The Croatian government will inject 46 million euros into its national carrier through a capital hike, as well as an additional 11.7 million euros in direct aid. Croatia Airlines will issue 35 million new shares which will be acquired by the state in order to “return the airline’s capital to pre-Covid levels i.e. to the same levels as on December 31, 2019”, the company said. It added, “This is one of the applicable financial support mechanisms Croatia has adopted based on the European Commission’s temporary framework for state aid measures to support the economy in the current Covid-19 outbreak”. The Croatian government already holds a 99% stake in the national airline.
Yesterday, the Croatian government also adopted plans to inject 11.7 million euros into the company in line with European Commission state aid rules. The funds will be forwarded to Croatia Airlines by the end of the year in order to cover the losses made between March 11 and June 30. Croatia Airlines registered a net loss of 32.1 million euros during the first nine months of the year, up from its loss of 6.5 million over the same period in 2019. During the first three quarters, revenue declined 59% to 71.7 million euros. The Croatian carrier previously estimated its passenger numbers would decline some 60% in 2020, while its annual losses would amount to thirty million euros. At this point, both targets are unlikely to be reached. The Croatian Chamber of Economy estimates Croatia Airlines will register a 52.5 million euro net loss this year, while it predicts losses during the first half of 2021 to amount to 25 million euros.
Croatia Airlines will authorise the capital hike on December 14 at its shareholders meeting. The company has drafted three different scenarios as to how the ongoing pandemic may affect its business, with estimates ranging between a loss of thirty million to 73 million euros by year’s end. It previously said, “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”.
There will be more of these.
ReplyDeleteThis won't be enough.
ReplyDeleteMore to come...
DeleteIt's the taxpayers who will foot the biggest bill from corona.
ReplyDeleteSame story with every ExYu airline.
DeleteAt least it seems that in all three ex-Yu countries with national carriers there is a consensus that the national airlines must survive.
DeleteAs they should
Deleteall governments across the world are saving their airlines.
DeleteLike in all other ex-Yu countries, the money OU is getting from the government is nothing compared to other state owned enterprises.
DeleteYet we never hear people bitching about those...
DeleteWell this is an aviation site so there is no reason why people would be complaining about other companies and not aviation companies.
DeleteAn aviation site on which most people want to see their national airlines go bankrupt. Crazy.
DeleteThese are quite high amounts for such a small carrier
ReplyDeleteYou might want to have a look at Montenegro Airlines.
DeleteEveryone is in the same boat.
ReplyDeleteHopefully they use the money wisely.
ReplyDeleteThey will use it to cover losses. Don't expect miracles.
DeleteAt least they will cancelled the A320neos. That would be a big waste.
DeleteYes, it would have been unfeasible. It's only a shame they spent 8 million on it already.
DeleteWell they couldn't afford them, but it's dangerous not to have a fleet renewal strategy, especially as OU's fleet isn't exactly young. Hopefully there will be a surplus of Neos for OU to source from at a cheaper rate.
DeleteThey have plan to take some newer leased planes.
DeleteGood luck
ReplyDeleteSo they expect a loss between 30 and 70 million?
ReplyDeleteFrom the article
Delete"The Croatian Chamber of Economy estimates Croatia Airlines will register a 52.5 million euro net loss this year, while it predicts losses during the first half of 2021 to amount to 25 million euros. "
Their initial estimate 3 months ago was 20 million.
DeleteHow many hospitals or schools could be built from this or how many villages in Slavonija could be saved with such aid?
ReplyDeleteIts not everything in schools and hospitals.
DeleteOf course and it would be ok if OU was a well run carrier but like this they waste money on projects that just collect losses. If Slavonija did better and if people were not leaving so much then OSI might have more flights. OU also lost the fight for the coast which is disastrous.
DeleteWell the majority of funds are being given on healthcare and hospitals. So your comment makes little sense.
DeleteOU lost battle on the coast? Can someone explain this nosense?
DeleteIt's the same guy that posts the same nonsense each and every time on Croatia Airlines-related topics, without actually having any clue of the situation on the market.
DeleteI guess shrinking marketshare on the coast is absolute success for some on here.
DeleteUnless you can explain how hospital and school buildings can help or even better how to "save" villages and why, your comment is completely retarded.
DeleteAnon 11:01
DeleteYou should know the difference between losing "the battle" on the coast and shrinking marketshare. These are two totally different things.
Also, i never understod people who complain about OUs marketshare on the coast while wanting from OU to leace the coast and operate routes only from ZAG. These 2 things are totally oposite.
Good I support this.
ReplyDeleteOU is a big contributor to the tourism industry. This summer the season would have been even worse without them. They deserve for the losses to be covered. They could have easily parked planes to save costs but then many other industries would have struggled even more.
ReplyDelete+1
DeleteWhy not? If the Italians and Germans can do so without any repercussions from the EU, then Croatia should do the same
ReplyDeleteMy two neighbours didn't get caught while driving drunk, I should do it as well.
DeletePretty much all of Europe is giving out aid to airlines. What would you suggest? Everyone go bankrupt? Want to be left with Wizz and Ryanair?
DeleteAny word on when the government will start tenders for PSO funding. Original contract expired in March, they just keep extending the same terms.
ReplyDeleteIf they want to do it for summer 2021 they should start the tender at the end of the month.
DeleteI wouldn't hold my breath.
DeleteThe government is again dragging its feet with PSO. The tender process takes 6 months and they haven't even started.
DeleteSomething drastic needs to change at this company. The last time they were given huge amounts of money they had to restructure and the end result was again new losses. It just led to the airline asking for more money last year.
ReplyDelete"The Croatian government already holds a 99% stake in the national airline. "
DeleteThe company's main problem.
Will the sale of shares impact on the future privatization process?
ReplyDeleteNo. What difference would it make if the airline is already 99% state owned?
DeleteAre there any conditions for this aid?
ReplyDeleteNo
DeleteMost countries have made certain requests from their airlines in return for aid.
DeleteIt will probably be another grand restructuring plan.
DeleteCompared to what other airlines are getting it is not that much.
ReplyDeleteYou should also compare the aid proportionate to the size of the company.
DeleteGood. The government being its owner should care much more about what's theirs.
ReplyDeleteIt is already theirs!
DeleteLOOL
Revenue for 2019 was 228 mln euro, so it is only 20% of that revenue. It is not much.
ReplyDeleteIt is difficult to compare what different airlines got, because some got loans/loan guarantees and some got equity, but for example:
Air France KLM got loans/loan quarantees in the amount of 10,4 bln euro, what compared to 23,2 bln euro of 2019 revenue, means 45% of that revenue.
It is not allowed by EU rules airlines which had losses before 31.12.2019 to be financially helped based on pandemia reasons
ReplyDeleteNo.
DeleteThe restrictions are different:
1) the aid should only compensate losses happening due to covid and not losses resulting from other circumstances, so you would typically compare the financial situation now and last year (bigger losses, turning from profit last year into loss this year).
2) the recipient of aid needs to remain solvent (ie aid should not go to recipients that have no future anyway).
It does not mean losses in 2019 as such preclude aid.
This applies not only in EU, but in whole European Common Aviation Area.
Never heard any of non EU airlines went belly up because EC ordered them to pay money back.
DeleteAnd the examples of Cyprus Airways, Malev and Estonian actually prove the opposite
Prove what? That outside eu all state aid is legal and therefore irrefundable? How one logically proves the other?
DeleteI will make it simple for you: which nom EU airline from ECAA went belly up because EC ordered them to pay back the money they got from their Governments?
DeleteYou see now?
How realistic is the option to take the necessary money away from every Croatian citizen and taxpayer and inject it into airline and to give every taxpayer share in airline? Then after the airline is stabilized the citizens would be allowed to sell or buy more of their shares to anyone interested and get at least part of their money back? This whole scheme could be called "Zajam".
ReplyDeleteLufthansa recently left ZAG as it was unprofitable for them. Croatia Airlines will offer service instead. OU has been a feeder for LH for a long time. OU operates feeder routes at a loss so that LH doesn't have to. As expected, EU approved Croatian taxpayers paying for those losses so German taxpayers don't have to. It's a beautiful world, let's all hold hands and sing Kumbaya.
ReplyDeleteAnd what kind of an alternative do you propose?
DeleteCroatia wants to have frequent connections a) domestically, b) to some of its key business partners, c) to hubs so that pax are able to transfer there to other places. This is what OU assures to the extent that Croatia can afford.
Short-haul in Europe is basically loss making for the legacies. Long-haul, and in particular profitable long-haul, is for OU out of reach and that for many reasons.
Totally wrong @An.15.15. Frequent connections means shuttle on hour between 2 or 3 domestic main airports, OU offers 2 or 3 daily, most other airports very poor connections with main hub, and no connections at all or couple weekly between secondary cities. Second, you cannot call business partner party which take advantage of you, which is exactly what "Mutti LH" and other bigger players within * are doing with OU, and third, only people who have Graz as center of Universe can claim OU cannot have profitable long haul "for many reasons". It's exactly the opposite - OU doesn't have long haul because it is "managed" by people whose World ends in Graz.
DeleteAnd @An14.44
Delete+1000
You seem to be absolutely detached from reality. Offering has to be tailored to the needs of the pax. You cannot do a shuttle with flights every hour, if the demand for that is absolutely not there. 2 or 3 daily from ZAG allow to catch most of the waves in MUC and that is a reasonable compromise, given what Croatia can afford. And, as you mention, this would be even less for other airports in Croatia than ZAG. Or otherwise you should triple the subsidies to OU.
DeleteAnd that would be even less than 3 daily from ZAG to MUC, if that flying is left to LH. And that is the reason, why Croatia is happy to subsidise and LH takes some benefit here.
By business partners I meant countries that Croatia does business with (import/export).
If you think that Croatia can sustain long haul by Croatia Airlines, pls tell me 1) how many indirect pax you have yearly ZAG-whatever-NYE or ZAG-whatever-ORD or on similar long-haul routes, and 2) how much money are these pax happy to pay more just to fly direct rather than indirect?
OU doesn't have long haul so ZAG offers incentives to Emirates, Korean, Air Canada, Air Transat. If that works for long hail, same could be done for short haul if OU wasn't there. Once coronavirus is gone offer incentives to LOT to make a base in ZAG similar to what they have in BUD, offer incentives to Wizz similar to SKP, offer incentives to other airlines similar to what LJU does. Require some airlines to base aircraft in ZAG and use CRO crew. All of this is much cheaper than burning cash for OU.
DeleteDomestic lines will always need PSO.
No airport in the world offers iniciatives to the airlines.
DeleteWho says flying to LH hubs is unprofitabile? There is no such a report which says OU loses money on flying to LH hubs while it makes money flying to non-LH hubs. We might now that OU loses 10 mil. € a year, but that doesnt mean all loses are made on routes to LH hubs.
Delete"OU doesn't have long haul because it is "managed" by people whose World ends in Graz."- what a great, wise and smart message with a lot of sense. You must be the most inteligent person in the world which ends in Graz.
Delete"No airport in the world offers iniciatives to the airlines"
DeleteDear Anonymous,
Owing to the fact that you have no clue how we operate, your job application at our our airlines has been declined,
Ryanair & Wizzair
No airport in the world offers iniciatives in terms of free cash. Airports do offer discounts sometimes to particular airlines, but never inciatives like money subventions. That is a job of local authoritaries, not airports. Idea of airports giving subventions to the airline is like owning a bakery where you pay people to eat your products, it has no any sense.
Deleteeveryone knows that, technicality. in the end airport is cheaper to fly to for an airline regardlless who and how is paying for it.
Delete@17.41
DeleteMy World begins in Graz, not ending. And in my World, I am just an average guy. They (or you) whose World ends in Graz are in most cases just and only "jajare", or "sold souls", with attitude that could be interpreted from your post
which small/medium european airline flies long distances and was profitable as a company before corona?
DeleteWizz, BUD to DWC.
DeleteLOT Polish
Delete@pozdrav iz Rijeke Lol, you're such a clueless boomer!
Delete@Michael
DeleteYou have every right to think completely different from what I think and firmly believe. In broader picture, Croatia as a country, together with its airline company, had marvelous opportunity to become important player in aviation and it miserably failed. Your incapability to see, or deliberate intention not to see that broader picture, simultaneousky insulting me, just proves my point. Cheers!
Just honestly asking: where is/was this opportunity for Croatia?
DeleteYou also didn't answer my questions about longhaul.
Anon 17:06.
Daily from Croatia to Philadelphia, Toronto and Dubai, two daily to Doha, 3 weekly to Seoul, scheduled, direct, plus Japan charters, other destinations by foreign carriers in announcement, scheduled and charter, half of the passengers on both OU and foreign carriers from both ZAG and coastal airports transferring to long haul in MUC, FRA, VIE ZRH, CDG, AMS, CPH, BEG, IST, ..., DL/UA/AC QF, CX, AI, SQ ccodeshares to Croatia on both OU and foreign carriers, Absolutely no strategy of any kind about national aviation, decision to feed others instead focusing on developing own network long time ago, nepotism and corruption, lack of synergy between flag carrier and its hub, if that's not enough to answer both questions, than I give up
DeleteAnd just one more thing : You might check Routeshop of top unserved destinations. Among 25 top unserved destinations from ZAG, you will find Chicago, Cleveland, Pittsburgh, Minneapolis, Kansas City, New York, Seattle, Vancouver..., with exact numbers. So no need for me to answer.
DeleteLOL.
DeleteYou mix indirect pax with data about local Croatian populations. OK, New Zealand according to routeshop has 40.000 population with some Croatian ancestors, so start one weekly direct with a technical stop in SIN from ZAG:) This is not a list of top 25 indirect routes with the number of indirect pax, but of 25 potential routes, mostly selected based on local Croatian populations (as per routeshop).
If people like you had anything to say in OU, OU would be long dead.
If people like me had anything to say in OU, OU would have been, with all state money it received so far, 3 times bigger, and contributing at least double more to overall society. But you have right to think differently, of course. And I will not comment nonsense of one weekly New Zealand at all. But speaking of daily EWR and daily BKK, under current circumstances, without covid of course, for the beginning, would be something completely different, and absolutely needed. Sorry you can't get it. And I will not LOL about you not getting it.
DeleteAnd what about winter? Are you procjeting multiple flights to everywere also during that season?
DeleteAfter reading your comments im really start to think how great OUs managment is comparing to how would you lead OU? You would fly daily flights to BKK and feed Thai Airways while OU is flying 3 daily to FRA and feeds LH. This second options seems far more less money losing then first one. And no, my world doesnt not ends in Graz...
DeleteIf Thai brings passengers from southern China, Philippines, Hong-Kong, Malaysia, Indonesia, even Australia for another carrier, OU in this case, than TG is feeder, not the other way round. As an expert, you should be aware at least of that. Interesting you don't mention NYC where UA could be feeder for particular service from more compact single market with multiple destinations. If long haul is less profitable than medium haul, than Mutti would fly Europe only, not opposite. Fequencies in winter :BKK year round, EWR reduced in winter by few weekly. And I am now ending this pointless conversion, just need to say praising existing OU "management" and saying your World isn't ending in Graz does not fit together. Cheers!
DeleteBut you said OU should fly to BKK, same as OU flys to FRA. There is not difference except in distance. But yeah, you are really smart and tolerant person. It is so better to fly daily flights with 250+ seater to destination which brings not more then 40.000 tourist then 3 daily to FRA. So much logic. You are so much better then them. And yes, comparing LH to OU has so much sense. If they fly long haul why wouldnt we. Size of the market or seasonality doesnt matter. Again, a lot of logic. Your world even ends in Leoben mate!!! Ok maybe not to that village but maybe even SALZBURG!!! Great job!!
DeleteOne more thing to add...
Delete"than Mutti would fly Europe only, not opposite"
LH flys non-Europe only? No short haul flights? They fly only long haul. Despite even LH managment dosent know they fly non-Europe only, you know.
I am not related to OU management now or in the past, but "pozdrav iz Rijeke" continues in this tread and elsewhere to treat them as if they were idiots. At the same time he claims that among top 25 unserved routes from ZAG are places like Cleveland, Pittsburgh, Minneapolis, Kansas City, Seattle, Vancouver... while these are just exemplary routes on routeshop without any numbers for indirect pax to Croatia and selected purely on some Croatian minorities living in these cities.
DeleteNow he claims that OU should fly to places like Philadelphia or Bangkok. Why? To carry some fresh air from other continents to Croatia?
Bangkok is a money losing exercise for most airlines. High costs, dirty cheap tickets, long rotation. Ask UIA.
Philadelphia - if you have a hub in Philadelphia you can fly from there to Europe, but if not, its a dead end for airlines. And pls don't tell me about potential transfers from other star alliance partners - absolutely none will help with those. OU is not a jv partner.
anon 17:06 and 9:41
Anon 16:59
Delete+1000
They are charging 300 eur for Amsterdam in November with hand baggahe only! Let it burn
ReplyDeleteYou're not giving any examples. Is this a RT? For which dates? And given that AMS is an important destination in ZAG, it's normal to have high prices.
Delete