The European General Court has begun hearing Ryanair’s case against the European Commission’s decision in 2020 to approve 11.7 million euros in state aid to Croatia Airlines aimed at compensating the carrier for losses incurred as a result of the coronavirus outbreak and 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. Proceedings kicked off yesterday morning, with a ruling on the matter to be made in November. Ryanair is using four arguments in its case involving aid granted to Croatia Airlines, as shown in the court document below:
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”. Ryanair has launched similar action against a number of state aid decisions involving carriers in France, Belgium, Sweden and Italy. The General Court has already ruled in Ryanair’s favour in cases involving Air France, KLM, TAP Air Portugal and Condor but the has held off on requesting the airlines to pay back the funds immediately.
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”. This summer, the Croatian government distributed aid amounting to 45.4 million euros to the country’s aviation sector in the form of subsidised interest rates on loans. The recipients of the aid, and the amounts each received, have not been made public yet. The Croatian government has twelve months to do so from the moment the contracts were concluded, meaning they are unlikely to be revealed before June of next year.
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For all FRs faults at least they make a profit
ReplyDeleteBut at what cost? They have no social commitment as far as I know. Plus questions are asked about modus oprerandi. I would not use them if I could avoid it.
DeleteIt's hard to imagine a stupider, more ignorant comment than "they have no social commitment as far as I know". What do you imagine would be there "social commitment"? For the millions who vote every month with their own money Dyanair's "social commitment" is to be a low cost carrier that makes it possible for them to see family, go in holidays or do business at prices unimaginable when the ugly socialist national carriers ruled the skies. Millions vote Ryanair, this magnificent business is unlikely to miss one fool.
DeleteIf they have to repay the money, the government will just give them more.
ReplyDeleteMy point too. They won't be allowed to get money from Government.
DeleteThe last paragraph is telling. So much aid, yet so little to show for it.
ReplyDeleteThe money that the state gives for OU is negligible compared to the money for other state owned companies.
DeleteTrue, but other state companies are not distorting competition in the international market. That's the argument that's being made.
DeleteThat is besides the point. OU was supposed to utilise the money they get to the last eurocent and try to get back to growth. Instead they spent it on external advisors to write them a report on how they are spending the money.
DeleteRyanair and Croatia Airlines started operations both at the same time, roughly 30 years ago. They both started with two leased twin-jets, BAC S1-11 in case of FR, and MD-82 in case of OU. We just need to compare size of the fleets, network and destination maps and financial results at both. I think no other comment is needed.
DeleteWhat you will do next year?
DeleteRyanair started operations in 1984
DeleteIf you tell one part, you should tell everything, unless you have hidden intentions. Yes, true, Ryanair was founded earlier, in 1984, but operated Waterford-Gatwick only with 15 seater Embraer Bandeirante, very similar to Croatia Airlines predecessor Zagal, which was also founded earlier and operating Cessna aircraft for several years. Real FR jet aircraft low cost operations I was talking about started in 1990, one year before Croatia Airlines scheduled passenger operations. So it should be truth, not lies, everything, not one part of information.
DeleteCroatia Airlines was never set up to be profitable. It was set up to connect Croatia to the world, and bring tourists in at a time when tourism in Croatia had to restart right from the beginning. It has been very successful in achieving its goals.
DeleteIt has been a manifest failure. With 13 international destinations this winter and a 15% market share on the coast, they are neither connecting Croatia to the world nor bringing tourists in.
DeleteIt's a damn shame because it could have been a terrific regional airline, and with a bit of vision even more than that. I still remember the relative glory days of 2012-2014 when you could actually use OU to connect from Europe to the Balkans, I had more than 20 flights on OU in those three years alone. Since then, only 4.
Croatia Airlines was set to be profitable, was set to be "Croatian Swissair", was set to fly long haul, was set to be pride of Croatian people and its employees. Then, thieves and crooks within Kradeze took over and today we have shameful feeder and humiliated servant.
Delete"[A] 15% market share on the coast" for a network carrier based in Zagreb sounds really impressive to me. I expected that share to be much lower. What is the share of Aegean on the main Greek islands, Iberia in Spain's coastal cities, TAP in Faro etc?
Delete15 % is not market share on the coast. 15 % is overall market share, modest transfer traffic, ZAG traffic and coastal traffic. It's much lower for coast only, plus part of these 15 % is domestic PSO, so it's far far far away from impressive, it's actually very sad
DeleteWhen you compare RyanAir to national carriers like OU, you forget one detail: the latter is required to fly some unprofitable "essential" routes. That's akin to comparing national postal service to commercial parcel carriers.
DeleteThe later is required to fly some unprofitable routes, for which it gets millions euros from PSO funds. In addition to other subsidies, subventions, and help, direct and indirect, formal and informal, public and hidden, legal and illegal, all of which FR and the likes don't have. Maybe you are forgetting that detail.
DeleteIf they are successful, they could launch cases for all the other additional aid that OU got afterwards.
ReplyDeleteLittle chances for success for FR.
DeleteOn a similar matter against Finnair and Condor, they already lost in court this summer. Why should it be different with OU and bottom line, when they see they are losing these cases why do they even bother pursuing this.
They won against Condor. Not lost
DeleteRyanair wins case against Condor as EU court rules against state aid for German airline
https://www.avitrader.com/2021/06/10/ryanair-wins-case-against-condor-as-eu-court-rules-against-state-aid-for-german-airline/
and then they lost again
Deletehttps://www.reuters.com/article/eu-ryanair-condor-idUSL2N2XA0PH
The end of OU
ReplyDeleteIt could be the beginning of the end if the court rules in FR's favour.
DeleteThat's what I meant.
DeleteNaah the beginning of the end was when ZAG gave them an ultimatum and they did nothing. They thought they were bluffing and the gamble did not pay off. Just look at OU's finances, from what I recall they did better last year. What happened? Ryanair happened.
DeleteOU focused its entire existence on feeding LH. Now that FR is offering many, many nonstop flights there is less and less need for passengers to connect via various hubs.
Ryanair are a bunch of criminals and bullying scum!
ReplyDeleteThe EU can f**k off as well. Time for Croexit!
DeleteI don't know how it is where you live, but in Dalmatia you can't even build a school or kindergarten without EU funds, certainly not roads, bridges, or energy-efficient house renovations, modernization of the water supply, sewage system, renovation of the hospitals, renovation from ports on islands etc
DeleteCroatia isn't that poor not to be able to afford these things
Deletejust look at split. the children go to school in 2 or 3 shifts, they see small children coming home from school at 7 p.m. in the evening. in the last 20 years only one new school was built, with 85% eu funds. Every year there are not enough kindergarten places.
Deletethe outer districts have no sewage system, but "crnu jamu". when it rains heavily, the tap water officially has to be boiled because the tap water is contaminated (no filter systems available). not to mention the problems of waste disposal. But of course, we don't need EU help.
Croatia isn't poor at all. It is just robbed and destroyed by Kradeze.
Deletethis is not only a problem of the ruling party and the waste of money in state companies like Croatia Airlines. if you look who has ruled split locally since 1990 and live in split you know exactly what i mean (Baldasar, Kerum...)
DeleteIt is only problem of the ruling Party because it "organized" Croatia with +500 communes and +20 regions (zupanije) and centralized money control and money flow in order to steal easier. In addition to that, Kerum is their player as well. Regional authorities, with exception of Zagreb, basically can't do anything without Central authorities, which is Kradeze, which controls money flow and redirecting it to their own pockets. One part legally, one part illegally.
DeleteAnd municipal politicians don't control the city budget? Who decides who works in the city administration and how much, who for the municipal city services? Who decides on the building applications (GUP)? You don't need to explain local politics in Split to me, nor do I in Rijeka.
DeleteCity budgets make 1-2 % of overall tax, EU and other incomes which are in 98 % centralized on state level in order to be controlled and manipulated. Everyone who want to understand can understand that
Delete"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."
ReplyDeleteI love Ryanair's language :D :D sounds like comments people make here haha
+1
DeleteCommon sense is talking like this .
DeleteGood luck OU!
ReplyDeleteI don't see how OU can survive in the long term with Ryanair on its back all the time.
ReplyDeleteThey can thank Zagreb Airport for that.
DeleteNo, they can thank for that their incompetent management, overstaffed Buzin offices filled with inert and uninterested Uhljebs, mindset stuck in 1950's, nepotism, crime and corruption. ZAG did what it had to be done after no changes happened in OU for years which would allow more traffic and more income for the airport
DeleteTime to privatize OU ASAP.
ReplyDeleteTo whom exactly?
DeleteAnyone can have a go at that .. You need to have 1€ and a promise.... Not even that appeared. The A220 is going to be a real poison pill, it will enable another decade of theft and incompetence.
DeleteIn the end it makes no difference to OU, Ryanair will kill them one way or another. Either the court will rule in their favor and finish them off or FR will do it themselves by mercilessly attacking OU in ZAG.
ReplyDeleteThis winter will be brutal for OU, it will be interesting to see what their finances will look like. Personally I think they are making a mistake in shifting focus from ZAG to the coast. It would be one thing if they were leasing additional capacity for the coast but here they seem to be shifting what they already have. While they are busy flying foreign tourists from/to the coast, continental Croatia will be getting used to flying on their competition. When winter comes and when OU brings back its capacity to ZAG they will have minimal advantage over other carriers (both legacy and LCC).
You need to remain focused on a market if you want to make it work.
True unfortunately. I fear their financial performance will only get worse and now on top of everything they have to pay for 6 A220s.
DeleteThat whole A220 situation is hilarious and I don't think it will happen. It reminds me of that major expansion by JP just before they went bust. Seems like struggling airlines tend to make such bombastic announcements to make it seem as if everything is ok.
DeleteIf OU was realistic, they would have leased old, cheap, high density A320s for the coast and would make mercilessly used them during the three summer months. This extra capital could have been used to invest in their fight against FR in ZAG.
*and would mercilessly use them
DeleteTrue. I believe their share at ZAG is less than 20% atm. People obviously do fly but not with OU.
DeletePlus the rise of TZL and BNX affected them. They are lucky LJU management is useless so only FZ affected them.
DeleteThere is no shifting of winter capacity. It has all happened already. It's not summer/winter, it's just June-September. OU is already flying from Zagreb to Dublin for example.
DeleteWhy doesn't someone manage to kill RYR instead??
DeleteThey are the biggest crooks in the world and a laughing stock of aviation ... and no one seems to care about their falsification of flight hours , poor crew training etc ...as long as they remain cheap (shi..). Fascinating.
@10.03 they decided not to resume flights to Oslo, Helsinki, Stockholm, Milan, Mostar and many more this summer so they could serve the coast.
DeleteOU should increase its presence in the local market with more regional flights offering good connections via ZAG, especially now when they are facing competition from Ryanair on key markets.
DeleteThat ship has sailed under the command of Captain JU.
DeleteTo me the bigger issue is that the money they got was not used properly.
ReplyDeleteI think they will dismiss Ryanair's case
ReplyDeleteIt doesn't look that way. They are applying the same methodology for all airlines in this case.
DeleteAnd they lost most cases.
DeleteRyanair need investigating. They have very corrupt business practices but seem to get away with it.
DeleteAgreed
DeleteOne way or another it's the taxpayers who will foot the bill, either through direct state aid or government guarantees for a loan.
ReplyDeleteIn my opinion, they are probably not happy with the financial results in Zagreb so they’re trying to recoup their costs, Ryanair in Zagreb seems desperate. Only thing they do is cut flights without introducing a single new flight in a year.
ReplyDeleteThey launch cases even in countries where they don't operate to. They launched case against Adria for the government aid it got.
DeleteOk, that makes sense. But still in general, I think that they can't make that much profit when they have such low prices in their entire network so they look for some extra cash by fighting in court. On the surface, that's what it looks like.
DeleteI doubt they make much money but it all depends on how much subsidies and incentives they get.
DeleteYour comment makes no sense. They launched this case when they only just opened their Zagreb base.
DeleteIt will be interesting to see what the outcome of this will be and what the repercussions would be for OU if the court rules in Ryanair's flavor.
ReplyDeleteAt least it's only 11 million EUR, which isn't that much/
ReplyDeleteDoes OU have 11m in cash they can spend just on returning state aid?
DeleteFor an airline bleeding tens of millions of euros each quarter, 11 million isn't a small amount.
DeleteRegardless 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.
ReplyDeleteReplacement of the management should be a priority.
DeleteFor 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.
ReplyDeleteOU barely contributes to tourism so the loss wouldn't be significant.
DeleteI wouldn't be so sure.
DeleteWho maintains flights to Croatia on a year round basis when many airlines don't fly in winter?
DeleteWith only 18% share in Croatia air traffic OU is certainly not the main contributor to country's economy.
DeleteNobody is advocating Croatia Airlines bankruptcy. People are aware OU is on the best way to bankruptcy if it remains the same as it is now. Unfortunatelly some people here don't understand or pretend not to understand that
DeleteHaving booked with OU (whom I have used successfully and safely for years between Croatia and the UK,? these remarks bother me a lot.
DeleteI don't like Croatia Airlines' chances.
ReplyDeleteall governments across the world are saving their airlines. I don't know what FR is on.
ReplyDeleteYes, they should simply let their competitors get unlimited money.
DeleteCorona is a nice excuse to continue with state control and pumping tax payers money in this airline. It's good Ryanair will now be monitoring everything. I don't see any visible contribution from OU for the economy.
DeleteWell you are blind then!
DeleteCan the court case be followed somewhere?
ReplyDeleteNo
DeleteShame, it would be fun to watch.
DeleteIf FR will loose the case, they will release a flood of routes in croatia for few months, just to bring Croatian Airlines to its knees, and then will kill 90% of them
ReplyDeleteNext summer they are bringing back routes that everyone thought they cut from Zagreb.
DeleteBrindisi, Malmo, Bratislava. They are all back on sale.
They were downgraded to seasonal, I don’t think anyone said they were canceled. So nothing changed since August
DeleteFR did announce they want to base as many as 10 aircraft in ZAG.
Deletehttps://www.exyuaviation.com/2021/06/ryanair-plans-up-to-ten-aircraft-at.html?m=1
OU's business model relies on state aid.
ReplyDeleteHopefully they don't rule against OU.
ReplyDeleteToday it's gonna be a party time for POZDRAV !!!
ReplyDeleteNo comment.
DeleteCompared to what other airlines got among those listed as being sued by Ryanair, this is nothing.
ReplyDeleteYou should also compare the aid proportionate to the size of the company.
DeleteAnd that many of those airlines were profitable before Covid...
Delete...unlike OU
DeleteBravo Hrvatska!
ReplyDeleteRyanAir calling Eus commissioner’s approach “spineless” is a bit hypocritical and ironical, considering how RyanAir is approaching most of their customers, dont you all think? RyanAir doesnt deserve 1 euro in aid. It needs it, but doesnt deserve it.
ReplyDeleteCompletely agree
DeleteIt definitely deserves 1 Euro in aid. However, it should come with a 2 Euro transfer fee, and a 3 Euro transaction fee, and ...
DeleteThere are few issues here:
ReplyDelete1) OU has to get her act in order for their own benefit. It has to start creating value for Croatian taxpayers and Croatian society very this minute. No more corruption, no more politicizing, no more BS.
2) EU commission is spineless because it is un-elected body and it has to disappear.
3) EU Courts ruling in Ryanair favour but has held off on requesting the airlines to pay back the funds immediately are showing they are political hacks.
+1
DeleteHope Ryanair losses
ReplyDeleteYes!
DeleteAs I write above, whatever the ins and outs of the finances, I have used OU successfully and safely for 7 years between Croatia and the UK. Generally, they have done me OK. Also, I really don't like FR's modus oprerandi, being aware of at least one who wouldn't work for them because of their operating policies. It would be the last option for me. I hope OU prospers...part of the success has been the Dash 400s which seem to me to do a good job between Split and elsewhere. Covid wad exceptional and if governments had to bail out the aviation industry along with so many others, so be it. Might as well sue the WHO/PRC whoever for letting the Virus out in the first place. Only lawyers will benefit from FR's efforts.
ReplyDeleteRe. the above, the LH Group/OU arrangements have been part of my matrix. Simple: if it ain't broke, don't fix it. Hvala.
DeleteIt is broken, man, OU loose a lot of money. Don't you think it would be better for your matrix if OU would be flying directly to UK destinations?
Delete