are some important information that can be gleaned from this text. It's certainly more newsworthy than many other articles usually staring Oleg Butkovic and talking about potential direct flights from the US.

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  2. Well now we know why they are not attracting LCCs.

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    1. LOL, when you don't understand what you are reading it is better not to comment.

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    2. Yes there are always excuses.

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    3. "Now we know why they are not attracting LCCs?"

      Ok for the ones with an IQ of over 80: Please explain, as no one will unterstand that who is half way intelligent.

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    4. They reported loss in 2017 and they are taking out loans. If you want to attract LCCs you have to take on a certain financial burden at the beginning because no LCC will pay full prices at ZAG. Or for example Zagreb would have to invest in the old terminal to make it ready to handle LCCs there. It all comes at a price.

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    5. Sta da investira? Da baci otrov za pacove i sta to jos? Zgrada nije pretrpela nikakva ostecenja. Za LCC vise nego dovoljno

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    6. Terminal je prazan.

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    7. Ne nije, sva oprema je unutra. Karuseli, stolice, check in šalteri, kontrolni uređaji, barovi, trgovine idr. Ništa od toga nije odneseno na novi terminal

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  3. Any new airlines planned for ZAG soon?

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    1. Nothing announced yet.

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    2. Nothing as far as I know. But, who knows, it's still early days for next summer season.

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    3. Well we are a few months away so my guess is that if anyone announces more flights it won't be before December.

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    4. I don't think there were ever fewer announcements for next summer at this point. Just look at the right hand side, the new route launches section. There are just three routes announced for next summer.

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    5. There is always the possibility for China flights. They announce them only a month before they start.

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    6. ZAG really needs Easyjet.

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    7. ZAG needs more than Easyjet, Scandinavian market it not covered during winter, what about Italy and direct flights to Rome and other cities? What about domestic market? So many missed opportunities!

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    8. I agree although I think domestic market is not profitable for any airline, OU included.

      I dumbfounded by the fact that there are no nonstop flights between Zagreb and Rome still.

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    9. United Airlines je najavio da će 22.08 objaviti neke nove međunarodne linije. Ako je Zračna luka Zagreb pregovarala sa Unitedom, možda se i Zagreb postane njihova nova destinacija.

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    10. ^ Fingers crossed

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    11. I think there is a strong possibility they will announce ZAG. Croatian tourist minister said flights should start in 2020.
      https://www.exyuaviation.com/2019/06/new-york-zagreb-flights-to-launch-in.html

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    12. No United, announcement included new Europe routes but no ZAG.

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    13. Could it be Delta? Or United in 2021? I'm surprised United didn't choose DBV or SPU for next year.

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    14. There is still time guys, they can make a surprise announcement for EWR-ZAG!

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  4. I'm surprised no one from existing consortium doesn't want to buy Viadukt's share. Why?

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    Replies
    1. Maybe there are some issues we are not aware of. If a business is a lucrative cash cow then people rush to buy it.

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  5. Debt refinancing is normal.

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    Replies
    1. I don't think anyone said it was not normal ;)

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  6. Does anyone know when will they start building the building for rent a car?? They announced it a year ago. Having containers for rent a car offices is really not normal.

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    1. +1 seems like the project has been delayed. They announced how construction would start last year.

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    2. Have they finished the VIP lounge? Last time it was reported that construction has started.

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    3. Apparently the VIP lounge is being paid for by the government.

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    4. So the government is subsidizing it?

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    5. The concession agreement says that the government is entitled to 33% of any profit resulting from debt refinancing. Because that the state got 7 million euros at the end of last year. 4 was paid directly to the budget and the remaining 3 is being used to upgrade the VIP lounge and general aviation facilities which are both used by the Croatian government.

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    6. But the concessionaire runs the airport so they should be the ones paying for these things. To me it seems like the Turks and French getting away with yet another scam which is financed by the government.

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    7. Those facilities are officially used by the Government as well. Thats why they are contributing.

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    8. VIP lounge I can understand but no way for general aviation, most of the times it's not used by the government and the airport is the one collecting cheques.

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  7. until when does the concession run?

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  8. I still don't get that they think they need another 6 years to reach 5 million.

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    1. It's not in their interest to begin before that. On top of that it seems to me like the scope of work in the second phase will be reduced since they are redrafting the master plan.

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    2. Let's wait and see shall we ;)

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  9. We will know next month what their finances were in 2018. In 2017 they had a loss. It could give us a better of idea of why some things are done the way they are at ZAG airport.

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    1. The airport is making good money, don't worry. The financials are in red because currently there is financial expenses (i.e loan payments) due to the investment. This is very normal. All projects pay off the investment first, then you start keeping all the cash.

      The important indicator to understand if the company is healthy or not is whether the airport is operationally in positive balance or not, namely, operational revenues are greater then operational expenses (Positive EBITDA). ZAG has a strong EBITDA figure.

      Financial expenses are a totally different story, which is normal due to financing of the project.

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    2. Just because they have operational profit doesn't mean they have an overall profit that is when you factor in other non operational expenses. With modest growth so far we can assume their revenue has not considerably increased. We will have to wait and see but itei obvious things arenta as rosy.

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    3. Exactly Anon 10:40. It doesn't mean they have overall profit. But it is totally normal for them to have zero overall profit at the 5th year of operations of a 30 year contract. Typically you pay back for the investment for a term of 10-12 years. After this period, the asset turns into a cash cow. This is how companies make money out of BOT contracts.

      Of course, lets wish the best for them in any case...

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    4. That's right last anon, building the new terminal and those couple of kms of the eastern approach to the terminal was a huge investment on their part. 300 mill euro altogether I believe. The remaining 80 million out of the entire worth of the project, serves to cover operational costs.

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  10. What about the old terminal? Still looks in good shape. It's sad they are not using it at all.

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    1. They should use the old terminal for LCC. It's perfect for it and would need minimal investment, no need for air bridges... It would really boost numbers and most importantly offer passengers affordable travel.

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    2. Obviously the concessionaire believes old terminal is better suited as a concert hall than an LCC terminal. Lol

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    3. There is a concert in October in old terminal

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  11. Anyone know how August is performing at ZAG?

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  12. fire the management

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    Replies
    1. No new airlines or routes, passenger numbers have started to reduce, TAV is practically managing the airport, even though that was not part of the concession deal, promised infrastructure upgrades have not happened.

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    2. Passenger numbers decreased only in July. Hardly a reason to panic.

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    3. There was no growth in January either.

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    4. Overall a new approach is needed as like this the airport won't grow.

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    5. TAV is not practically managing the airport. The consortium is managing the airport. None of the consortium members have the right to take managerial decisions on their own. It doesn't matter who the CEO or the COO is. All decisions are made commonly as none of the shareholders are holding the majority of the shares.

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    6. Those common decisions are still not good enough, upcoming winter season being best proof of it. Even LJU managed to secure additional frequencies in winter time.

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  13. That terminal really always looks stunning :)

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    1. The architectonically most beautiful terminal in EX-Yu and wider region.

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    2. @ anon 9:43 "architectonically" ? Is that even a word? Lol

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    3. Pretty from the outside but not so functional on the inside.

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    4. Not pretty on the inside either. They went nuts with all of those steel bars, lol! Criss-crossing even the windows. Can't post a normal pic of the planes from the departures. Functionality can be fixed.

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  14. Development until 2021 will be key. That's when Ljubljana gets its new terminal and there will be a lot more competition between these two.

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    Replies
    1. I highly doubt LJU will pose any competition to ZAG, with or without new terminal.

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    2. Agree with anon 9,30, Let's not forget that 2020 is also the year of Croatian presidency of the Council of the EU for 6 months, so plenty of job to be done, hope for some new routes to be established.

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    3. Sorry but if there were going to be any increase for EU presidency they probably would have been announced by now.

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    4. The planned increase is Croatia Airlines additional weekly flight to Brussels.

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    5. What rate of growth could we expect because of the EU presidency?

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    6. With OU being the way it is, they can only expect modest growth.

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    7. Since Transavia launched LJU, KL in ZAG has been reduced to Embraer and this winter reduced to six weekly. I think LJU does have an impact on ZAG.

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    8. KL never flew with 737 at the winter in ZAG, EMB was all the time, to there was no reduction.

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    9. Embraer is now in summer as well.

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    10. The past seven days we have on KL: 1x B738, 1x E90 and 5x E75.

      Before Transavia it was mostly B737-700 and B737-800.

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    11. since KL launched SPU with 2 daily flights with B737, ZAG is reduced to Emb A/C. There's no other reason, there is also Transavia iz RJK to Eindhoven and in PUY and ZAD as well, not just in LJU :)

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  15. Good work ZAG.

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    Replies
    1. Getting better loan terms. They will have to pay less money every month

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  16. Would be interesting to know which airlines they are negotiating with.

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  17. Изналажење повољнијег кредитора за дуг који је раније подигнут јесте логичан. То је рађено и у Србији. Подизани су кредити са већом каматом раније, да би пре неку годину
    Ови кредити били отплаћени са новим кредитом. Са каматом нижом ти ипо пута. Хрватска вероватно има више камате?...
    Зато има помоћ и приступ Европским фондовима.
    Са надом и добром жељом да Загребачком аеродрому се побољају кредитни услови.
    Rodney Marinkovic & Motivation Assoc. ✈☺😇🌞✈🌍🌏🌎✈🌐✈🌞✈ Kraljevo and Sydney ✈🌐✈

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  18. Talking about the results of ZAG management I am not sure we can say they were successful. No new routes announced for this winter, LX, OK, A3 still not flying year-round, big EK/FZ winter downgrade, negative growth in January (-0,04%) and July (huge -3,4%!), no announced China and US flights, Norwegian total cancellations of all ZAG flights for winter months etc...

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    Replies
    1. You can't have new routes every single season. A3 has extended flights compared to last year.

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    2. And also it is highly likely United will announce flights to Zagreb this afternoon.

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    3. Yes, you can...just have a look at some surrounding airports.

      United to Zagreb..it depends how deep is "udruzeno oglasavanje" fund :-)

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    4. Yeah all flights to Zagreb are subsidized. Give me a break.

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    5. UA would be the same way EK was the first year. No secret there.

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    6. As well as KE

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    7. No UA next year unfortunately.

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    8. United Airlines announced new destinations and Zagreb is not on the list.

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    9. What routes did they announce?

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    10. Curacao, Nice, Palermo

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    11. Sure buddy, KE is subsidized. The flight wouldn't happen to have anything to do with the fact that half a milion Koreans visit Croatia annually.
      I see a couple of people still use that udruzeno oglasavanje meme unironically, lol!

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    12. UA to ZAG "highly likely"
      LOOL

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    13. Udruzeno oglasavanje works for some while it doesn't for some others. It worked for KE but it didn't for EK, simple as that.

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  19. Bravo Hrvatska!

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  20. That is a lot of money that won't go very far in the aviation sector.

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  21. Btw : Look at Wikipedia how Wizz Air is opening routes from Kutaisi Airport in Georgia ...
    It will blew your minds !!!

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    Replies
    1. They are subsidized routes, nothing so special.

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