The Croatian government will inject 39.2 million euros into its national carrier through a capital hike. Croatia Airlines will issue 29.6 million new shares which will be acquired by the state. It comes two years after the government previously recapitalised the company by acquiring 35 million shares for 46 million euros. Since then, the airline has also been the beneficiary of several financial injections, both through direct aid and equity loans. Croatia Airlines will authorise the latest capital hike on December 22 at its shareholders meeting. The Croatian government is the company’s largest shareholder, with a 97.7% stake, while the remainder is mostly owned by state-owned or public companies such as the Croatian Postal Bank, oil transportation company JANAF and the former state operator of Zagreb Airport.
Croatia Airlines has not disclosed the purpose of the financial injection. The carrier registered a net loss of 13.1 million euros during the first three quarters of the year, up from a loss of 6.5 million euros during the pre-pandemic 2019. However, the company saw its first profitable quarter in Q3 2022 since Q3 2019. On the other hand, the airline is yet to firm up an announced order for six Airbus A220 aircraft. It is believed the carrier is in the process of securing the finances for the deal in order to enable deliveries of the aircraft from 2024 as part of its post-Covid strategy.
Croatia Airlines recently warned that it may require additional state support. It said, “Considerable positive steps have been made compared to 2021, however, the increase in fuel prices significantly effects operating costs and the amount of cash outflow. The continuation of the war in Ukraine and the unpredictable nature of the pandemic continue to have a major impact on demand and, consequently, on income”. It added, “All of these may again raise questions about maintaining liquidity. The company is taking all necessary measures to actively manage liquidity and optimise the business. It continues to implement rigorous cost cutting measures, which is in line with Croatia Airlines’ post-Covid strategy”. A recent report by analytics company Credit Analyst, which reviewed Croatia Airlines’ financial reports, said, “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”.
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What a surprise
ReplyDelete39.7 million 😀
ReplyDeletehttps://www.exyuaviation.com/2022/11/split-airport-concludes-croatia.html
What for?
DeleteHe was indicating that they are getting another half a million for the Split Airport advertising.
DeleteNever ending story
ReplyDeleteJust days after Ryanair lost case against European Commission for giving aid to OU.
ReplyDeleteFR is watching their every move. If need be, they will launch a new case.
DeleteGood. State should support the national airline
ReplyDeleteIt would be fine if they actually used the money to develop
DeleteWell they are. They are getting A220s.
DeleteThey will use this money to cover suppliers and wages.
Delete@8.25
DeleteWhile I wish OU the very best, I would not be surprised if this order (which they still haven't made) ends up like Adria's phantom Sukhoi order. Don't know, just looks that way but I do hope I'm wrong because a new fleet might breathe in some new light into the airline.
It is not good. State should support national airline which not humiliated servant and pathetic feeder which works for foreign interests. Money will not be used for development but for covering of losses. A220, if ever arrives, will not be development, it will be only change of existing fleet and will probably mean even bigger losses, considering its price and capacity in current network. And there will be no new light with A220, it's not the type of aircraft, especially regional one, which brings new light, but many other things OU doesn't want and doesn't care to change
Delete@08,29
DeleteLets wait and see if those aircraft will ever arrive. OU in 2008 ordered 4 A319's, which it later converted to 4 A320 neos in 2015.
Companies such as OU cannot finance brand new aircraft. It's definitely not the way to go for them.
@ 8:22
DeleteDare put it on a referendum?
Why? Why should people who have no clue decide on these matters?
DeleteWhat a waste
ReplyDeleteHow on earth are they going to finance the new planes?
ReplyDeleteLike this, through the state.
DeleteHow is it allowed in the EU for the government to just keep giving money to an airline that is almost 100% in their ownership?
DeleteBecause in the EU decisions are based on politics rather than objective rules and facts. It’s not much unlike China in that regard. Both have unelected leaders at the top as well.
DeleteWasn't Aegean interested in buying Croatia Airlines?
ReplyDeleteOnce upon a time.
DeleteNot an option any longer. New A220s will be coming, no need for investors, clearly the state has decided. By the way, Croatia is putting money into OU the same way Serbia invested in JU a month ago, a move universally hailed by people on this portal.
DeleteIt wasn't universally hailed at all. Go read the comments and you will see. And that investment was 15 million and we got 2 new long haul routes and 1 wide body for it. This is double for nothing. Those A220 planes haven't even been ordered.
DeleteAgain...
ReplyDeleteThe state owns the company and wants to invest. Seems normal to me.
DeleteIt is. But not investing into something that is making 0 progress throughout the years and than blaming everyone else for their lack of competence and management. COVID is the only excuse acceptable, everyone was hit but every other time it’s fuel prices, this and that. Who’s next to blame? Maybe their astrology sign?
DeleteThe state isn’t “investing”. It’s handing it money with no strings attached. Quite a difference.
DeleteNo, the state is increasing its ownership stake in the company. Same thing what Serbia did!
DeleteGood luck
ReplyDeleteAdd to that new PSO funding and a dozen other hidden subsidies.
ReplyDeleteLike what? What dozen more subsidies?
DeleteLetting OU go bust would cost the government much more. Especially the compensation it would have to pay ZAG concessionaire.
ReplyDeleteOU going bankrupt wouldn't be as damaging as what JP's bankruptcy did in Slovenia. JP held over 60% of the market in LJU while OU barely 20% in Croatia. Massive difference to start. Not to mention that, unlike Slovenia, Croatia has Trade Air which could possibly take over some PSO routes, if needed. Mind you, a couple of routes could possibly operate without PSO subsidies ie ZAG-DBV/SPU. The biggest loss would be the ZAG-SJJ and ZAG-SKP routes which likely wont be replaced if OU was to go bankrupt.
DeleteIm not sure about the concession agreement, if it's linked together with OU as some sort of a guarantee for x amount of pax/revenue. Considering that OU handled just over 1 million pax for the first 3 quarters for all of Croatia (guesstimate at 700.000 in ZAG), I'm sure that most of the potential loss could be made up within a short period of time with little penalties from the concessionaire.
I think OU going bust would hardly make a dent in Croatia’s air traffic.
DeleteI do not mind state aid, as long as it is used to try and expand and turn things around
ReplyDeleteHopefully now things really will turn around with the A220s.
DeleteGetting new planes doesn’t have to mean that. In fact knowing their usual load factor during WS and certain route performances, without dashes they could be in an even bigger problem.
DeleteIf you seriously think the A220s are coming, you haven’t been following OU or this blog long and/or thoroughly enough.
DeleteStill, it's nothing compared to other airlines in the region...
ReplyDeleteUnder this current management, the airline has received almost 500 million. In 2019 they got 100 million in direct aid, not to mention everything they got after for Covid. And all of this is AFTER restructuring which was supposed to make Croatia Airlines profitable. So first thing that should be done is fire or replace the management. Find some competent people. In order for OU to be profitable it needs to properly restructure first. Getting new expensive bigger planes will only lead to more and more aid until it can no longer be sustained.
DeleteIt is more than any airline in the region when you calculate the aid given per passenger handled.
Delete@09,09
DeleteNo, OU is worse. You have similar subsidy figures between JU and OU, however JU is a larger airline by around 30%.
Speaking of the last 2 subsidies for JU, they did alot of flying for the Serbian Government during the pandemic, repatriating 15.000 Serbian nationals and alot of cargo flying. Someone had to pay for those flights. OU held open a for revenue link with FRA and had an odd flight out to China (TSN) with their A320. I believe even Fly Bosnia had more cargo flights than OU during the pandemic.
Subsidies into JU have gone to renewing the entire ATR fleet (5 ac), an additional A330 with 2 new long haul routes (TSN and ORD), 1 A320 (YU-APO), 3 A319's (YU-APL & APM in 2020 and YU-APN this year), several new destinations, amongst other things, while being close to 2019 recovery this year and will surpass 2019 figures next year. OU on the other hand brought in 1 18 yo A320 (9A-CTO) which pretty much sits idle in ZAG, shuffled some flights seasonally over to SPU, is no where near recovery from the pandemic and continues to lose out its market share to competitors.
So no, definitely not the same.
A bunch of people who have newer flown with OU and got no idea about the industry, yet they feel privileged to give 'insights'. Real Balkans men, clueless and opinionated.
DeleteThey are wasting taxpayer money for what? New one weekly seasonal Split-Skopje flight.
ReplyDeleteMore of the same
DeleteNot the same. Worse
DeleteAnd what's your suggestion then?
DeleteStart by doing something with the management when all it does is beg for money. At another airline in the region, when its business model was found completely unsustainable and its losses too big, the CEO was fired and the entire management replaced.
DeleteSPU-SKP sounds too sad and desperate...
DeleteWaiting for that one Dalmos to say SPU IS THE FUTURE OF OU!!!
Deletesorry to dissapoint everybody, but dated a319 and Dash8 can't make it much farther than SKP
DeleteThey are ordering A220s and getting aid. Seems legit.
ReplyDeleteIt seems recapitalization is the perfect new way to legally pump money into state airlines under EU rules. And while this can't work in many countries because of mixed ownership and shareholding, it works perfectly in ex-Yu.
ReplyDeleteThe EU is very much aware what all these governments are doing. They just let it slide for the time being but if need be they will bring out the file at some point.
Delete"They just let it slide"
DeleteAh the famous EU "rule of law"
1.3 euros per share
ReplyDeleteKeep pumping those euros.
ReplyDeleteThese are quite high amounts for such a small carrier
ReplyDeleteTypical way to do business in the Balkans.
ReplyDeleteIt is typical way to grow the business anywhere in the world.
DeleteHaha funny of you to assume these financial injections will "grow" OU's business.
DeleteSo any idea on when they might firm that order for the A220? They announced they would order the plane several months ago.
ReplyDeleteBetter than taking out a loan.
ReplyDeleteThere is an issue because OU can more or less not get loans anymore. They don't have collateral. That analysis that is quoted in the last paragraph actually explained it quite well.
DeleteThe money would come out of taxpayer's pockets either way.
DeleteYeah, nobody in the banking sector will lend them these sums of money, without at least the state acting as a guarantee.
DeleteOU must be managed terribly bad. With its cost structure (salaries, rents) it should have quite of an advantage over carriers in western Europe and it could be even used for more, than just operating out of HR. However nothing of that, huge losses (comparison size of airline) are made year by year and hundreds of millions of taxpayers money have been burned the past 20 years.
ReplyDelete+1
DeleteBravo Hrvatska!
ReplyDeleteOMG
DeleteBravo OU!
ReplyDeleteEven bigger OMG
Deletepozdrav, I strongly suspect that you are talking to KDZ bot :) after all, with all that money being moved left and right, somebody must have spent some of it into bots, right? :D
DeleteGood! OU is worth every Euro invested in it!
ReplyDeleteI think you might be delusional.
DeleteIs ot really worth it that much with 13 international routes from its main hub?
Delete*it
DeleteThey basically only have 11 routes from Zagreb, since Rome is via Split and Athens via Dubrovnik.
DeleteYes, it's good for Uhljebs. And for those in general public knowing zero about aviation
DeleteWithout OU I wouldn't travel any longer to Croatia. I don't like Ryanair or British Airways!
DeleteSo you expect croatian tax payers to pay hundreds of millions every year, for useless and loss making company which never achieved none of the goals it was created to achieve, because you like flying with them and doesn't like some other airline(s)? You just proved me 100 % right. Thanks for that!
DeleteLet's hope it's money well spent but past experiences indicate otherwise.
ReplyDeleteMoney well spent and Croatia Airlines don't go in the same sentence.
DeleteEndless money pit
ReplyDeleteGood I support this.
ReplyDeleteAre there any conditions for this aid?
ReplyDeleteNo
DeleteFun
DeleteNice. The government being its owner should care much more about what's theirs.
ReplyDeleteMuch more? I think their constant financial injections show that they care.
DeleteThey would show much more that they care if they selected a professional management.
DeleteLet's just hope the planes actually come. Their last two orders never materialized.
ReplyDeleteand then there's slovenia...we've invested 4 million since 2019
ReplyDeleteThank God. Imagine we’d still have Adria. The money demands would have been endless. No, thanks. And here Croatia is investing without a trouble tens of millions into a failed carrier while people are fleeing the country. How much has Croatia’s population shrunk in a decade? A quarter of a million? Why not invest there? In the so-called real economy.
DeleteBecause Kradeze does not care about the people but does care about its Uhljebs. No limit when one of their sanctuaries is in question.
Delete^ true
ReplyDeletethe never ending saga of protecting this airline. From many comments it seems that this company is not commercially viable .
ReplyDeleteWaiting fo Pozdrav….three, two, one….. :)
ReplyDeletescroll up 😃
DeleteLol!
DeleteWaste of taxpayer money. Country would be better off without national airline.
ReplyDeleteI remember the days when everybody complimented Croatia on leaving Yugoslavia .
ReplyDeleteThey said it would spell the end of incompetence and mismanagement in Croatia ...
Excellent point and so totally true!!!
DeleteUnfortunatelly unreformed part of KPJKPH switched to Kradeze and has been destroying Croatia by frauds and incompetence for 30 years, totally opposite of what people wanted and expected
State-owned companies are prone to poor management and corruption everywhere, especially in southern and eastern Europe. In Bavaria this used to be called "Amigo" economics.
DeleteAnd let's not forget how the aviation market used to be before it was liberalized and LH, BA, AF etc were 100% state owned. For many, flying was priceless
Anonymous09:59
ReplyDeletesorry to dissapoint everybody, but dated a319 and Dash8 can't make it much farther than SKP
That can’t be further from the truth OU fly the A319s to Dublin, London and Stockholm in the summer plus they are also launching SPU-OSL
For half amount of money on a yearly basis, JU opens around 10 new european and 2 new intercontinental routes.
ReplyDeleteBut they don't have Jugoton deal! 😃
DeleteAn absolute waste of rations!!! Need a clean out from top to bottom. Top heavy staffing levels. What a joke
ReplyDelete