Ryanair has submitted an appeal to the EU General Court against the European Commission’s decision last December to approve 11.7 million euros in state aid to Croatia Airlines aimed at compensating the carrier for losses incurred as a result of 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. The budget carrier filed the complaint in late February and announced the opening of a base in both Zagreb and Zadar in April. Ryanair has also filed state aid complaints against Air France, Lufthansa, Brussels Airlines, Nordica, Condor, Air Baltic, KLM and TAP.
In its complaint against the European Commission’s Croatia Airlines state aid decision, Ryanair said, among other things, that the EU’s executive branch violated specific provisions of the Treaty on the Functioning of the European Union and the general principles of European law that have underpinned the liberalisation of air transport in the EU since the late 1980s. The EU General Court has already dismissed Ryanair’s appeals against aid granted to Finnair and SAS. However, it should be noted that Ryanair has since developed new arguments for aid annulment, which has been included in the Croatia Airlines complaint, emphasising the violation of the general principles of air transport liberalisation and the obligation for the Commission to open formal investigation procedures.
In addition to the 11.7 million euros Croatia Airlines was given to cover losses incurred between March and June 2020, the carrier has also been granted 33.2 million euros as an equity loan by the government and has been recapitalised by the state through a 46.2 million euro cash injection in order to “return the airline’s capital to pre-Covid levels i.e. to the same levels as on December 31, 2019”. Croatia Airlines has said, “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”. Croatia Airlines registered a 47.3 million euro loss in 2020 after state aid and financial grants are accounted.
So it begins
ReplyDeleteNot unexpected, and any future aid will generate similar appeals. I don't see how OU can survive this...
ReplyDeleteAnd OU has already indicated they will need more. From the other day:
Deletehttps://www.exyuaviation.com/2021/05/croatia-airlines-registers-129-million.html
"The company is facing decreased demand for travel and ticket sales. Therefore, the question of liquidity may arise again in the coming period, especially when we take into account the uncertainty over the duration of this crisis. "
Of course they will need more, in Q1 they lost like 14 million which was covered from state aid, their bank accounts are slowly getting empty. Most of their flights are on Q400 to Star Alliance hubs.
DeleteI think they will dismiss Ryanair's case but what it shows is that it will be much harder to hand aid to Croatia Airlines in the future.
ReplyDeleteThere will always be PSO funding.
DeleteIt is far from being enough for them
DeleteAny word on when the government will start tenders for PSO funding. Original contract expired in March, they just keep extending the same terms.
DeleteAnd when I say March I mean March of last year!
DeleteWatch FR start applying for the PSOs as well. Could be the reason the government is not starting tenders. They are afraid someone other than Croatia Airlines and Trade Air might apply.
DeleteFR might launch domestic flights just for fun because then it would disqualify them from PSO subsidies. EU allows them only if no one can make them work normally.
DeleteIt would be actually great idea by FR.
DeleteHonestly, PSO for ZAG DBV is a scam. That route can work without subsidies even in winter especially on a turboprop. I won't even speak about SPU.
DeleteJust additional way of pumping the money in.
DeleteTime to privatize OU ASAP.
ReplyDeleteTo who exactly?
DeleteGaruda Indonesia or Emirates.
DeleteSure, OU is their top priority.
Deletewhy is this nonsense with Indonesia being repeated over and over again, what sense would it make?
DeleteI don't see any airlines investing in perpetual-loss making company with zero strategical advantage over their competitors.
DeleteAnon 09.20
DeleteBecause Croatian government announced that they are in talks with Garuda over a take over. Hopefully something comes out of it.
Tako je
DeleteNitko to iz vlade nije rekao već 8 godina.
Delete@9.41 stop spreading nonsense.
DeleteThe last time there was any mention of it was 2015. Time for you to move on. Everyone else has.
He is aware of it. He is just spamming.
DeleteNo, I am just a desperate romantic who believes in love and the relationship between Croatia Airlines and Garuda.
DeleteGaruda was ready to buy 49% of OU:
Deletehttps://www.exyuaviation.com/2013/08/garuda-croatia-airlines-logical-choice.html
I guess they should resume talks. OU needs access to the immense SE Asia market.
You're either new around here or trolling. Firstly, eight years is a lifetime in aviation and whatever was discussed in 2013 is utterly obsolete today. Secondly, to think that OU, who failed to capture and capitalise on its own coast and EU markets will somehow be saved by getting feed from SE Asia - a market where you'd have to compete against behemoths such as EK, QR etc. - is just plain delusional.
DeleteA couple of years ago, Slovenia was not allowed to help Adria Airways because the European Commission DID NOT allow it, today everyone invests in airlines because of the virus, double standards? Good luck OU
ReplyDeleteThe equity loan will have to be paid back?
ReplyDeleteIn theory, yes, it has to be paid back. But the government gave no details on the terms.
DeleteOU is no longer protected like a polar bear. I would be worried if I was them.
ReplyDeleteSoo many appeals filed recently agains TAP, SAS, LH and other and all rejected.
ReplyDeleteBecause in LH case, it wasn't aid, it was state loan that needs to be repaid with interest.
DeleteAre there any conditions for all this aid for OU?
ReplyDeleteNo
DeleteMost countries have made certain requests from their airlines in return for aid.
DeleteIt will probably be another grand restructuring plan.
DeleteThe amount of money OU needs just to cover their operations is getting bigger and bigger.
ReplyDeleteAnd here we have it. Proof that FR did not come to ZAG to co-exist with them or to serve unserved routes but rather to kill them and to take the market for itself.
ReplyDeleteI don't think OU has any mechanisms to fight them so the real question is how long can they survive with the cash they have on their hands right now and how valuable are their remaining assets.
Unlike BT or OS, they have no hub and spoke system which can provide them with transfer passengers. Also, it's worth noting that by opening all those non-stop destinations out of ZAG, there will be less of a need to transfer via LH Group hubs.
I really don't know how they plan on surviving the upcoming winter season.
They had so much time to get their shit together ... to build a business that could one day stay afloat and compete against the inevitable LCC onslaught ... but no, too comfortable and too busy doing absolutely nothing to future proof their business.
DeleteI know people have made many comments abt Poz iz Rijeke, but they guy is absolutely right ... this OU management should be held criminally responsible for pissing away a state asset and for putting a publicly owned business at risk due to poor and incompetant manaegement. We need to start making people accountable for their actions and unless we do, shit like this will continue to happen.
Nemjee - they have already put out a tender for consultants to help mgt see through the fog of what needs to be done in the winter and beyond ... don't worry, all is under control
DeleteI am afraid it is too late for any move that could save them. FR is here to stay and they were totally unprepared for it.
DeleteCroatia is just another example of the very bad economic situation in many state-owned companies in HR. The Croatian railway, for example, is a mega disaster
Delete:) :) :) :) 09.26 you made my day! I agree, consultants will fix it all :) :) :)
DeleteTowards the end of the summer season 2021 Ryanair will have an excess number of planes. It was so before covid, and now it is only worse. Instead of parking them as usual, they will use those redundant planes to open routes, wherever they can get subsidies for those routes to cover at least variable costs. Clever strategy. Croatia and ZAG are happy to give them these subsidies - why not use it?
DeleteWhat is next Ryanair does not care now (and does not even know now). If subsidies are lowered next year or the market rebounds elsewhere, they will move these planes to a different place, where it will make more financial sense. That is for sure and quite understandible.
Then Croatia will be left with OU with even emptier bank account or with nothing (if OU goes bust in the meantime). In the latter scenario all pax will be channelled through MUC or better VIE (OS has lower costs than LH). Given that all pax that were going direct to other places in Europe on OU, will now need to go via MUC/VIE, the volume to MUC/VIE may be higher, and may make financial sense for LH/OS.
I think Ryanair is hoping that OU won't make it to next spring. Like that they will bring ZAG to an awkward situation where they will have to extend the subsidies or maybe even offer them a sweeter deal. If OU is gone, FR can always propose to add a third plane but only for money or even lower charges.
DeleteIf I was ZAG management, I would have never negotiated with FR simply because OU is not able to act as a counterweight to their typical behavior. Similar to what JU is doing in Belgrade, BT in Riga, A3 in Athens and so on.
Winter is a lazy period for OU anyway. Therefore one winter will certainly not be enough for Ryanair to kill OU. Ryanair is not counting on that. They just take money that is available and that is it.
DeleteNeither JU nor BT could be a counterweight for airlines like Rynair. Actually one can say that BT is already under attack by Ryanair in Riga. Still I do not believe Ryanair wants to kill BT. Rather they have no clue what to do with redundant planes.
OU was already in bad shape before covid, now they are in a worse one especially since it's obvious demand in Europe won't recover until 2022. Don't forget that OU survived those lazy winters thanks to the money they made in summer. This summer they won't be making much of it for obvious reasons.
DeleteFR can be like locust, wherever they go they make sure nothing but them is left. That is why they are suing airlines left and right. They smell blood in the water and are going to ZAG because they know they can position themselves there long-term.
People tend to present FR like some traveling trickster that moves from one airport to the other. There are so many airports around Europe that have been working with them for decades now. Look at PFO in Cyprus. They are extremely happy with FR and both make good money one from the other.
FR hopes that by forcing OU into bankruptcy, they could become the new king in ZAG. By having the most important role there, they could also influence ZAG to make sure no one gets such discounts.
Of course, for that to happen FR needs to deliver... which they almost always do.
It's game on now ....
ReplyDeleteDumb move of OU to make a hissy fit about ZAG airport incentives to Ryanair ... this has only served to stir the nornets nest. Ryanair will now watch any Govt funds going into OU like a hawk.
And just for fun - once they base more aircraft in ZAG, watch them price dump just to put the knife to OU's throat ....
No good will come from this .....
It would be fun if they launched ZAG-FRA even without discounts just to piss off LH and OU.
Delete"Just to piss off LH and OU" - hahahahahah
DeleteCorona is a nice excuse to continue with state control and pumping tax payers money in this airline. It's good Ryanair will now be monitoring everything. I don't see any visible contribution from OU for the economy.
ReplyDeleteYou really think OU does not contribute to the economy? Who brings tourists to Croatia? Who maintains flights to Croatia on a year round basis when many airlines don't fly in winter?
DeleteWith only 18% share in Croatia air traffic OU is certainly not the main contributor to country's economy.
DeleteBy that logic Anon 09.18 the Croatian government should give state aid to easyJet since they are the busiest on the coast in summer. They are more important than OU in that sense.
Delete@An.09.18
DeleteLess than 20 percent of tourists come to Croatia by air. 18 percent is OU share in total air traffic in Croatia, it is about 10 % for for tourists visiting. So, OU brings to Croatia 20 % from 10 % of tourists - 2 percent of them. Is it really worth billions of taxpayers money? If you are uhljeb the answer is probably yes. For all others is no. And please save us from winter flying mantra because ALL winter flights are PSO and subsidised, so we don't need to be thankful to them they operate, we, the people pay for it
Get your popcorn out people - this is going to be fun to watch !!
ReplyDeleteProblem is once this one is done, I don't think there will be a Part 2 !
DeleteIt's not fun to watch, it's like watching a hurt seal being circled by a great white shark. You know the outcome of the situation already.
DeleteThere is no reason to rejoice. Every single airline in the region will be destroyed. Not at once, but one by one. And then you will fly on LH/OS or lcc.
DeleteOU was supposed to utilise the money they get to the last eurocent and try to get back to growth. Instead they spent it on external advisors to write them a report on how they are spending the money.
ReplyDeleteAt 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.
DeleteNewer Ceos are likely the best alternative.
DeleteOU should increase its presence in the local market with more regional flights offering good connections via ZAG, especially now when they are facing competition from Ryanair on key markets.
ReplyDeleteThe port is closed since that ship has sailed long ago.
DeleteSomething drastic needs to change at Croatia Airlines. 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 in 2019 (before corona). Now with Ryanair on their backs, it won't be easy.
ReplyDelete+100
DeleteCompared to what other airlines got among those listed as being sued by Ryanair, this is nothing.
ReplyDeleteYou should also compare the aid proportionate to the size of the company.
DeleteAnd that many of those airlines were profitable before Covid...
Delete...unlike OU
DeleteHow 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?
ReplyDeleteI think OU is already hurting from Ryanair's arrival. They have slashed their prices on certain routes they will be competing against Ryanair.
ReplyDeletean airline that reacts so inflexibly to the market and is not even able to connect Zagreb with politically and economically important cities like Berlin. or to offer more Balkan connections. Zagreb Rome still only via Split etc.
DeleteIt is bizarre of FR to file a complaint, while themselves are milking public funds to have their routed subsidised by local airports and communities, thus distorting competition. Bunch of hypocrites.
ReplyDeleteThe difference here is that those local airports and communities don't have a majority ownership of Ryanair, nor would they automatically pick Ryanair for subsidies if another airline wanted to fly the same route.
DeleteI love the phrase "distorting competition". Was Ryanair distorting competition when it flew to MBX and got some subsidies from local community?
If OU goes bust that means the end of transfer system at ZAG. It will become a purely O&D airport.
ReplyDeleteand this might happen very soon.
DeleteLook at ZAG departures these days. 90% of OU flights are to Star Alliance hubs or on routes that are PSO. If they go bust it's LH that will lose more than Croatia.
ReplyDeleteThis is a case of chickens coming home to roost ......
ReplyDeleteHow on God's earth did anyone let things get this far this bad ?????
BRING BACK KUCKO !
ReplyDeleteSeriously ?
DeleteKucko was just one name on the list of "generalnih direktora" who did nothing for OU, or did negative things, for their personal interest or to benefit their Masters
DeleteFuckers, they always want to destroy aviation. They complain to lh or anyone else. I hope croatia gouverment will now see why they are so bad and will bann them from zagreb or even other airports.
ReplyDeleteDestroy aviation? By making travel more affordable for everyone while making profit?
DeleteHe's probably an uhljeb who is afraid that he might lose his job. He should not worry his party will take of him.
DeleteUhljeb whose unreformed wing KPJ-KPH bolshevik mindset is seen in desire to ban doing business, and whose english language knowledge is reflected through repeatedly written "gouvermant" or double n in ban, writing nonsenses as always, on life support, literally, as soon he will be jobless
DeleteAnd no, I am not @An.12.52
DeleteYou know you can miss type sometimes.
DeleteAnd no I won't loss my job, but low coster are destroying charm of aviation. That's all what lccs are.
What charm of aviation? Sitting at home, knowing you could never afford to fly, like it was 50 years ago?
DeleteOne-way economy class ticket London-New York in 1960s in today's prices would be around $1600. Sounds great, right?
Majority of Croats can't afford today's economy class return ticket to New York in peak season anyway.
DeleteLuckily I am not among those who cannot afford distant travel. And if something destroys my charm of flying, that's transferring from widebody to OU Q400 in the basement of some European airport
DeleteAs a former employee in LCC, I can confirm that LCCs are destroying aviation industry from perspective of employee. When you have extremely cheap ticket that means someone else had to pay for that. That means your pilots and cabin crew had cheap contracts and worked their a*s off flying fatigued and 900h per year to give you ability to have cheap tickets. On the other hand, Croatia Airlines has decent treatment of pilots and bankrupcy of CTN would destroy one of few decent employeers in Europe. However I agree that organizational structure is extremely heavy in CTN and reorganization must happen in order to survive as current headcount in the offices for 12 aircrafts in a fleet is almost same as WZZ headcount for 130 aircrafts...
Delete"Croatia Airlines has decent treatment of pilots"
DeleteAre the pilots PAYING per hour to fly in the right seat of OU aircraft included in this?
@21:29, yes just like with all other low costers who are charging pilots to pay 30-45k eur to fly their aircrafts. However, CTN offers bonding for regullary employed pilots and they are not charged for it... The only difference is Croatia Airlines offers many benefits that other lccs don't like travel id, transportation from and to airport (forget about it in LCC), fair crewmeal on aboard compared with RYR who don't even provide you with water on 4 sector day or Wizz Air that gives you crewmeal that stays in aircraft for 10h on +30 and then you have food poisoning... Oh yes, I forgot to mention that their pilots are not flying 900h compared with LCC and with turnarounds of 25 min pushing pilots and cabin crew to the edge.
DeleteI don't know of any major LCCs in Europe that charge pilots per hour of flying, unlike OU. Type rating is a different story, but then again, OU doesn't provide that as well for those pilots anyway.
Delete@07:21 both EasyJet and RYR do that but they justify it by putting that into type rating price. Training agreement mentions only 500h so pilots do not have guarantee to work for them afterwards. So having 45k eur type rating or 50k type+line training is basically same s*it.
Delete@07:21 EasyJet and RYR charge for type rating 30-45k eur and training agreement says its only 500h of line training. So they don't have any guarantee to work after 500h. Basically line training+type rating or type rating alone for 50k eur is same thing...
DeleteLet's see how long it will take them to pull the plug on Zagreb.
ReplyDeleteWhy would they pull the plug?
Delete@16:17:
DeleteRyanair doesn't negotiate. They set the terms and then it's take it or leave it. If the government decides to support OU, Ryanair might demand more discounts form the airport. If ZAG doesn't oblige, Ryanair will pack their bags and move on. It has happened before.
Oh all you OU haters, OU will never go bankrupt.... I've been writing this for over 4 years on this blog site, but you keep on wanting this bankruptcy sooooo badly, keeps me wondering why some much trolling?! Croatia Airlines will get as much money as they want, and no EU will stop this, especially for the next 2 years since now COVID-19 aid is betting given to all airlines from all EU governments. Bankruptcy is not even on the horizon, no pun intended! ;-)
ReplyDeleteNever is a very long period, and Covid-19 won't last forever...
DeleteTypical uhljeb with HDZ mindset : destroying everything around, and accusing others who want things to be bigger and better, to be haters and wishing to harm and destroy, which is exactly what they are, and what they do, using public money.
Deletevery bitter discourse as usual, comes naturally from some...
Delete... individual able to comprehend and speak about bitter reality your Party created in whole of Croatia, civil aviation included
DeleteEverybody, I mean everybody laughs at your pessimistic unfounded "conspiracy theory" commentary. Unfortunately, you have lost a long time ago the capability of debating objectively (void of emotion) any aviation discussion. I hope you can recover from your rut, good luck, good luck buddy!
DeleteUhljeb na aparatima, trostruki prikljucak :) :) :) :) :)
DeleteI guess LH smelled the coffee and already seek for a replacement for their favourite Balkan slave airline !
ReplyDeleteAir Monty will feed that hungry greedy beast that is Lufty and when flying with them over Croatia i will wave the uhljebs goodbye !