Croatia Airlines awaits court’s Ryanair ruling


Croatia Airlines is awaiting the EU General Court’s ruling on whether the European Commission’s decision to approve an 11.7-million-euro state injection into the company last year was in line with the block’s rules. The case, brought forward by Ryanair, is likely to be finalised during the third quarter. The budget airline has filed similar complaints over state aid granted to Air France, KLM, TAP Air Portugal and Condor, all of which are related to Covid-19 assistance. The Luxembourg-based General Court has ruled in Ryanair’s favour in the above-mentioned cases but has held off on requesting the airlines to pay back the funds immediately.

Commenting on the matter, Ryanair said, “The EU Commission’s spineless approach to state aid since the beginning of the Covid-19 crisis has allowed member states to write open-ended cheques to their inefficient zombie flag carriers in the name of faded national prestige. The EU commission has hastily approved over thirty billion euros of discriminatory state aid since the crisis began”. Croatia Airlines was compensated with 11.7 million euro 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. Ryanair, which will open a base in Zagreb in late August, said last week Croatia Airlines is “irrelevant” in its decisions concerning the Croatian market.

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.


Comments

  1. Anonymous09:01

    The outcome of this ruling could determine Croatia Airlines' fate.

    ReplyDelete
    Replies
    1. Anonymous09:02

      It did not for KLM, TAP and many others so it wont for OU.

      Delete
    2. Anonymous09:04

      Well let's wait and see.

      Delete
    3. Anonymous09:17

      I agree with anon @9.02 but it will be much harder to hand aid to Croatia Airlines in the future.

      Delete
    4. Anonymous09:22

      There will always be PSO funding.

      Delete
    5. Anonymous09:27

      That won't be enough.

      Delete
    6. Anonymous09:32

      The amount of money OU needs just to cover their operations is getting bigger and bigger.

      Delete
    7. Anonymous09:47

      Of course it won't be enough, in Q1 they lost 14 million

      Delete
    8. Anonymous13:39

      So, what happens with PSO if another company launch the route, e.g. Zagreb - Dubrovnik/Split. Do they have to wait current PSO expires or not?
      Anyone knows?

      Delete
    9. Anonymous16:01

      Well PSO will be valid until the end but it won't get renewed the next time if an airline wants/can operate it without subsidies.

      Delete
  2. Anonymous09:02

    If they have to repay the money, the government will give them more.

    ReplyDelete
    Replies
    1. Anonymous09:03

      Umm I don't think that will be allowed.

      Delete
  3. Anonymous09:06

    Good luck OU.

    ReplyDelete
  4. Anonymous09:15

    Not unexpected, and any future aid will generate similar appeals. I don't see how OU can survive in the long term with Ryanair on its back all the time.

    ReplyDelete
    Replies
    1. Anonymous09:38

      The only solution would be to sell it, which I realize is impossible at the moment.

      Delete
  5. Vlad09:20

    I love Ryanair's direct language in these matters. No sugar-coating or beating about the bush.

    ReplyDelete
    Replies
    1. Anonymous09:22

      +100

      Delete
    2. Anonymous11:02

      The Irish people are always very straight to the point-type of people.

      Delete
  6. Anonymous09:20

    Ryanair's statement sounds like a comments someone would make here :D

    ReplyDelete
  7. Anonymous09:22

    Time to privatize OU ASAP.

    ReplyDelete
    Replies
    1. Anonymous09:27

      To whom exactly?

      Delete
    2. Anonymous10:05

      It's unfortunate OU didn't get privatized on time.

      Delete
    3. Anonymous10:11

      Garuda is the perfect choice. Asian connections.

      Delete
    4. Anonymous10:19

      I think if there was another 6 months before corona started, they would have been sold and would basically be someone elses problem.

      Delete
    5. Anonymous10:19

      Even if they were sold just before corona, the government would have ended up giving some sort of a loan.

      Delete
    6. Anonymous10:21

      They had so many chances to be sold and nobody wanted them.

      Delete
    7. Anonymous10:28

      Garuda is the perfect choice? lol . Regurgitating something you heard here years ago.

      Garuda is in a deep slump. They are negotiating the return half of their fleet back to lessors as well as launching a plan for early retirement of a large chunk of their employees.

      That ship has long sailed.

      Delete
    8. Anonymous10:47

      Such a shame Aegean didn't buy them. Would have been fantastic.

      Delete
    9. Anonymous18:03

      Just not for Aegean .
      It probably would have ruined them...LOL!

      Delete
    10. Anonymous00:48

      They were quite interested.

      Delete
    11. Anonymous07:44

      Yes, they were interested until they saw their books.

      Delete
  8. Anonymous09:27

    Ryanair are the ones that need taking to court for not refunding passengers who had cancelled flights. I predict Ryanair will go bankrupt by the end of the year, they are on a worse financial position then they would care to admit.

    ReplyDelete
    Replies
    1. Anonymous11:05

      Their latest financial report doesn't indicate any sign of upcoming bankruptcy, they've got about 12bn EUR in assets, and they outright own a majority of their fleet.

      Delete
  9. Anonymous09:27

    The equity loan will have to be paid back?

    ReplyDelete
    Replies
    1. Anonymous09:31

      In theory, yes, it has to be paid back. But the government gave no details on the terms.

      Delete
  10. Anonymous09:31

    OU is no longer protected like a polar bear. I would be worried if I was them.

    ReplyDelete
    Replies
    1. Anonymous15:35

      Hahaha... beli medved.

      Delete
  11. Anonymous09:37

    Game on.

    ReplyDelete
  12. Anonymous09:37

    This is going to be interesting to watch.

    ReplyDelete
  13. Anonymous09:42

    To me the bigger issue is that the money they got was not used properly.

    ReplyDelete
    Replies
    1. Anonymous11:06

      It would be very naive to expect a company that has been surviving on perpetual state aid will be very frugal financially.

      Delete
  14. Anonymous09:44

    Summer isn't all that it promised to be and you can see that by the number of seats OU is offering which is around 80.000. This is not enough to make sure they have enough capital to get them through until better times arrive next year.
    Ryanair is already attacking them and the biggest attack will come when they open their base at ZAG. OU in my opinion is dead even before this ruling is made.

    ReplyDelete
    Replies
    1. Anonymous11:49

      I think so too. I expect more and more routes to be announced by FR with more pressure to be put on OU.

      Delete
  15. Anonymous09:47

    FR will become OU's biggest nightmare.

    ReplyDelete
  16. Anonymous09:48

    I think they will dismiss Ryanair's case

    ReplyDelete
    Replies
    1. Anonymous09:49

      It doesn't look that way. They are applying the same methodology for all airlines in this case.

      Delete
    2. They lost the case against SAS.

      Delete
  17. Anonymous09:49

    A couple of years ago, Slovenia was not allowed to help Adria Airways because the European Commission didn't allow it.

    ReplyDelete
  18. While I’m not a fan of the state aid. At the same time, the government chose to restrict entry and put in place the restrictions. They should therefore compensate those impacted. Ryanair is just upset that they are not getting a piece of the action. They have no government affiliations, so it’s no surprise they went out of their way to complain about the state aid that they weren’t getting.

    ReplyDelete
    Replies
    1. Anonymous11:08

      The issue is that the state aid is unproportionally divided.

      For example in Italy, Alitalia is only the 3rd largest carrier behind FR and EZY, yet which company is receiving tens of millions from the Italian government every month to stay alive?

      Delete
  19. Anonymous09:53

    Most countries have made certain requests from their airlines in return for aid.

    ReplyDelete
    Replies
    1. Anonymous09:59

      Are there any conditions for the OU aid?

      Delete
    2. Anonymous10:00

      Not that I'm aware of.

      Delete
    3. Anonymous10:03

      It will probably be another restructuring plan.

      Delete
  20. Anonymous10:00

    It's interesting how there are certain rules for airlines like Alitalia who can receive unlimited and then other rules for the rest.

    ReplyDelete
    Replies
    1. Anonymous01:00

      Alitalia is literally dying a slow death.

      Delete
  21. Anonymous10:04

    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
  22. Anonymous10:32

    Ryanair statements make my days day after day :)
    Direct, cruel, truthfull and honest...haha "spineless EU Commission"...priceless :)
    They are really vultures and I wish them to stay vultures as long as it is needed for legacies to wake up and realize that nowadays air traffic is a big bus with wings.
    I could not care less for "seamless service" and a cushion...give me price options (like JU), maybe connections and low price and I am all yours.
    Look at BEG-BER route! Prices before competition were 300 EUR round trip. Now? Now u can find tickets with JU for 80 EUR round trip! And for sure JU makes profit on that route because as soon as u start tweaking costs you realize that you CAN and MUST make additional revenues.
    For example - I booked 3 return to BER for 240 EUR. However, I needed one additional bag and I wanted to seat together with other pax on my ticket. Also, we ate a sandwitch and had a coffee on a flight. Total costs in the end were around 300 EUR.
    If return with easyjet was 80 and with JU was 100 i would choose easyjet. However, price your ticket low and rip me off later worked fine and I did not complain!
    Thats great strategy!

    ReplyDelete
  23. Anonymous10:47

    Hopefully they find some sort of solution and the EU does not rule in Ryanair's favor.

    ReplyDelete
  24. Anonymous10:51

    Regardless of the outcome 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 in 2019.

    ReplyDelete
    Replies
    1. Anonymous11:38

      +1

      Delete
    2. Anonymous11:38

      Starting with the management

      Delete
    3. Anonymous11:48

      True but unrealistic.

      Delete
  25. Anonymous11:22

    OU stands no chance there and everyone knows that, even they do.

    ReplyDelete
    Replies
    1. Anonymous11:48

      People have been saying that about OU for years yet here we are.

      Delete
    2. Anonymous16:03

      Yet all those years we didn't have FR in ZAG.

      Delete
  26. Anonymous11:48

    The Ryanair statement is epic :D

    ReplyDelete
  27. Anonymous11:50

    For those here advocating for Croatia Airlines' bankruptcy, they should remember that it would be extremely costly. Not only for Croatia's tourism industry but also for the fact that the government would then have to make payments to Zagreb Airport operator as stipulated in the concession agreement.

    ReplyDelete
    Replies
    1. Anonymous12:14

      I dont see a problem.
      OU shall be converted into a charter airline and support arriving more British, Norwegian, North German, Benelux, Russian travellers to their coast.
      Compared to Greece or Spain, Croatia has very little percentage of tourists that arrived by plane. And those who arrive by plane spend much more than those who arrived by car, bus or train.

      Delete
    2. Anonymous13:55

      During the tourist season OU's marketshare among coastal airport has been shrinking for years and OU now has a minority summer role.

      Delete
  28. Anonymous11:51

    It will be interesting to see what will happen. I don't like Croatia Airlines' chances.

    ReplyDelete
    Replies
    1. - Converting 4 units 320neo order for 3 units 321xlr and 1 unit 320n
      - Merging with Trade Air, getting 1 more 319 and 3 more 320
      - Use 320 mostly from the coast, open summer SPU and DBV base
      - Renegotiate Q400 lease, stop paying double lease to Misetic company
      - Lease at least 6 units EMB 170/190 for regional network
      - Organise proper waves with 3 daily regional flights from ZAG on EMB and Q400
      - Start at least 12 new regional destinations, most to the east, similar to JU model
      - Lease 2 units 330 to fill the gap until 321xlr arrives, start NYC, YYZ, ORD
      - in the second phase, with 321xlr introduce BOM and DEL to reduce seasonality
      - continue growing network, possibly keeping 330 in fleet, 2nd phase as well
      - hire professional management
      - get rid of uhljebs and excessive administrative workforce
      - make revision of all harmful contracts, get rid of "advisers" and "consultants"
      - change alliance, or renegotiate status within Star, from feeder to partner
      - use croatian equity funds for initial investment
      - use FR situation to renegotiate terms with ZAG

      Delete
    2. That's what they should have done long ago, and still can, instead crying for more money and awaiting courts ruling

      Delete
    3. Anonymous15:11

      Of all your ideas, the one I like the most is the suggestion for OU to merge with Trade Air. Now, that would not be so easy given that Trade Air is a private company so the Govt should sell OU to Trade Air. Let them take it for EUR1 - it really isn;t worth any more than that.

      Trade Air is an exceptionally well run company and would cut the fat, get it into shape and then develop a twin strategy of charter and scheduled services.

      That would also keep the airline within Croatian ownership and would finally get a good solution in place.

      Anybody have any thoughts on this idea ?

      Delete
    4. Anonymous17:12

      Pozdrav iz rijeke i njegovi mumbo jumbo planovi nas nasmijavaju svaki dan. Daj bože samo da više nema uhljeba i nepoznavatelja tržišta u OU. Bilo bi idealno.

      Delete
    5. Anonymous17:27

      Typical wishful thinking by pozdrav.

      Just one example: renegotiate status within SA from feeder to partner. Easier said than done.

      If you bring to the US >1 mln pax on your equipment (and on good margins), then there may be space for some discussion about your real status in the alliance. Without that, there are bigger boys in town coming from Europe and in real life their interest matters for the US airlines more than yours. The US airlines will prefer to do business with those bigger boys, whose interest conflicts with yours, so you will be trashed. You may have codeshares or alliances, but no real business will be done with you.

      Of course you can spend a lot of money and change an alliance only to learn that the rules are the same everywhere.

      Delete
    6. 17.12 & 17.27 - Uhljeb na aparatima LOL. Btw Gulivair and Neos will surely bring over mil pax to US, the same as Air Serbia, Air Azores, TAP and LOT do. LOL again

      Delete
    7. Anonymous07:05

      A simple math:

      200 x 2 x 365 = 146.000

      A DAILY flight on a 200 seater means 146.000 seats both ways PER YEAR.

      I don't know about TAP and LOT, but Ju had something like 80.000 pax to/from US in 2019. And Gillivair has zero.

      This just shows how clueless you are.

      Delete
    8. Anonymous09:05

      Pozdrav iz rijeke
      očito ne vidiš da kritiziram OU zar ne? al eto ti si najpametniji i svatko tko se ne slaže sa tobom je uhljeb.

      Delete
  29. JU520 BEGLAX13:32

    Time to step out of the EU and join EFTA. Same as for Serbia, which never should join EU but enter EFTA like UK, Norway, Island, Liechtenstein and Switzerland

    ReplyDelete
    Replies
    1. Anonymous13:46

      How would that resolve issues for Croatia Airlines?

      Delete
    2. @JU520 BEGLAX
      Buddy, I very often agree with you here on aviation stuff but I really don't believe you dare comparing Croatia and Serbia with Norway and Switzerland. EU is good way to go for poor countries, just not with corrupt and rotten leaders as we have, it's not about EFTA, it's about us

      Delete
    3. Anonymous17:01

      @JU520 BEGLAX

      OK, you found out an easy way to cut off all development funds that are flowing to Croatia, and then what? All this just to get a free hand to subsidise OU? Is this the top priority?

      By the way UK is no longer part of EFTA.

      Delete
  30. Anonymous13:46

    all governments across the world are saving their airlines. I don't know what FR is on.

    ReplyDelete
    Replies
    1. Anonymous13:56

      They have always been this way. Nothing new.

      Delete
    2. Anonymous14:23

      How dare they complain about their competitors receiving unlimited state aid, right?

      Delete
    3. Anonymous14:30

      Don't they receive millions from airports, local tourism councils etc...

      Delete
    4. Anonymous18:30

      The difference is they compete for that on the free market with all the other airlines.

      If they made 500m loss every year, you wouldn't see some small French airport covering their losses year after year.

      Delete
    5. Anonymous00:49

      ^True

      Delete
  31. Anonymous13:51

    I see quite a number of negative comments about pouring money to OU. Remember how this was done with JP? You were blaming it all the time and now look what happened.

    ReplyDelete
    Replies
    1. Anonymous00:38

      It's there where it is because it was unsustainable and living off state aid until it was sold and ultimately bankrupted.

      Delete
  32. Anonymous13:56

    The money that the state gives for OU is negligible compared to the money for other state owned companies.

    ReplyDelete
  33. Animosity16:06

    When your business model relies on state aid, and for OU it has since it's inception, it is only a matter of time until your finances catch up with you. The inept management always knew this but figured it will happen on someone else's watch. Therefore,
    corruption, graft, and incompetence were all inbred into OU, but the party will end soon.
    c'est la vie.

    ReplyDelete
    Replies
    1. Anonymous21:55

      True dat.

      Delete
    2. Anonymous00:28

      I agree. But the management gets rewarded with constant extensions to their contracts. As if they are doing an amazing job.

      Delete
    3. But they are doing amazing job for the Master, for the Mutti. Danke Deutschland!

      Delete
  34. Anonymous18:18

    After some years, when Ryanair has digested OU and gets bored with their once new toy Zagreb, they will look east and see an even bigger and tastier opportunity .

    Air Serbia but also Wizzair and Easyjet are fortunate to have got some years to prepare for that case and they should use them wisely !

    ReplyDelete
    Replies
    1. Anonymous20:08

      ^ Absolute correct. No reason to sit back.

      Delete
  35. Anonymous22:14

    I guess that Rynair is in financial trouble if, something as little as Croatia can provoke such a response

    ReplyDelete
    Replies
    1. Anonymous22:17

      It's not so much abiut Croatia Airlines. They filed cases against all airlines in the EU that got aid.

      Delete
    2. Anonymous22:23

      *about

      Delete
  36. Anonymous00:48

    OU would make more money if it focused more on charters.

    ReplyDelete
  37. Anonymous01:46

    Hopefully they don't rule against OU.

    ReplyDelete

Post a Comment

EX-YU Aviation News does not tolerate insults, excessive swearing, racist, homophobic or any other chauvinist remarks or provocative posts with the intention of creating further arguments. A full list of comment guidelines can be found here. Thank you for your cooperation.