Croatia Airlines has requested financial assistance from the government in order to alleviate the effects of the coronavirus pandemic. “In order to secure liquidity and sustainability, the company is in urgent need of additional financial resources that would cover the damage caused by Covid-19, in the form of subsidies or donations on behalf of the owner - the Republic of Croatia”, the airline said. It added that a financial injection is part of intensive negotiations with the state. The company also expects to get state guarantees in order to take out long-term loans. Croatia Airlines registered a net loss of 23.1 million euros during the first half of the year, up from its loss of 12.1 million in H1 2019. The carrier expects for its passenger numbers to decline 60% in 2020 compared to last year’s record of 2.179 million. As a result, it will likely handle under one million travellers for the first time since 1999.
Croatia Airlines has drafted three different scenarios as to how the ongoing pandemic may affect its business. “The first projections prepared for our crisis plan foresees a loss of thirty million euros on December 31, 2020. With this result we would have marginal liquidity. Therefore, in order to maintain sustainable operations, we would require additional funds through loans and state guarantees. The second cashflow projection, based on revenue levels being at 52% to that of last year, the suspension of some seasonal routes and a lower average cabin load factor, we project a loss of forty million euros. In case the crisis drags on and revenue levels reach 37% of last year, while border reopenings are delayed, which will result in lower demand at the start of 2021 and our schedule being reduced to significantly fewer routes, we could except a shortfall of 73 million euros”, the company noted.
The Croatian Ministry for Sea, Transport and Infrastructure has reiterated it will assist the country’s national carrier in the face of the coronavirus pandemic, with a solution expected to be presented to the public either next month or in October. Minister Oleg Butković said, “We will have to find a solution to help Croatia Airlines. Of course, we share the faith of all other European countries that are trying to save their national carriers. We certainly won’t back away from helping Croatia Airlines. We will find a solution that will be in line with European regulations. Once the situation stabilises, we will complete the process of finding a strategic partner”. Last month, the ministry said it may merge some airports and other state-owned enterprises into a holding with Croatia Airlines, noting that the entire aviation industry in the country has been hard hit as a result of the pandemic.
Tougher entry and travel rules by countries such as the United Kingdom, Austria and Italy have thrown Europe's long-anticipated August break into disarray, dealing a setback for Croatia Airlines. In the United Kingdom, quarantine measures have been reimposed onto Croatia, while Austria and Italy now require all arrivals from the country to possess a negative coronavirus PCR test. “Currently, the biggest internal risk impacting Croatia Airlines is maintaining liquidity in the coming period due to the cancellation of numerous flights”, the company said.
So basically one way or another it's the taxpayers who will foot the bill, either through direct state aid or government guarantees for a loan. Also it's very ambitious of them to be taking out a long-term loan, it's very risky.
ReplyDeleteCroatia Airlines will soon be history...
DeleteNo it want. It will continue to exist on tax payers money. This way or another, especially while HDZ is ruling party. They will never give up. They consider it national strategic asset. Whom ever asks why they throw money in it they will say that company worked for nation in COVID19 times (China flight, operations all the time to stay connected, tourism, jobs, etc.). Unfortunately all the louses inside the company will continue to suck blood and the result in few years will be the same. Just maybe they will cut staff but I hardly believe it. They promptly reacted at the beginning of crisis by letting go contractors, cutting salaries and unnecessary costs. This way they have a privilege to say that they gave their part in helping company
DeleteI am sure Governments of Hungary, Estonia and Cyprus also did not want their national airlines to go belly up but in these cases actually nobody asked them.
DeleteOn the same way nobody will ask anything CRO Government if EC says that OU needs to pay back all the money they got.
Simple as that.
I still don't understand why EC decided to bankrupt those airines while Alitalia which has got so much state aid is alive and kicking.
DeleteAZ is too big to dissapear as the carrier of important EU member.
DeleteFrom the other side OU is no bigger than any of airlines that did not make it. Its destiny might be the same.
Everyone is in the same boat.
ReplyDelete+1
DeleteI think the third scenario is most likely.
ReplyDeleteI think the second. Summer was ok until mid August.
DeleteWell they cancelled all seasonal flights from ZAG except Brac. So to me that falls within the third category.
DeleteIs ZAG-BWK doing well?
Deleteit's covered by PSO so it doesn't really matter
DeleteThese are quite high amounts for such a small carrier
ReplyDeleteThey ask for more while giving less and less in return.
ReplyDeleteI'm waiting for all the outrage, taxpayer concern, doom and gloom predictions and so on like we see for other airlines on here.
ReplyDeleteNo doom and gloom for OU here. Many experts are saying how OU cannot even make charters from LJU to Greece despite it is made for tourists agencies...
DeleteAt least it seems that in all three ex-Yu countries with national carriers there is a consensus that the national airlines must survive.
ReplyDelete+1
DeleteIt's unfortunate OU didn't get privatized on time.
ReplyDeleteyep it seems they needed like 6-12 months more before corona struck and they could have been someones else problem, or at least a shared problem :/.
DeleteI blame the govt for dragging their feet with this, oh and also blame this and all other governments for not caring or destroying OU on purpose with corruption.
Now again taxpayers will pay and nothing will get changed in OU...
They tried to sell it for years now but there were no buyers, there is very little benefit to spending millions on OU.
DeleteIt doesn't matter it didn't get privatized. What's important that each time there were "privatization advisers" with big fees.
DeleteThe privatisation consultant for the last ptivatization attempt did not get paid thankfully.
DeleteThey don't need to be paid, as their goal was to get profitable airports and ACI marines through pension fund.
DeletePrivredna banka in same time is biggest Croatia airlines creditor - conflict of interest
Privredna banka is 50% owner of pension fund with Croatia Osiguranje which is owned by Adris grupa biggest tour-operator in Croatia which has interest in airports and ACI for their prime business - conflict of interest
And nobody in Government cares. What more they support this.
With them needing this sort of money I just don't see Croatia Airlines setting up a base in Ljubljana.
ReplyDeleteOf course not.
DeleteSame story as with all other regional bases they announced over the years.
DeleteGood luck.
ReplyDeleteAt least they will cancel the A320neos. That would be a huge financial burden.
ReplyDeleteYes, it would have been unfeasible. It's only a shame they spent 8 million on it.
DeleteI think it was a pretty good decision. This order was placed a long time ago and certainly a 32N is not the best aircraft for OU. Obviously the perfect fit will be the A220. Economic and easier to sell seats year-round.
DeleteThat said, luckily enough OU has a pretty decent fleet age.
A320neo or A220-300 during the winter is literally same. It would just sit on the tarmac...
DeleteNo. A319 and A223 are more or less the same. But not A320 and A223. 140 seater is for sure easier to fill.
DeleteI said there is no difference between these 2 aircrafts when they sit on the tarmac during the winter.
Deleteall balkan airlines are a failure
ReplyDeleteAegean isnt
DeleteThat should be fixed to regional Balkan airlines.
DeleteNot really. Some of them didn't get that affected during Corona such as YM or FB.
DeleteAny airline that had to be grounded for 3 months is affected.
DeleteGreece is part of Balkans per se.
DeleteAegean airlines has a stock of over 400 million euros, so at least for now they can't be compared with any ex yu airline.
DeleteThe current situation of OU and many other Euro carriers is in jeopardy. Never has the world been in such a position. OU must utilise the money they get to the last eurocent and try to get back to growth.
ReplyDeleteNo, just close the airline. Same as with Adria. Waste of taxpayers money
Delete@anon 09:24
DeleteI am really happy that they are not acting like we did in case of Adria. At least they are connected with many destinations while LJU has 5 flights per day and even those have terrible schedule.
They have 5 because of coronavirus. At least they are not wasting money on it. Now is the right time to stop doing the same in Cro.
DeleteSo they expect a loss between 30 and 70 million?
ReplyDeleteYes
DeleteTheir initial estimate 3 months ago was 20 million.
DeleteGood I support this.
ReplyDeleteWhat benefit does Croatia have from endlessly pumping millions into OU?
ReplyDeleteIt's a big contributer to the tourism industry. Plus they would have a lot of issues with the Zagreb concession if OU went bust.
DeleteIt is useless for the tourism...
DeleteWhy not? If the Italians and Germans can do so without any repercussions from the EU, then Croatia should do the same
ReplyDeleteThe same rules don't apply for all countries. You should be aware of that by now.
DeletePlus they will get increased PSO funding.
ReplyDeleteIt's good to see the government behind OU.
DeleteThe government is again dragging its feet with PSO. The tender process takes 6 months and they haven't even started.
DeleteThere is something fishy about that. I doubt they are just lazy in starting the tender process.
DeleteHow the tune of some here has changed compared to yesterday...
ReplyDeleteyours too to be fair
DeleteConsidering this is my first comment today, I wouldn't say so.
DeleteTotally agree. The thrashers of yesterday have become sugarcoated optimists of today.
DeleteAnd all of them with excuses as
Delete- all the companies are in problem
- all the companies receive help
- national interest etc.
And yesterday we saw totally opposite comments even faulty calculations about the amount of money you received etc.
It seems their inspiration today is not so strong as yesterday. I wonder why?
Is someone metioning how OU is succesful airline with the future and improving results? No. So I dont have any conversation with anyone. If someone said that, I would show him that he is wrong.
DeleteI dont see any praises for OU here like yesterday for JU. Most of the comments are grim. Yesterday it was a fight between deluded fools who think JU is the best in the world and haters who want it to fail.
DeleteThat's because OU is a list cause and there is really no way to sugarcoat it without being delusional. That's not the case with JU though.
DeleteJU, OU and YM should merge into one big airline in order to survive. #UnpopularOpinion
ReplyDeleteThat wouldn't be bad in theory but in practice it could never work.
DeleteNope. I`d say JU should become a big airline and survive. I don`t think others could achieve that, honestly.
DeleteThe amount of money these three have received from the government among them is staggering.
DeleteIn some universe 3 Losers may make a winner
DeleteNo thanks. If there's anyone JU should consider merging with, it ought to be viable entities. As the dominant carrier in the ex-YU, it should avoid falling into a trap of dragging other defunct airlines up with its own resources.
DeleteFully agree. JU should follow its path.
DeletePath of money lossing carrier same as OU and YM...
DeleteIt is not the same.
DeleteBetween the carrier that is rapidly losing its market share on domestic, very popular, touristic market, makes copy/paste of its previous flight plan and still receives Government help and the carrier that also receives its Government help but increase network, fleet and the only one fly TATL without any second thought I choose the second one.
Here we go again.... Losing money is losing money no mater what. So it is on the same path if not worse. When Serbia enters in the EU you will se what will happend. State will not be able to finance their growth anymore...
DeleteCroatia entered the EU and Croatia Airlines keeps getting money left and right.
DeleteIt got 15 million last year because it needed to survive and politicians made it possible. EU would not be happy if they saw how someone is getting money every year for the expansion and taking larger piece of EU market.
DeleteIt got another 15 million this year. The 15 million last year was just the first installment.
DeleteIt is not the same. Again.
DeleteIf you invest in bigger fleet and in bigger flying network it will be paid back to you.
If you just use the money you get for nothing, that is exactly what you are going to get back.
JU has a concrete business plans that's showing promising signs since control was brought back to Belgrade. OU abd YM have no business plan and are merely living one day to the next. I can imagine one of the first things that would happen is JU 500 getting a stop in ZAG basically killing off its potential from Belgrade.
DeleteAnd when will they start making profit if they have a business plan?
DeleteIt's a non-profit organization just like OU
DeleteLOL +1000 to you anon 21:28. Truly great comment!!!!
DeleteI would give them the money but something DRASTIC needs to change at this company. The last time they were given huge amounts of money they had to restructure and in my opinion it was a complete failure because the restructuring didn't lead to a healthier business. It led to the airline asking for more money last year.
ReplyDelete+1 but I think its unrealistic
DeleteBIG facepalm. Despite ongoing pandemic I must, for the n-th time, point out that this company is just a waste of taxpayers' money. I don't want it to go bankrupt, but definitely to get rid of the inefficient and corrupted management. Replace them with competent people and there will be something of OU
ReplyDelete+100
DeleteDismiss the management.
And what will happen next year if they produce loss again. How will they cover it?
ReplyDeleteLet us all first survive this year.
DeleteFrom Government help. Illegal one.
DeleteJust give them this aid like every other airline and after that make them independent. If they dont no how, they will went in bankruptcy and everyone will lose their jobs. Its very simple.
DeleteThe current corona situation in Croatia won't help OU at all. If it was not in the EU, borders to the block would have been closed
ReplyDeleteExactly, we are back at 300 cases per day. Really bad.
DeleteCroatia's Q2 GDP drop was 12.5% which is huge. This is a waste of money on a business that will never get fixed.
ReplyDeleteIf this virus situation goes on for a couple of years impact on economy will be massive. Croatia Airlines will need hundreds of millions in the end. Much better to shut it down now while losses are smaller than to wait 2-3 years and do it then.
DeleteWell, they needed extra help at the time when everything was normal and we can only imagine how much money they would need now and who is going to pay all of it.
DeleteWe should really stop giving money to that carrier.
DeleteThe biggest surprise for me is that despite quarantine rules every day there are countless flights from Britain .
ReplyDeleteHow this is possible ?
OU should increase its presence in the local market for multiple short-haul flights to BEG, INI and KVO. The costs would be low and the return on investment would be high. It's really an untapped market.
ReplyDeleteIt should but it wont.
DeleteWho would they carry in Belgrade when JU has a hold on the market not just in ZAG but on the coast as well.
Delete