The European Commission has found a Croatian grant of 11.7 million euros to Croatia Airlines to be in line with European Union state aid rules. Last month, the Croatian government approved the sum in the form of a direct grant, as well as an additional 46 million euro injection into its national carrier through a capital hike. The 11.7 million euros sum is aimed at compensating the airline for the losses directly caused by 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. This forced Croatia Airlines to cancel most of its scheduled flights and resulted in major losses in turnover.
In a statement, the EU’s executive branch said, “The Commission assessed the measure under Article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU), which enables the Commission to approve State aid measures granted by Member States to compensate specific companies or specific sectors (in the form of schemes) for the damages directly caused by exceptional occurrences, such as the coronavirus outbreak. The Commission found in particular that the Croatian measure will compensate damage that is directly linked to the coronavirus outbreak. An independent external audit firm will verify that the aid does not exceed the amount of damage suffered during the period between March 19, 2020 and June 30, 2020”. It added, “Following the audit, any public support received by Croatia Airlines in excess of the actual damage suffered will have to be returned to Croatia. The risk of overcompensation is therefore excluded”.
The Commission also found that the measure is proportionate as the compensation does not exceed what is necessary to make good the damage. On this basis, the Commission concluded that the Croatian measure is in line with EU state aid rules. Croatia Airlines registered a net loss of 32.1 million euros during the first nine months of the year, up from its loss of 6.5 million over the same period in 2019. The 46 million euro capital hike, which the government says is in line with the European Commission’s temporary framework for state aid measures to support the economy in the current Covid-19 outbreak, will be approved by the carrier at its shareholders meeting on December 14. It is aimed at returning the airline’s capital to pre-Covid levels i.e. to the same levels as on December 31, 2019.
What happened to 33 mil EUR given as "loan" to OU before pandemic? Are they also approved?
ReplyDeleteIt was given under the condition that the airline is successfully recapitalised by the middle of this year. Since that is not possible because of Covid, I don't expect any repercussions for that.
DeleteI would not be that sure. EC surely won't be playing "pojela maca" game with OU.
DeleteDo they also have to approve the capital hike?
ReplyDeleteI'm wondering this too. That's where most of the aid (which doesn't seem needs to be rapid) will come from.
DeleteGood. They need all the help they can get.
ReplyDeleteJust 12 million for the 3 months? YM got 35 million!
ReplyDeleteAnd YM is on the verge of being grounded even with that help. That says more about YM than OU.
DeleteYes but OU has received quite a lot of cash over the years, either from direct injection by the government (€100 million was the first post-EU one) and then there was the income that came from selling family valuables such as Preso prevoz or LHR slots. None of these were used to make OU more competitive, just to maintain status quo and that's the biggest problem here.
DeleteIn December last year OU got 13 million just from the first tranche of the state aid. Then they got another 20.2 million this year from the second tranche. Now 11.7 million to cover Covid losses for 3 months and in 2 weeks another 46 million.
DeleteOnly thing that OU got for "free" was 106 mil. In 2012. Selling these asetts was used for expansion and liquidity.
DeleteThis won't be enough.
ReplyDeleteHopefully they use the money wisely.
ReplyDeleteThe money has been used to pay for wages and suppliers.
DeleteI'll say it again. Something drastic needs to change at this company. 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 last year.
DeleteSpeaking of restructuring, what happened with OU's last restructuring process? where did those 100+ million euros disappear.
DeletePaying of loans, suppliers, wages, engines...
DeleteAccording to official OU information it was around 140 mil EUR at that time. Huge
DeleteIt was about 106, not 140.
DeleteDokapitalizacija od strane Vlade RH kroz pretvaranje duga u kapital = 652 mil HRK
DeleteDokapitalizacija od strane Vlade RH pretvarenje duga u kapital - kamate na protestirana jamstva = 210 mil HRK
Dokapitalizacija od strane Vlade RH kroz pretvaranje duga u kapital 2 rate BLB kredita u 2013 = 150 mil HRK
Ukupan iznos dokapitalizacije (sa 47mln kuna ZLZ) = 1.060 mil HRK
1.060 mil HRK = 141,33 mil EUR
Where do you see 106 mil EUR?
From where did you get that? This blog was usually reporting 120 or 106.
DeleteSo when you have facts against projects of Serbian Goverment your comments got removed?
DeleteThis article is related to Croatia Airlines. In case you missed that, please re-read the article.
DeleteSo in 2 weeks when government buys more shares in OU, OU will be in the same position money wise as it was before the crisis?
ReplyDeleteThat's the plan
DeleteAdd to that new PSO funding which will be larger than the previous one. If the government get its act together and starts the tender.
ReplyDeleteWhere did you get an info that it will be larger?
DeleteAny word on when the government will start tenders for PSO funding. Original contract expired in March, they just keep extending the same terms.
Delete@9.33 I guess he concluded from the fact that it will include 2 more routes. But you are right, there is no mention of the total sum
Deletehttps://www.exyuaviation.com/2020/05/croatia-adopts-new-pso-routes.html
So, actually the purpose of PSO is that Goverment pays for empty seats on all domestic routes?
DeleteIf OU sells all seats they will get no PSO money , but if they sell 50% of seats they will get 50% back from the Government.
Is it correct?
No, you get compensation per pax. Largest compensation is €599,17 per pax for Osijek-Zagreb route.
DeleteSo per paassengers that flies on that day?
DeleteYes
DeleteSo if the plane is empty they are getting no money at all? It sounds strange.
DeleteDBV-ZAG €12,59 per pax
DeleteSPU-ZAG €22,36 per pax
ZAG-ZAD-PUY €177,55 per pax
ZAG-BWK €74,88 per pax
OSI-DBV €53,11 per pax
OSI-SPU €47,30 per pax
OSI-ZAG €599,17 per pax
OSI-PUY-SPU €120,32 per pax
OSI-RJK €234,88 per pax
RJK-SPU-DBV €204,72 per pax
If the plane is empty they cancel the flight. But since the operative costs are very low for these routes then it's enough to have just a few passengers to make a profit. On top of that some local city authorities, like Dubrovnik for example have a set amount of tickets pre purchased on all flights.
DeleteThanks for detailed explanation per routes.
DeleteI thought they get compensated per empty seat...It seems now that 30% of sold seats brings less money from Government than 90% of sold seats. Shouldn't they cover the costs where sales is bad and not opposite?
Sorry, I am just trying to figure it out
It is payed per flight not per passenger.
DeleteHaha,now the confusion is in full swing!
DeletePSO is never payed per passanger. It is always per flight or capacity. These are just calculated amounts given per passenger in some year.
DeleteI really hope that this money will be strictly monitored like it says in the article. The last restructuring was an absolute failure and those 106 million were obviously not used in the way they were supposed to.
ReplyDeleteAccording to some sources it was 140 mil EUR
DeleteThis 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.
ReplyDeleteThey had less competent government.
DeleteThe better example of double standards is Alitalia which has the luxury of getting endless state aid.
DeleteLike 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 and most importantly CDU which runs the show.
DeleteWell no one knows how much money LO is getting from the Hungarian government to operate a base in BUD. EU choese to turn a blind eye when it's convenient for it. There is a good reason why the UK is leaving.
DeleteAgree with anon at 9.24. Who knows what other favour Croatia has done for EU, simply by voting for some motion. It's tit for tat.
DeleteThe state owns the company and wants to invest. Seems normal to me.
ReplyDeleteVery normal. LOOL
DeleteSay it to Cyprus Airways
Letting OU go bust would cost the government much more. Especially the compensation it would have to pay ZAG concessionaire.
ReplyDeleteHas ZAG upheld their end of the bargain? They did not fully expand the terminal and they did not really bring that many new carriers, many have left even before covid.
DeleteThey have actually. Project was downsized when the concession was awarded, so if the government had a problem with it they could have ended the concession and given it to the second placed company. The whole tender was very unprofessional, which probably means it was awarded to the French on purpose because of political reasons. Based on the concession terms, the terminal gets expanded when passenger numbers reach a certain number, which hasn't happened yet.
DeleteBravo EU
ReplyDelete11.7 million really isn’t a big sum in the grand scheme of things.
ReplyDeleteOU is a big contributor to the tourism industry. This summer the season would have been even worse without them. They deserve for the losses to be covered. They could have easily parked planes to save costs but then many other industries would have struggled even more.
ReplyDelete"They could have easily parked planes to save costs"
DeleteAnd how would they pay the salaries if they had no income?
OU is a big contributor to the tourism industry. This summer the season would have been even worse without them. They deserve for the losses to be covered. They could have easily parked planes to save costs but then many other industries would have struggled even more.
ReplyDelete+100
DeleteWhy not? If the Italians and Germans can do so without any repercussions from the EU, then Croatia should do the same
ReplyDeleteTarom got €62 million with the blessing of the EU.
DeleteYes but almost all airlines will have to pay back the money. I don't see any guarantees for that here.
DeleteThe Corona Pandamic is a different thing. If any government would not help, we probably would not have any airlines left after the pandemic.
DeleteI'm OK with state aid to help otherwise viable airlines in this exceptional circumstances.
ReplyDeleteCountries all over the EU are helping their airlines, no reason Croatia couldn't do the same.
My hart goes for otherwise viable airlines in other parts of the world going bankrupt because there is no money or political will to help them.
In case it's not obvious I'm happy the rest of the airlines in this region are getting help too.
Slovenija je dokazala da se može bez nacionalne avio-kompanije. Ekonomska analiza pokazala je da nema tržišta za isplativu nacionalnu avio- kompaniju. Poruka lekcije glasi – ako je previše skup, džaba mu status simbola državnosti. Slično je mogla da postupi i Hrvatska. Da Vlada raspiše javni tender za povezivanje Hrvatske sa Evropom i svetom, propiše pravila i sufinansira avio-prevoznike s određenom sumom. Mogla je Vlada Hrvatske (ali nije htela) da zapuši usta svim patriotima koji nikad ne pitaju za cenu državnih simbola.
DeleteLol sure anon 17:55, slovenija dokazala da se može brez avio-kampanije. Yeah, with 1 flight per day haha. Dream on!
DeleteDon't hate, Anon at 22:46. Those are not my words, they are of M.Brkic. I just replaced Serbia with Croatia. He is a fan of LH and wants Germans to take over aviation in the Balkans like they did in Slovenia:
Deletehttps://www.danas.rs/dijalog/licni-stavovi/slovenci-srbi-i-drzavni-simboli/
Brkic is a useless moron who has extremely limited knowledge of aviation. His articles are extremely dangerous because they educate the masses in the wrong way. He is the minister of desinformation, very simply as that.
DeleteCroatian Government knows what they're doing.
ReplyDeleteHope it works out
ReplyDeleteDon't worry. Croatia Airlines will be around for a loooong time.
DeleteGood news. OU gets aid and doesn't get punished for it.
ReplyDeleteTo me the capital hike is much more interesting and important.
ReplyDeleteI'm really interested to see which direction OU takes in the future. The expansion over the last 4 years with a lot of new routes has been wiped out over night. None of the routes launched in the last 4 years are returning in 2021. The A320neos are being cancelled and the privatization has been cancelled. So it will be interesting to see what the future holds for this company.
ReplyDeleteYes, a lot of unknown for the future.
DeleteMaybe they can open a base in LJU now.
ReplyDeleteAre you serious? They got aid to cover covid losses for 3 month period and you expect them to open a base in Ljubljana??
DeleteDont forget 3x daily to TGD
DeleteProfesional also said flights to Kansas City, Pittsburg, Bangkok and Vancover. These destination will replace flights to LH airports.
DeleteExactly
DeleteBas volim ove kompleksase koji stavljaju ljudima u usta rijeci koje nikada nisu rekli i koji istrzu iz konteksta i iz cijele slike samo segmente koji im odgovaraju, da bi one koji misle svojom glavom omalovazili, a sve to kako bi posto poto samo sami sebi dokazali da su u pravu i time pokrili svoju nesigurnost i pravdali uhljebnistvo. Samo naprijed, moze i jace sto se mene tice, to nikada nece promijeniti cinjenicu da je OU samo jos jedna velika propustena sansa, kao uostalom i mnoge druge tuzne hrvatske price
DeleteGood. At least we avoid another ex-Yu airline going bankrupt.
ReplyDeleteWhat sucks is that they are wasting taxpayer money for what? To get more of the same?
ReplyDeleteNot the same. Worse
DeleteAnd what's your suggestion then? All airlines should go bankrupt because of covid.
DeleteCroatia Airlines was in problems before this pandemic...! The EU is throwing money down the toilet trying to help this national airline.. this airline is operated by thieves.
ReplyDeletewaste of money
ReplyDeleteMuch more money would be lost if they went belly up
DeleteOne way or another it's the taxpayers who will foot the bill, either through direct state aid or government guarantees for a loan.
ReplyDelete+1
DeleteSame story with every ExYu airline.
Exactly
DeleteThese are quite high amounts for such a small carrier
ReplyDeleteLH got 9 billion!
DeleteLH was PAYED 9 billion for goverment getting 20% of shares.
DeleteSo taxpayers saved them with 9 billion.
DeleteLH also raised close to one billion while being owned by the government, so they got that with the guarantees of German taxpayers. Very nice scheme.
DeleteThings will get a lot worse before they get better. Croatia no longer allowing tourists into the country will hurt OU.
ReplyDeleteI think EU citizens can enter with negative PCR test. The ban is for people from third countries.
DeleteYes you are correct 15.09.
Delete