EU approves state aid for Croatia Airlines


The European Commission has found a Croatian grant of 11.7 million euros to Croatia Airlines to be in line with European Union state aid rules. Last month, the Croatian government approved the sum in the form of a direct grant, as well as an additional 46 million euro injection into its national carrier through a capital hike. The 11.7 million euros sum is aimed at compensating the airline for the losses directly caused by the coronavirus outbreak and the travel restrictions introduced by Croatia and other countries to limit the spread of the virus in the period between March 19, 2020 and June 30, 2020. This forced Croatia Airlines to cancel most of its scheduled flights and resulted in major losses in turnover. 

In a statement, the EU’s executive branch said, “The Commission assessed the measure under Article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU), which enables the Commission to approve State aid measures granted by Member States to compensate specific companies or specific sectors (in the form of schemes) for the damages directly caused by exceptional occurrences, such as the coronavirus outbreak. The Commission found in particular that the Croatian measure will compensate damage that is directly linked to the coronavirus outbreak. An independent external audit firm will verify that the aid does not exceed the amount of damage suffered during the period between March 19, 2020 and June 30, 2020”. It added, “Following the audit, any public support received by Croatia Airlines in excess of the actual damage suffered will have to be returned to Croatia. The risk of overcompensation is therefore excluded”. 

The Commission also found that the measure is proportionate as the compensation does not exceed what is necessary to make good the damage. On this basis, the Commission concluded that the Croatian measure is in line with EU state aid rules. 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. The 46 million euro capital hike, which the government says is in line with the European Commission’s temporary framework for state aid measures to support the economy in the current Covid-19 outbreak, will be approved by the carrier at its shareholders meeting on December 14. It is aimed at returning the airline’s capital to pre-Covid levels i.e. to the same levels as on December 31, 2019.




Comments

  1. Anonymous09:02

    What happened to 33 mil EUR given as "loan" to OU before pandemic? Are they also approved?

    ReplyDelete
    Replies
    1. Anonymous09:40

      It was given under the condition that the airline is successfully recapitalised by the middle of this year. Since that is not possible because of Covid, I don't expect any repercussions for that.

      Delete
    2. Anonymous10:52

      I would not be that sure. EC surely won't be playing "pojela maca" game with OU.

      Delete
  2. Anonymous09:04

    Do they also have to approve the capital hike?

    ReplyDelete
    Replies
    1. Anonymous09:07

      I'm wondering this too. That's where most of the aid (which doesn't seem needs to be rapid) will come from.

      Delete
  3. Anonymous09:04

    Good. They need all the help they can get.

    ReplyDelete
  4. Anonymous09:05

    Just 12 million for the 3 months? YM got 35 million!

    ReplyDelete
    Replies
    1. Anonymous09:12

      And YM is on the verge of being grounded even with that help. That says more about YM than OU.

      Delete
    2. Anonymous09:39

      Yes but OU has received quite a lot of cash over the years, either from direct injection by the government (€100 million was the first post-EU one) and then there was the income that came from selling family valuables such as Preso prevoz or LHR slots. None of these were used to make OU more competitive, just to maintain status quo and that's the biggest problem here.

      Delete
    3. Anonymous10:44

      In December last year OU got 13 million just from the first tranche of the state aid. Then they got another 20.2 million this year from the second tranche. Now 11.7 million to cover Covid losses for 3 months and in 2 weeks another 46 million.

      Delete
    4. Anonymous13:43

      Only thing that OU got for "free" was 106 mil. In 2012. Selling these asetts was used for expansion and liquidity.

      Delete
  5. Anonymous09:07

    This won't be enough.

    ReplyDelete
  6. Anonymous09:08

    Hopefully they use the money wisely.

    ReplyDelete
    Replies
    1. Anonymous09:08

      The money has been used to pay for wages and suppliers.

      Delete
    2. Anonymous09:12

      I'll say it again. Something 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.

      Delete
    3. Anonymous10:12

      Speaking of restructuring, what happened with OU's last restructuring process? where did those 100+ million euros disappear.

      Delete
    4. Anonymous10:13

      Paying of loans, suppliers, wages, engines...

      Delete
    5. Anonymous10:53

      According to official OU information it was around 140 mil EUR at that time. Huge

      Delete
    6. Anonymous12:55

      It was about 106, not 140.

      Delete
    7. Anonymous14:54

      Dokapitalizacija od strane Vlade RH kroz pretvaranje duga u kapital = 652 mil HRK
      Dokapitalizacija od strane Vlade RH pretvarenje duga u kapital - kamate na protestirana jamstva = 210 mil HRK
      Dokapitalizacija od strane Vlade RH kroz pretvaranje duga u kapital 2 rate BLB kredita u 2013 = 150 mil HRK
      Ukupan iznos dokapitalizacije (sa 47mln kuna ZLZ) = 1.060 mil HRK

      1.060 mil HRK = 141,33 mil EUR

      Where do you see 106 mil EUR?

      Delete
    8. Anonymous16:45

      From where did you get that? This blog was usually reporting 120 or 106.

      Delete
    9. Anonymous21:59

      So when you have facts against projects of Serbian Goverment your comments got removed?

      Delete
    10. This article is related to Croatia Airlines. In case you missed that, please re-read the article.

      Delete
  7. Anonymous09:09

    Good luck

    ReplyDelete
  8. Anonymous09:09

    So in 2 weeks when government buys more shares in OU, OU will be in the same position money wise as it was before the crisis?

    ReplyDelete
  9. Anonymous09:10

    Add to that new PSO funding which will be larger than the previous one. If the government get its act together and starts the tender.

    ReplyDelete
    Replies
    1. Anonymous09:33

      Where did you get an info that it will be larger?

      Delete
    2. Anonymous09:35

      Any word on when the government will start tenders for PSO funding. Original contract expired in March, they just keep extending the same terms.

      Delete
    3. Anonymous09:39

      @9.33 I guess he concluded from the fact that it will include 2 more routes. But you are right, there is no mention of the total sum
      https://www.exyuaviation.com/2020/05/croatia-adopts-new-pso-routes.html

      Delete
    4. Anonymous11:02

      So, actually the purpose of PSO is that Goverment pays for empty seats on all domestic routes?

      If OU sells all seats they will get no PSO money , but if they sell 50% of seats they will get 50% back from the Government.

      Is it correct?

      Delete
    5. Anonymous11:05

      No, you get compensation per pax. Largest compensation is €599,17 per pax for Osijek-Zagreb route.

      Delete
    6. Anonymous11:07

      So per paassengers that flies on that day?

      Delete
    7. Anonymous11:08

      Yes

      Delete
    8. Anonymous11:13

      So if the plane is empty they are getting no money at all? It sounds strange.

      Delete
    9. Anonymous11:13

      DBV-ZAG €12,59 per pax
      SPU-ZAG €22,36 per pax
      ZAG-ZAD-PUY €177,55 per pax
      ZAG-BWK €74,88 per pax
      OSI-DBV €53,11 per pax
      OSI-SPU €47,30 per pax
      OSI-ZAG €599,17 per pax
      OSI-PUY-SPU €120,32 per pax
      OSI-RJK €234,88 per pax
      RJK-SPU-DBV €204,72 per pax

      Delete
    10. Anonymous11:16

      If the plane is empty they cancel the flight. But since the operative costs are very low for these routes then it's enough to have just a few passengers to make a profit. On top of that some local city authorities, like Dubrovnik for example have a set amount of tickets pre purchased on all flights.

      Delete
    11. Anonymous11:22

      Thanks for detailed explanation per routes.

      I thought they get compensated per empty seat...It seems now that 30% of sold seats brings less money from Government than 90% of sold seats. Shouldn't they cover the costs where sales is bad and not opposite?

      Sorry, I am just trying to figure it out

      Delete
    12. Anonymous12:56

      It is payed per flight not per passenger.

      Delete
    13. Anonymous14:35

      Haha,now the confusion is in full swing!

      Delete
    14. Anonymous16:50

      PSO is never payed per passanger. It is always per flight or capacity. These are just calculated amounts given per passenger in some year.

      Delete
  10. Anonymous09:15

    I really hope that this money will be strictly monitored like it says in the article. The last restructuring was an absolute failure and those 106 million were obviously not used in the way they were supposed to.

    ReplyDelete
    Replies
    1. Anonymous11:02

      According to some sources it was 140 mil EUR

      Delete
  11. Anonymous09:16

    This goes to show the double standards of the EU. Don’t get me wrong, I’m happy Croatia Airlines will live another day but others weren’t so lucky to have understanding from EU over aid, like Malev for example.

    ReplyDelete
    Replies
    1. Anonymous09:17

      They had less competent government.

      Delete
    2. Anonymous09:23

      The better example of double standards is Alitalia which has the luxury of getting endless state aid.

      Delete
    3. Anonymous09:24

      Like with a lot of things, it comes down to politics. Of course Alitalia gets endless aid because Italy is one Europe's biggest economies. Of course Croatian aid is approved because Croatian government is very compliant and cooperative with the EU and most importantly CDU which runs the show.

      Delete
    4. Anonymous09:41

      Well no one knows how much money LO is getting from the Hungarian government to operate a base in BUD. EU choese to turn a blind eye when it's convenient for it. There is a good reason why the UK is leaving.

      Delete
    5. Anonymous10:03

      Agree with anon at 9.24. Who knows what other favour Croatia has done for EU, simply by voting for some motion. It's tit for tat.

      Delete
  12. Anonymous09:17

    The state owns the company and wants to invest. Seems normal to me.

    ReplyDelete
    Replies
    1. Anonymous11:03

      Very normal. LOOL

      Say it to Cyprus Airways

      Delete
  13. Anonymous09:18

    Letting OU go bust would cost the government much more. Especially the compensation it would have to pay ZAG concessionaire.

    ReplyDelete
    Replies
    1. Anonymous09:34

      +1

      Delete
    2. Anonymous09:42

      Has ZAG upheld their end of the bargain? They did not fully expand the terminal and they did not really bring that many new carriers, many have left even before covid.

      Delete
    3. Anonymous09:47

      They have actually. Project was downsized when the concession was awarded, so if the government had a problem with it they could have ended the concession and given it to the second placed company. The whole tender was very unprofessional, which probably means it was awarded to the French on purpose because of political reasons. Based on the concession terms, the terminal gets expanded when passenger numbers reach a certain number, which hasn't happened yet.

      Delete
  14. Anonymous09:18

    Bravo EU

    ReplyDelete
  15. Anonymous09:22

    11.7 million really isn’t a big sum in the grand scheme of things.

    ReplyDelete
  16. Anonymous09:33

    OU 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
    Replies
    1. Anonymous11:05

      "They could have easily parked planes to save costs"

      And how would they pay the salaries if they had no income?

      Delete
  17. Anonymous09:34

    OU 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
  18. Anonymous09:34

    Why not? If the Italians and Germans can do so without any repercussions from the EU, then Croatia should do the same

    ReplyDelete
    Replies
    1. Anonymous09:42

      Tarom got €62 million with the blessing of the EU.

      Delete
    2. Anonymous10:14

      Yes but almost all airlines will have to pay back the money. I don't see any guarantees for that here.

      Delete
    3. Anonymous10:32

      The Corona Pandamic is a different thing. If any government would not help, we probably would not have any airlines left after the pandemic.

      Delete
  19. Anonymous09:41

    I'm OK with state aid to help otherwise viable airlines in this exceptional circumstances.

    Countries all over the EU are helping their airlines, no reason Croatia couldn't do the same.

    My hart goes for otherwise viable airlines in other parts of the world going bankrupt because there is no money or political will to help them.

    In case it's not obvious I'm happy the rest of the airlines in this region are getting help too.

    ReplyDelete
    Replies
    1. Anonymous17:55

      Slovenija je dokazala da se može bez nacionalne avio-kompanije. Ekonomska analiza pokazala je da nema tržišta za isplativu nacionalnu avio- kompaniju. Poruka lekcije glasi – ako je previše skup, džaba mu status simbola državnosti. Slično je mogla da postupi i Hrvatska. Da Vlada raspiše javni tender za povezivanje Hrvatske sa Evropom i svetom, propiše pravila i sufinansira avio-prevoznike s određenom sumom. Mogla je Vlada Hrvatske (ali nije htela) da zapuši usta svim patriotima koji nikad ne pitaju za cenu državnih simbola.

      Delete
    2. Anonymous22:46

      Lol sure anon 17:55, slovenija dokazala da se može brez avio-kampanije. Yeah, with 1 flight per day haha. Dream on!

      Delete
    3. Anonymous03:18

      Don't hate, Anon at 22:46. Those are not my words, they are of M.Brkic. I just replaced Serbia with Croatia. He is a fan of LH and wants Germans to take over aviation in the Balkans like they did in Slovenia:

      https://www.danas.rs/dijalog/licni-stavovi/slovenci-srbi-i-drzavni-simboli/

      Delete
    4. Anonymous06:34

      Brkic is a useless moron who has extremely limited knowledge of aviation. His articles are extremely dangerous because they educate the masses in the wrong way. He is the minister of desinformation, very simply as that.

      Delete
  20. Anonymous09:41

    Croatian Government knows what they're doing.

    ReplyDelete
  21. Anonymous09:59

    Hope it works out

    ReplyDelete
    Replies
    1. Anonymous10:13

      Don't worry. Croatia Airlines will be around for a loooong time.

      Delete
  22. Anonymous10:12

    Good news. OU gets aid and doesn't get punished for it.

    ReplyDelete
  23. Anonymous10:14

    To me the capital hike is much more interesting and important.

    ReplyDelete
  24. Anonymous10:46

    I'm really interested to see which direction OU takes in the future. The expansion over the last 4 years with a lot of new routes has been wiped out over night. None of the routes launched in the last 4 years are returning in 2021. The A320neos are being cancelled and the privatization has been cancelled. So it will be interesting to see what the future holds for this company.

    ReplyDelete
    Replies
    1. Anonymous11:22

      Yes, a lot of unknown for the future.

      Delete
  25. Anonymous11:13

    Maybe they can open a base in LJU now.

    ReplyDelete
    Replies
    1. Anonymous11:23

      Are you serious? They got aid to cover covid losses for 3 month period and you expect them to open a base in Ljubljana??

      Delete
    2. Anonymous11:57

      Dont forget 3x daily to TGD

      Delete
    3. Anonymous13:45

      Profesional also said flights to Kansas City, Pittsburg, Bangkok and Vancover. These destination will replace flights to LH airports.

      Delete
    4. Anonymous21:57

      What?

      Delete
    5. Anonymous23:03

      Exactly

      Delete
    6. Bas volim ove kompleksase koji stavljaju ljudima u usta rijeci koje nikada nisu rekli i koji istrzu iz konteksta i iz cijele slike samo segmente koji im odgovaraju, da bi one koji misle svojom glavom omalovazili, a sve to kako bi posto poto samo sami sebi dokazali da su u pravu i time pokrili svoju nesigurnost i pravdali uhljebnistvo. Samo naprijed, moze i jace sto se mene tice, to nikada nece promijeniti cinjenicu da je OU samo jos jedna velika propustena sansa, kao uostalom i mnoge druge tuzne hrvatske price

      Delete
  26. Anonymous12:05

    Good. At least we avoid another ex-Yu airline going bankrupt.

    ReplyDelete
  27. Anonymous12:05

    What sucks is that they are wasting taxpayer money for what? To get more of the same?

    ReplyDelete
    Replies
    1. Anonymous12:14

      Not the same. Worse

      Delete
    2. Anonymous21:56

      And what's your suggestion then? All airlines should go bankrupt because of covid.

      Delete
  28. Croatia Airlines was in problems before this pandemic...! The EU is throwing money down the toilet trying to help this national airline.. this airline is operated by thieves.

    ReplyDelete
  29. Anonymous12:44

    waste of money

    ReplyDelete
    Replies
    1. Anonymous21:55

      Much more money would be lost if they went belly up

      Delete
  30. Anonymous12:47

    One way or another it's the taxpayers who will foot the bill, either through direct state aid or government guarantees for a loan.

    ReplyDelete
    Replies
    1. Anonymous12:57

      +1
      Same story with every ExYu airline.

      Delete
    2. Anonymous21:55

      Exactly

      Delete
  31. Anonymous13:16

    These are quite high amounts for such a small carrier

    ReplyDelete
    Replies
    1. Anonymous15:06

      LH got 9 billion!

      Delete
    2. Anonymous16:53

      LH was PAYED 9 billion for goverment getting 20% of shares.

      Delete
    3. Anonymous21:55

      So taxpayers saved them with 9 billion.

      Delete
    4. Anonymous06:36

      LH also raised close to one billion while being owned by the government, so they got that with the guarantees of German taxpayers. Very nice scheme.

      Delete
  32. Anonymous15:06

    Things will get a lot worse before they get better. Croatia no longer allowing tourists into the country will hurt OU.

    ReplyDelete
    Replies
    1. Anonymous15:08

      I think EU citizens can enter with negative PCR test. The ban is for people from third countries.

      Delete
    2. Anonymous21:54

      Yes you are correct 15.09.

      Delete

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