Croatia Airlines privatisation suspended


Croatia Airlines' privatisation process has been suspended until further notice due to the impact the coronavirus Covid-19 has had on the airline industry. In a statement, the Croatian Ministry for Sea, Transport and Infrastructure, said, "Based on our discussions, the inter-agency privatisation committee has decided to alter the dynamic of the entire process by suspending it until further notice due to the risks and unfavourable circumstances currently prevalent in the aviation sector. The committee will continue to monitor the situation in the industry". The Croatian government previously set a deadline to privatise or recapitalise the airline, which registered a 10.7-million-euro loss last year, by June 2020.

Greece's largest airline Aegean and Spanish regional carrier Air Nostrum had both expressed interest in acquiring shares in Croatia Airlines. In January, Aegean said, "Any significant decision on whether or not the company is likely to participate in the next phase of the privatisation process will be taken in the coming months, following the provision of information and discussions, in accordance with the procedure set by the Republic of Croatia". The next phase of the process was to involve the government announcing a tender for the submission of binding bids and setting out the number of shares it is willing to sell in the company. It previously noted it would offer a stake of up to 70%.

Late last year, the Croatian government granted aid amounting to 33.7 million euros to Croatia Airlines in an attempt to create favourable conditions for its sale. The capital injection has since been converted into a shareholder loan. The grace period on the loan has been set to two years with a fixed annual interest rate of 2%. The Ministry for Sea, Transport and Infrastructure said other terms and conditions would be negotiated with Croatia Airlines at a later date. The European Commission, which has strict guidelines on state aid, said last October it was “in close contact with Croatian authorities” after the government approved the aid package. The burden of the loan’s repayment was to fall onto Croatia Airlines’ new owner. However, this has now been brought into question due to the suspension of the privatisation process.

Croatia Airlines has said it is currently experiencing a 17% decline in booking numbers over fears associated with Covid-19. “During February we saw a modest decrease in bookings being made for March and April, as well as the coming months. This shows that our passengers are hopeful the situation with the coronavirus will improve as time passes by”, the airline said. The decline in bookings has been recorded both on the carrier’s international and domestic flights. “The situation can change for the better or worse, depending on weather the virus will further spread”, the company noted. The airline industry is facing its worst downturn since the 2008 financial crisis as a result of Covid-19. The International Air Transport Association (IATA) is forecasting a 113 billion US dollar decline in airline passenger sales as a result of the virus.




Comments

  1. Anonymous09:01

    Mashala.

    ReplyDelete
  2. Anonymous09:03

    Neither the politicians, the government bureaucrats of the various ministries and especially the OU employees want the airline privatized.
    They just want to continue exactly as is with the tax payers covering its losses for ever.

    ReplyDelete
    Replies
    1. Anonymous09:33

      +1000

      Delete
    2. Anonymous10:58

      They can't have it their way forever. Eventually the EU will step in. They just ordered TAROM to repay its aid.

      Delete
  3. Anonymous09:05

    It seems that Aegean gave up and corona is simply perfect excuse for OU.

    There was no corona in 2019 and yet their business result was loss of 10.7 mil EUR. According to some sources without 13.5 mil EUR received from Government the loss would be approx. 24 mil EUR.

    Disaster.

    The same like -1.8% decrease in ZAG in February 2020.

    ReplyDelete
    Replies
    1. Anonymous10:59

      With finances like these I don't see why Aegean would be interested.

      Delete
    2. Anonymous12:20

      The government loan was not included in the profit/loss calculation. Net cash flow was +2.8mil

      Delete
    3. Anonymous12:42

      Why wasn't it included?
      They got 13.5 mil EUR in 2019 and it had to be seen in their books.
      You can't simply deny that fact especially if you are EU member

      Delete
    4. Anonymous13:55

      Last anon:

      If you understood basic accounting, you would know that a loan is not part of the profit/loss. I cannot have a profit just because somebody lends me money. An interest on the loan is part of the cost and therefore decreases the net result.

      Loan is shown as increase in liabilities, so you see it in your balance sheet. Nobody can hide it.

      Re anon 10:59:

      In each scenario an investor pays for what he gets. If the company were in a better financial form, it would cost more. If it is in a worse financial form, it costs less. Sometimes it is better to buy a company in a bad financial form, so you pay less, and then you can easily turn it around, if you only know how and have resources necessary to do it. Basically it is easier to make a gain on buying something that is disorganised. If something is super organised the seller will want you to pay for it and you can hardly make any improvements that will make the thing grow in value.

      Delete
  4. Anonymous09:06

    nekada je bilo Jatovanje, sada je Kroatovanje

    ReplyDelete
  5. Anonymous09:17

    If the corona would be the problem, they should speed up the process in order to save the company, not to stop it and watching how the company is slowly approaching to bankrupcy.

    ReplyDelete
    Replies
    1. Anonymous10:04

      Perfect excuse

      Delete
    2. Anonymous11:00

      Exactly. This was just a convenient situation to avoid embarrassment come June.

      Delete
    3. Anonymous13:58

      Coronavirus may mean the investor is more hesitant. Because of coronavirus the investor may have bigger problems with making a proper valuation of the company. It may be worried of spending money now on OU as it may need this cash for himself, especially if it heavily dependant on a leisure market just like OU.

      Delete
    4. Anonymous14:40

      I think OU's books are making them more hesitant than the virus is.

      Delete
    5. Anonymous15:25

      Last anon. And you seem as you have never bought or sold anything of value. Everything has a price. The better is the good (asset), the higher is the price. Otherwise everybody would be buying only Porsche and we all know there are people buying WORSE goods just for less.

      Delete
  6. Anonymous09:17

    Laku noc.

    ReplyDelete
  7. Anonymous09:40

    It's so nauseating constantly listening to their excuses. They pretty much have an excuse for everything. The company is rapidly rotting from the inside but never ever is anything there their fault. I wouldn't be surprised that they blame Halley's Comet for their catastrophic results that are now a certainty for 2020.

    ReplyDelete
    Replies
    1. Anonymous10:44

      Last time around Kucko blamed the lack of interest on a "negative media campaign" lol.

      Delete
  8. Anonymous10:10

    So what happens next with OU?

    ReplyDelete
    Replies
    1. Anonymous10:13

      They default on the shareholders loan?

      Delete
    2. I bet the EU will allow some rescue package and all of the EU airlines will be aloud to have their respective government debt either forgiven or deferred indefinitely. Corona could be a saving grace for the likes of OU but their expansion plans for the year are now in shatters.

      Delete
  9. Anonymous10:10

    This what? The third failed privatisation attempt?

    ReplyDelete
  10. Anonymous10:11

    It is no doubt that the virus would have tipped anyone against buying OU.

    ReplyDelete
  11. Anonymous10:12

    Everyone is experiencing a slowdown. The last thing they need is a loss making airline on their plate.

    ReplyDelete
  12. Anonymous10:16

    I'm now really worried about Croatia Airlines. PSO tender process still hasn't even started while current contract end in 3 weeks, no privatisation, tourist season will probably go down the drain this year, loan from government has to be repaid... I think they will struggle for survival.

    ReplyDelete
    Replies
    1. Anonymous10:29

      There are companies flying without PSO.

      Another artificial way of pumping the money in OU

      Delete
    2. Many seasonal airlines might pull out of Croatia this year. Could actually work in OUs favor if the season has time to recover but this will all depend on how much longer we are talking about Corona.

      Delete
    3. Anonymous13:31

      If seasonal airlines pull out of Croatia the reason behind is that they will not have enough passengers.

      If they do not have enough passengers Croatia Airlines won't have them as well.

      Delete
  13. Anonymous10:17

    Well i think we can safely say good bye to those A320neos :(

    ReplyDelete
    Replies
    1. Anonymous10:31

      They already started paying for those but I also wonder if they will have enough to finance the entire thing. Especially now.

      Delete
    2. Anonymous14:43

      Advanced payments for neos are being made now but this is a small portion. The majority will be payed after the aircraft's delivery and that won't be until 2022.

      Delete
    3. Anonymous14:46

      They don't have the funds to finance a fleet modernization on their own.

      Delete
  14. Anonymous10:18

    Last year Bajic said company will go bankrupt if they are not sold.

    ReplyDelete
    Replies
    1. Anonymous10:22

      No, he said it would go bankrupt if they didn't get 33 million, which they did.

      Delete
  15. Anonymous10:19

    Isn't it an election year in Croatia? I doubt the government will let OU go bankrupt.

    ReplyDelete
    Replies
    1. Anonymous10:20

      People said the same about Adria. But here we are.

      Delete
    2. Anonymous10:27

      The government that was in power when Adria collapsed is no longer in power.

      Delete
    3. Anonymous10:30

      Adria was privatelt owned. Completely different then OU.

      Delete
    4. Anonymous12:58

      owned by the german mafia.

      Delete
  16. Anonymous10:29

    Just you wait. I have a feeling a "restructuring plan" is on the horizon.

    ReplyDelete
    Replies
    1. Anonymous10:31

      Black hole is OU

      Delete
    2. Anonymous11:02

      A proper restructuring of the company wouldn't be such a bad idea.

      Delete
  17. Anonymous10:31

    Shame :(

    ReplyDelete
  18. Anonymous10:38

    Their only option now is to sell aircraft.

    ReplyDelete
    Replies
    1. Anonymous10:41

      Do they still have anything to sell?

      Delete
    2. Anonymous10:41

      There are Heathrow slots too.

      Delete
    3. Can they sell the management? :) Maybe some gullible Gulf state will pay big money for them.

      Delete
    4. Anonymous13:30

      Hey, it worked in the past ;)

      Delete
  19. Anonymous10:41

    My guess is the worst will happen now. They will start selling OU piece by piece until the actual airline is worthless. Pitty.

    ReplyDelete
    Replies
    1. Anonymous10:42

      The maintenance division could be of much greater interest to a potential investor than the airline itself.

      Delete
  20. Anonymous10:43

    Difficult road ahead.

    ReplyDelete
  21. Anonymous10:46

    Time to stop playing around and replace this management, they have wasted enough time.

    ReplyDelete
  22. Well something tells me that they will cancel the a319 and DH - 8 - 400 dry lease.

    ReplyDelete
    Replies
    1. Doubt it, they took they both on long term so they might not fly much this year (depends how the situation develops) but it will probably cost them more to now cancel the leases.

      Delete
    2. I think I will disagree with you. It's better to lose the first payment in advance they might have done for that contract, than to lose the every month money they have to give. Don't forget that a a319 relatively new costs at least 100.000 dollars per month.

      Delete
    3. They signed a long term lease and have trained new crew. Doubt a lessor would allow OU (or any airline) to walk away from a long term lease without penalty.

      Delete
    4. I really don't understand you. What other penalty do they have to pay? I just told you they will lose the first payment in advance they might have done. What else? You think that the leasing companies are nazis? Come on give me a break. As the train of the new crew it's being done from the airline not from the leasing company.

      Delete
    5. Anonymous19:08

      " I just told you they will lose the first payment in advance they might have done. What else? You think that the leasing companies are nazis?"

      Dry leases are normally done for couple of years, as it involves a lot of costs on both sides of the agreement. And there is normally not many reasons why a lessee (airline) can terminate such agreement, at least not without paying most - if not all - the remaining part of their obligations under the lease agreement.

      Delete
    6. I'm waiting for an example that an airline paid the whole amount of the leasing agreement that had canceled to a leasing company. Personally I have never heard anything before and I work in the aviation industry. (logistics in Athens Airport).

      Delete
  23. Anonymous10:48

    I give them a year.

    ReplyDelete
  24. Anonymous10:49

    They should have saved the money from the government instead of opening pointless Podgorica and Sofia flightsm

    ReplyDelete
  25. Anonymous10:53

    I don't understand that it is that hard to get interest for OU. Fleet is relatively modern, you have a nice domestic network which is supported by the government and huge market during the summer. The biggest issue to overcome is seasonality. But still, OU isn't a bad investment. I don't understand that they haven't managed to find anyone.

    ReplyDelete
    Replies
    1. Anonymous10:55

      OU had a chance before major changes in the region. They have become far less attractive now.

      Delete
    2. Anonymous10:59

      You mean before JU becoming main player in ex-Yu?

      OU jets are 20 years old

      Delete
    3. OU is an awesome private piggy bank which they just pretend to want to sell. Since the year 2000 35 billion USD is unaccounted for in Croatia it was reported recently.

      Delete
    4. Anonymous14:44

      It also depends if there is interest on the market to purchase airlines. In this kind of business climate, definitely not.

      Delete
  26. Anonymous10:57

    And here people were writing how LOT, Aegean, Nostrum, Turkish, Lufthansa, Garuda were all interested.

    ReplyDelete
    Replies
    1. Anonymous11:05

      Now we see reality.

      Maybe Aegean only was interested but after they saw books they ran away.

      Delete
    2. Books no, conditions for the sale, Yes.

      Delete
    3. Anonymous15:13

      And books are in terrific state?

      LOL

      Delete
    4. OU can still be turned around if whoever buys is aloud the flexibility to fix the airline. I can just imagine the stupid conditions the Croatian government would put to any sale. This would scare off any investor more than the amount of debt OU has.

      Delete
  27. Anonymous11:01

    And I assume privatisation advisors will be paid again?

    ReplyDelete
    Replies
    1. Anonymous11:03

      Of course

      Delete
    2. Anonymous11:32

      As far as I remember it was said they won't be paid unless there is a positive outcome.

      Delete
    3. Anonymous11:41

      They were apaid for all previous attempts where there was no positive outcome.

      Delete
    4. Anonymous17:42

      Well the advisers can claim that they could not do their work because the government decided to suspend the process.

      Delete
  28. Anonymous12:46

    This government has done a terrible job at managing Croatia Airlines. Annulled tenders to select the airline's CEO, failed privatization, failed to launch PSO tender...

    ReplyDelete
    Replies
    1. Anonymous12:47

      And if it wasn't for this government giving them 33+ million, it would be bankrupt. So it is not all as it seems.

      Delete
    2. Governments always do a terrible job running anything. This is why successful countries usually have 'small government' and have mostly privatised and government owned business/institutions.

      Delete
  29. Anonymous12:47

    OU's last chance was 4K Invest. Now that they are out of the picture, I don't see any perspective buyer.

    ReplyDelete
    Replies
    1. Anonymous12:52

      Wait...

      There are Garuda, LOT, Aegean, Air Nostrum, Lufthansa, Turkish...

      All waiting to buy Croatia Airlines.

      Delete
    2. LOT just bought Condor which might bankrupt next after flybe. LOT must take care of itself. Liquidity is now the issue for every airline.

      Delete
  30. Anonymous12:48

    I think the government as an owner is not a good thing. OU definitely needs a change.

    ReplyDelete
  31. Anonymous12:52

    No surprise at all. This is what OU's actual CEO Ivan Misetic wants (Bajic is just there to represent Misetic's interests).

    ReplyDelete
    Replies
    1. Anonymous12:59

      There is an article on that.
      http://www.dnevno.hr/vijesti/hrvatska/povjerenica-za-informiranje-prizemljila-croatiju-airlines-1120505/

      Delete
    2. Anonymous13:06

      Cosa Nostra

      Delete
  32. Anonymous12:53

    Wasting more money on consultant's without any action taking place!

    ReplyDelete
  33. Anonymous12:54

    As I expected from the day they said they would privatize it. Nothing happened. They wasted money and will remain state owned.

    ReplyDelete
  34. Anonymous13:04

    It would be very sad for a national carrier of the country that has almost 15 million international tourist arrivals a year operates goes bankrupt.

    ReplyDelete
    Replies
    1. Anonymous13:09

      It happened to Cyprus.

      Nothing new

      Delete
  35. Anonymous13:20

    The OU privatisaion saga continues.

    ReplyDelete
    Replies
    1. Anonymous13:23

      This really is turning into a saga. The government has to cut the cake and decide what to do with OU.

      Delete
  36. Anonymous13:21

    And here I was hoping we would finally see Croatia Airlines privatization completed in 2020.

    ReplyDelete
    Replies
    1. Anonymous14:41

      Same story from government each year.

      Delete
    2. Anonymous16:16

      If you look at this site from 5, 6, 7 years ago, there were always news about privatization of Croatia Airlines. Nothing happens and then privatization effort restarts in a year or two...

      Delete
  37. Anonymous15:22

    Now they have again a reason to go on with the buddy-buddy, strina-, tetka-, stranka-, veza-business.....

    ReplyDelete
  38. Oil is about to crack $40 per barrel. Some relief for the airlines.

    ReplyDelete
    Replies
    1. Anonymous17:41

      I don't think it will manage to make up for the losses airline's are currently experiencing.

      Delete
    2. Anonymous19:12

      Hardly a solution when most of your fleet is leased.

      Even airlines with fuel-efficient and owned fleet, such as Ryanair, are cancelling flights. Probably because they know they can't come even close to breaking even with the bookings they are seeing for the next weeks/months.

      Delete
  39. Anonymous17:41

    Expected.

    ReplyDelete
  40. Anonymous18:09

    Why are most of you so sceptic? Just because there were several delays doesn't mean it's the end of the world. You all saw what happened with flybe when it was handed to Air Connect or with Jet Airways and Air Berlin when they were handed to Etihad.
    There is no rush or urge to privatise a carrier - OU is not in such a tragic condition nor was there a need to rescue it, similar to Malév for instance.

    ReplyDelete
    Replies
    1. Anonymous18:10

      CEO said last year airline can't survive without 33 million euros.

      Delete
    2. Anonymous18:24

      If it won't be sold, cash injection from last year will be illegal under EU State aid rules. EU decision will probably be similar to the case of Tarom, which must fully repay the loan in six months.

      Delete
  41. Many airlines will just not survive the virus. Lufthansa just cut its capacity by 50%. Many companies will need support of the state. This is reasonable decision by Croatia government.
    On the other hand it will be very difficult to sell any airline in the coming years. Firms will be bankrupting and consolidation will be done through taking the slots and airplanes rather than existing companies.

    ReplyDelete
  42. Anonymous12:02

    Call me an idiot or stupid but it would make sense that regional carriers such as OU and JU cooperate much more. They have many lines In the region and similar interests. They are too small to play a big role in this small market. Of course, the political situation would never let this happen but I am sure this would work. I’m not thinking on a merge but more code share, handling, maintenance, slots etc

    ReplyDelete

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