Croatia to grant €45.4 million in airline aid


The Croatian government will distribute 45.4 million euros in aid to local airlines as a means to support the civil aviation sector affected by the coronavirus pandemic. Contracts with carriers are to be concluded by the end of the month. The European Commission has approved the scheme. “Due to the coronavirus pandemic and the travel restrictions that Croatia and other countries had to impose to limit the spread of the virus, companies active in the civil aviation sector incurred significant operating losses and experienced a steep decline in traffic and profitability. The purpose of the measure is to support the activity of the beneficiaries and their economic recovery and structural viability”, the Commission said.

Under the scheme, the public support will take the form of loans with subsidised interest rates provided by the Croatian Ministry for Sea, Transport and Infrastructure. The maturity of the loans is limited to six years. Furthermore, the loans relate to working capital needs, while the loan contracts will be signed by June 30 at the latest. “The Commission concluded that the scheme is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state”, the executive body of the European Union noted. The Croatian government has not specified which carriers will be the beneficiaries of the contracts and to what amount.

Croatia Airlines, which registered a 38-million-euro loss in 2021, warned at the end of last year that, “The company continues to face reduced demand, resulting in low levels of revenue which may raise issues of maintaining liquidity in the coming period". During the first quarter, the carrier registered a loss of 15.2 million euros. It represents the airline’s worst first quarter financial result in at least eight years. According to analytics company Credit Analyst, which reviewed Croatia Airlines’ recent financial reports, “It is likely that the company will need more external support to stay afloat. Liquidity will likely remain stretched during this year, absent of any additional external support”.



Comments

  1. this will keep them afloat for a while.

    ReplyDelete
  2. Anonymous09:03

    Did OU return previous "loan" of 34 mil EUR?

    It means they are getting this amount of money on yearly basis with the same excuse every single time.

    ReplyDelete
    Replies
    1. Anonymous12:22

      id never approve a 34, 54, or any below 100 million loan to an airline. That amount is nowadays too small for any significant fleet upgrade, those loans are classical liquidity (sheer survival) ones which never return any added value to the creditor, not matter its a government, a bank or a lessor.

      Delete
  3. Bravo! And before the haters start moaning on here about OU, just remember Ryanair receives subsidies from local government in virtually every single country it operates from which ultimately come from the taxpayer!

    ReplyDelete
    Replies
    1. Anonymous09:05

      Comparing OU and FR...

      Funny.

      Delete
    2. Anonymous10:49

      How much does Ryanair money does Ryanair receive from governments in say Ireland, Italy and UK (their three largest markets)? Per passenger or aircraft based, as you prefer.

      Delete
  4. Anonymous09:05

    No need to worry, Croatia Airlines made a clever move by splitting its capacity further away from its main hub. You will see how amazing results will this strategic move bring to the company.

    ReplyDelete
    Replies
    1. Anonymous09:06

      🤣

      Delete
    2. Anonymous10:03

      Well they had to. They shifted their production to a place that gives them better costs and earnings. ZAG loses those connections that OU could have flown from ZAG but they shifted to SPU now. The same does Lufthansa with FRA and MUC. Just remember how LH shifted A380 to MUC once FRA increased fares and let FR in. FRA lost out. A similar strategy is pursued by OU now. And ZAG gets to feel it..

      Delete
    3. Anonymous10:19

      Ryanair had big plans in FRA. Now they are gone

      Delete
    4. Anonymous11:00

      Ryanair have big plans wherever they turn up. Problem is if an airport does not play ball and pay them they go. Or in the case of ZAG flight sales are minimal they cut back everything to the barebones.

      Delete
  5. Anonymous09:08

    "The Croatian government has not specified which carriers will be the beneficiaries of the contracts and to what amount"

    Isn't it the case in EU that this kind of activities need to be transparent?

    If so why don't we know the amount of money each company is going to get?

    ReplyDelete
    Replies
    1. Anonymous09:16

      I can imagine 40 million is going to OU.

      Delete
    2. Anonymous09:18

      They will probably make it public when loan contracts are signed.

      Delete
    3. Anonymous09:50

      We will know from Croatia Airlines' financial report how much they got. Certainly 90% of this sum.

      Delete
    4. Anonymous14:08

      About 45,4 mio to CA

      Delete
  6. Anonymous09:16

    And people said how the Croatian government will not be able to give more aid to OU.

    ReplyDelete
  7. Anonymous09:16

    Don't expect for it to be repaid.

    ReplyDelete
  8. Anonymous09:19

    I don't mind state giving money to OU If OU actually used it for expansion or modernisation. But they just use it to repay other loans and salaries.

    ReplyDelete
    Replies
    1. Anonymous09:28

      Maybe they finally order those A220s :D

      Delete
    2. Anonymous09:30

      Yes, unfortunately they use it for daily liquidity

      Delete
    3. Anonymous09:30

      Meaning that once they burn through it they will have to get another loan with government guarantees.

      Delete
    4. Anonymous09:33

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

      Delete
  9. Anonymous09:28

    OU will now have received over 100 million euros in just 2 years.

    ReplyDelete
    Replies
    1. Anonymous09:29

      Way over 100 million.

      Delete
    2. Anonymous09:29

      Well worth every euro given!

      Delete
    3. Anonymous09:37

      Is it? What did you get in return from OU?

      Delete
    4. You get : old planes, delays, overblown ticket prices, ridiculous and outdated schedules, lack of real functional domestic connectivity, lack of important international codesharing, small network, ultimate goal of LH feeder for peanuts, Party control, crime, corruption, nepotism, incompetence, lack of initiative, inertness, inadequate answer to increased competition, reduction in croatian market share year by year........

      Delete
  10. Anonymous09:28

    Bottomless pit.

    ReplyDelete
    Replies
    1. Anonymous10:04

      What´s the alternative? LJU scenario without Adria??

      Delete
    2. Anonymous10:26

      @ 10:04

      Yes, please.

      Delete
    3. Anonymous14:59

      Yes, make ZAG the same as LJU

      Delete
  11. Anonymous09:29

    Hopefully they use the money wisely.

    ReplyDelete
    Replies
    1. Anonymous10:50

      Hope doesn't float, Hodge.

      Delete
  12. Anonymous09:31

    While getting constant state aid, they have actually shrunk and reduced operations. Great deal.

    ReplyDelete
    Replies
    1. Anonymous00:56

      True unfortunately

      Delete
  13. Anonymous09:32

    OU is a big contributor to the tourism industry. They deserve for the losses to be covered.

    ReplyDelete
    Replies
    1. Anonymous09:49

      OU has carried 2.18 million passengers in 2019. Around 700,000 were transfer passengers, so there were 1.5 million passengers incoming and outgoing. Divide this to half to see the total incoming passengers, 750.000. We can easily assume that around half of these passengers are local citizens travelling, 375,000 is the number we left, let's say 400,000. Out of 19.5 million visitors to the country in 2019, only 0,4 million was carried by Croatia Airlines, meaning 2% (two percent) only. Whoever tells you that OU is a big contributor to the tourism, be aware that it is a lie. OU is currently a political tool to employ large number of voters.

      Delete
    2. Anonymous10:23

      Croatia dont need OU in Sommer, could live without, but in Winter without OU, would be very bad.

      Delete
    3. Anonymous00:57

      +1

      Delete
  14. Anonymous09:32

    Good. Smart move

    ReplyDelete
  15. Anonymous09:32

    Are there any conditions for this aid?

    ReplyDelete
    Replies
    1. Anonymous09:34

      Only requirement will be to vote for the political party in the next election. Lol

      Delete
    2. Anonymous09:34

      Yes, to reduce number of operations .)

      Delete
  16. Anonymous09:33

    Good. The government being its owner should care much more about what's theirs.

    ReplyDelete
  17. Anonymous09:38

    Corona is a nice excuse to continue with state control and pumping tax payers money in this airline. I don't see any visible contribution from OU for the economy.

    ReplyDelete
    Replies
    1. Anonymous09:45

      You 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?

      Delete
    2. Anonymous09:46

      With only 18% share in Croatia air traffic OU is certainly not the main contributor to country's economy.

      Delete
    3. Anonymous09:52

      During the summer it is even less than that.

      They aren't important player at all and they just burn tax payers money.

      Delete
    4. Anonymous09:53

      The situation is more pathetic if you know that most of the tourists arrive to Croatia by land transport, not air. Croatia Airlines' contribution to the economy is mostly via staff salary, where thousands of voters are fed using millions of voters' tax money.

      Delete
    5. Anonymous10:18

      https://www.exyuaviation.com/2022/06/ryanair-extends-zagreb-service.html

      Did you also write a comment here how FR is also a bad option for Croatia. If you have a better idea on how to avoid a scenario like in LJU with Adria in a country largely dependent on tourism join or open a consultancy firm and get huge money. Otherwise it is quite obvious why you have time writing here ;)

      Delete
    6. Anonymous10:18

      Delete
  18. Anonymous09:46

    OU must utilise this money to the last eurocent and try to get back to growth.

    ReplyDelete
    Replies
    1. Anonymous09:49

      Don't count on it

      Delete
  19. Anonymous09:46

    And what will happen next year when they produce loss again. How will they cover it?

    ReplyDelete
    Replies
    1. Anonymous09:49

      Another loan will be given. The government will probably use the emergence of monkey pox as an excuse.

      Delete
    2. Anonymous10:23

      ^hahaha

      Delete
    3. Hahahahahahahaha +1 😃

      Delete
  20. Anonymous09:52

    In 2019 when they were close to bankruptcy they got two big loans from the government. In 2020 they got several loans from the government and also got recapitalized so they wouldn't have to return the money. Now they get more loans from the government. Crazy.

    ReplyDelete
    Replies
    1. Anonymous09:54

      Add to that new PSO funding which will be larger than the previous one

      Delete
  21. Anonymous09:52

    Croatia Airlines needs all the help they can get.

    ReplyDelete
  22. Anonymous09:52

    This won't be enough.

    ReplyDelete
  23. Anonymous09:53

    Something 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 each year.

    ReplyDelete
  24. Anonymous09:55

    I really hope that this money will be strictly monitored. 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. Anonymous09:57

      Do you know they got also 34 mil last time as "loan"?

      This money will be "monitored" on the same way like previous "loan". So, no way it will be done. This money is lost forever.

      Delete
    2. Anonymous10:19

      According to some sources the state aid just before Croatia entered the EU was 140 mil EUR

      Delete
    3. Anonymous10:21

      Not according to some but according to official OU sources it was the amount of money given to them.

      Delete
    4. Please don't write it people. You will soon be called to give proofs and evidence 😃

      Delete
    5. Anonymous12:23

      Mr. Pozdrav on fire today!

      Delete
    6. Mr. Pozdrav is just happy and pleased that vast majority of visitors and posters on this blog share his thoughts and opinions about destroyed and rotten OU, and no Anonymous advocating Adeze and their crime, corruption and incompetence, can spoil it ☺

      Delete
  25. Anonymous10:21

    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. Anonymous10:41

      They had less competent government.

      Delete
    2. Anonymous10:42

      The better example of double standards is Alitalia which has the luxury of getting endless state aid under any name in any reincarnation.

      Delete
    3. Anonymous10:44

      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.

      Delete
    4. Anonymous10:48

      And Estonian wasn't?

      Delete
  26. Anonymous10:49

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

    ReplyDelete
    Replies
    1. Investing in healthy subjects is one thing, the other thing is wasting money on Party controlled and aparatchik-led loss makers

      Delete
  27. Anonymous10:49

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

    ReplyDelete
    Replies
    1. Anonymous11:12

      +1

      Delete
    2. No one is asking for OU to go bust. We just want to see some results of billions so far wasted. Capisc?

      Delete
  28. Anonymous11:12

    Bravo EU

    ReplyDelete
  29. Anonymous11:33

    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. Anonymous11:46

      Germans?

      Let me remind you on Air Berlin...

      Delete
    2. Anonymous12:39

      That Lufty destroyed AB?

      Delete
    3. Anonymous13:21

      Nobody saved AB

      Delete
    4. Anonymous14:39

      Air Berlin was destroyed by Etihad. They had a pathetic management. Worst airline ever!

      Delete
    5. Anonymous15:51

      I am not talking about who destroyed AB, but about the fact that nobody from Germany saved it as first post here implies.

      Delete
    6. Vlad22:26

      Air Berlin was destroyed long before Etihad's involvement. They just failed to save it.

      Delete
  30. Anonymous11:33

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

    ReplyDelete
    Replies
    1. Anonymous18:24

      In that case you will be just as happy when other two flag carriers left in the EX YU also avoid bankruptcy by getting dozens of millions of government loans or aid.

      Too many hypocrites justifying saving only one airline but attacking help to save other airlines.

      Delete
    2. Anonymous00:59

      I am happy that as many national airlines stay in operation. Especially in ex-Yu where there are not many left.

      Delete
  31. Anonymous12:23

    I believe this is the second or third time that the EU has approved aid for Croatian airlines during Covid. Ryanair is suing OU for the first installment.

    ReplyDelete
    Replies
    1. Anonymous00:58

      And we are still waiting on a ruling for that.

      Delete
  32. Anonymous16:45

    I know that Ryanair caused some havoc for OU and now they are focusing on SPU but what about the rest of markets where they still have an opportunity such as Madrid, Chisinau, Manchester, Lyon, Tbilissi, or secondary potential cities such as Cluj, Varna, Katowice/Krakow. They have the perfect aircraft for those routes.
    Poland and Romania are huge countries with lots of potential.

    ReplyDelete
    Replies
    1. Anonymous18:44

      FR is struggling with basic routes but of course Varna and Chisinau will work fine

      Delete
  33. Anonymous00:58

    I remember when people were writing how Slovenia would be fine without Adria and that the market would take care of itself. We saw how that turned out. We don't need the same scenario in Croatia.

    ReplyDelete
    Replies
    1. No, we don't. We need functional, modern, growing, if not profitable at least less loss making, freed from crime and corruption, freed from political influence, freed of Uhljebs, and expert run OU. Since we've been waiting for that some 30 years, and it's not happening, Adria scenario is likely to happen, sooner or later

      Delete

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