Government bails out Croatia Airlines

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The Croatian government approved on Thursday the payment of 100 million kuna (14.7 million U.S. dollars) from Croatia’s budget to stabilize Croatia Airlines before recapitalization.

This is an advance of 250 million kuna that the government will give to Croatia Airlines, with the remaining amount to be paid in 2020.

Finance Minister Zdravko Maric said that the decision to rehabilitate is based mainly on economic considerations, but it also aims to help the country’s tourism sector.

“In the case of Croatia Airlines, it is well known that the company plays a great role in tourism and in connecting Croatia with the rest of the world,” Maric said after the government session.

The minister was asked why the government chose to financially support Croatia Airlines, while Slovenia and the UK did not do the same with Slovenia’s Adria Airways and British tour operator Thomas Cook.

“I am not happy or satisfied with the situation, but we have assessed that Croatia Airlines and Croatia’s airports have great potential,” Maric said.

Financial projections for the next two years showed that Croatia Airlines would not be able to do the repair and overhaul of two aircraft engines without the support of the government, pay its debt to Croatian suppliers and finance other necessary investments.

Croatia Airlines today has a fleet of twelve aircraft and has connected eight Croatian and 30 international destinations this season. In the first six months of this year, the company’s losses amounted to 79.8 million kuna and the airline carried 960,620 passengers, which is one percent more than in the same period last year.

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