Croatia Airlines hit by €23.1 million loss

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. During the first six months, revenue declined 52.4% to 48.3 million euros, while expenditure was down 37% due to fewer flight operations. The carrier’s losses widened, and passenger numbers declined during the first half of 2020 as a result of the coronavirus Covid-19 pandemic, which began in March. Croatia Airlines was one of the few carriers in the region to maintain services during global lockdowns by maintaining a daily rotation between Zagreb and Frankfurt between April 5 and June 11.

The company said, “Currently, the biggest internal risk impacting Croatia Airlines is maintaining liquidity in the coming period due to the cancellation of numerous flights - up to 90% in April and May, 80% in June, while the situation is not expected to improve in the coming months when Croatia Airlines makes the greatest share of its annual revenue”. It added, “In order to reduce the impact of the crisis, the company has undertaken a number of initiatives to reduce costs including the cancellation of a short-term lease for a CRJ1000 aircraft, cancellation of a long-term dry lease for a Q400 and the deferral of payments for the long-term lease of an A319 jet until next summer season. Out of the current thirteen aircraft and engine lease agreements, rates for eleven of them have been reduced by utilising a Power by the Hour Agreement [where the lease is accounted based on the number of hours the aircraft is utilised]. Also, costs have been reduced and payments deferred by other suppliers. We have reduced all kinds of investments, including the hiring of seasonal staff, deferral of promotional campaigns and the reduction of wages”. The carrier has also managed to delay payments on loans it has taken out with several banks.

During the first half of the year, Croatia Airlines handled 330.935 passengers, representing a decrease of 66%, or 629.685 travellers, on the same period in 2019. Of those, 83.618 passengers were carried on domestic flights, down 63%, while 244.382 travellers flew on international services, a decline of 66%. The remaining 2.935 passengers were carried on charter flights, down 84% year-on-year. However, charters accounted for only 1% of overall traffic. The airline operated 5.661 flights during the first half of the year, which is down 57% compared to the same period in 2019. A total of 7.536 flights were cancelled. The average cabin load factor stood at 58.7%, down 12.4 points. Loads were softer on international flights by 11.7 points for an average of 60.1%, while on domestic services they were down 10.7 points to 53.9%. The Croatian carrier previously estimated its passenger numbers would decline some 60% in 2020, while its annual losses would amount to thirty million euros.