NEWS FLASH
The recapitalisation of Croatia Airlines has taken place, in line with announcements made last December, with the state injecting 39.2 million euros into its national carrier. The process took place last week, on February 6, through the distribution of 29.6 million new shares which have been acquired by the state. Croatia Airlines has not disclosed the purpose of the financial injection. 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. The carrier recently postponed the repayment of a 33.7-million-euro shareholders loan it received from the Croatian government in 2019. The loan, which received European Commission approval, was to be repaid in full last year at a 2% fixed default interest rate. However, the Croatian flag carrier requested for a deferral, which has been approved by the Croatian Ministry for Finance. The shareholders loan will now mature in January 2025 instead. 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 is expected to publish its 2022 financial result towards the end of this month.
Use the money wisely!
ReplyDeleteHaha good one!
DeleteOf course they will. For "consultants", sponsorships, musical contracts, double leases, flying empty planes 5 hours to pick luggage, flying empty routes, feeding Cartel for peanuts, leasing the most expensive aircraft on the market.... Don't know what's wiser...
DeleteThey are leasing the best Aircraft available on the planet.
DeleteLOL
DeleteSo, the State owns OU, yet the State is giving the loan to a State-owned company and that company needs to get the money back to the State. It is like pouring the same water from one to another pot for years.
ReplyDeleteIn this case it’s a tap pouring into a bottomless bucket… they never ‘return’ that money.
DeleteI am thinking about the "economic logic" behind this "lemon" of an airline.
ReplyDeleteSo what is the alternative?
No airline and bad connectivity like Slovenia.
Or 5 mil. in subsidies like in Macedonia, with the money going in foreign pockets.
So after all, the Croatian Lemon makes sense, they still have an airline and the money stay at home, at a price of around 40Mil every 2 years.
Well said
DeleteThere is a difference between 5 million per year, and 40 million every two years. It's simple arithmetic -- four times more expensive. And while money in domestic pockets sounds better, it may end up in the Gucci pockets of the well-connected, whereas if it ended up in the pockets of foreign shareholders they might reinvest it in more services for the Croatian customers. Not as obvious as you make it sound.
DeleteA subsidized airline makes sense if it is coupled with responsibility to try to make the most out of the subsidies but not as a bottomless pit for the uhljebs, as one of our friends here would say
Yes, but their foreign passengers fill up Croatian hotels and restaurants and pay 10 times more in taxes to the state. And the people who cater for them also pay taxes and fill up pension and medical insurance. OU gets little compared to how much they contribute.
Delete40 million handed out every 2 years is better than 5 million in subsidies? It’s this logic that is most likely keeping the Balkans locked in place. In my opinion at least!
DeleteSKP was between 3,5 mil and 5 mil for 3 years. But the question is what are the costs for the economy for not having an national airline. For SKP the costs for not having an based airline are much higher than the subsidies being offered. Wizziar generates more traffic, tourists, jobs etc and most importantly direct flights . For Croatia is very difficult to tell if 40 mil is worth. Even though Croatia airlines is offering many jobs the taxpayers still need to pay 40 mil a year(which isn’t investing like JU does but keeping the airline a live at taxpayers cost). If there would not be OU there will be for sure other airlines interested in starting flights to Zagreb and Croatian coast. Ans because OU doesn’t offer a lot of destanations from Zagreb I am sure that the lost routes will be very fast replaced by an other airline where the taxpayers don’t have to pay money for. Also lcc are maybe not even that bad for Croatia. Croatia doesn’t have to pay subsidies to them a lot of routes generated. At the moment OU is economically a loss for Croatia and only good for the ‘ prestige’ of having an own national carier. However I believe that OU has the potential to turn this around with smart management and making good choices in the future.
DeleteI don't know why you mention the Balkans in the context of Croatia? We are neither politically, economically, historically, militarily nor in any other terms part of the Balkans.
DeleteHahahhahahhahaha
DeleteThose jobs OU generate has zero to none added value (outside of few exceptions) so that argument goes down the drain. Most of the tourist are using other carriers anyway. Lastly, OU is not operating under fair market conditions so it's actually creating unfair competition to other carriers. Imagine, if there is no OU, maybe U2 or W6 would have another 2-3-4-5 planes based in ZG, and even more on the coast. Seasonality would be a challenge but that's where PSO flights comes handy.
DeleteI need not convince you. The fact is that OU generates a significant revenue for a whole lot of various sectors. You think what you want, it is your right.
Delete40 million wouldn't be bad if they invest that money in actually growing operations - which they don't. Shiny new aircraft isn't going to fix the problems at OU, rather it'll most likely make it worse.
DeleteFact is, in 2019 when OU was at least launching seasonal routes and would bring in 2 CRJ's for the peak summer season and they still managed to have a record low on the Croatian market, handling 16% of all air travellers in Croatia while Croatian tourism was at its peak. It is in fact the foreign carriers that are making the largest impact on the domestic tourism sector and not OU.
Looking in the ex-YU region:
2010:
JU - 1,1 million pax
OU - 1,6 million pax
2019:
JU - 2,81 million pax
OU - 2,1 million pax
Growth at OU in 9 years was 31%, JU 133%. OU had a decent fleet during this period, JU had to undergo a complete fleet renewal.
One of the biggest arguments in favour of a national carrier over LCC base is the connectivity that national carriers bring with their operations, however at 12 international destinations, they're really not adding much. Also what needs to be considered is that they have competition/another carrier on a majority of their international routes.
Difference with Slovenia is that JP transported the majority of pax into Slovenia, which isn't the case in Croatia. The 2 shouldn't be compared.
+1000
DeleteWell said @JATBEGMEL that is precisely it!
Those regular €40 million injections would be worth if OU was using the money to develop new routes and expand operations. Yes, that indeed would be in the national interest. It's however not what's being done. Not even close.
I know the concerned taxpayer argument is so tired and has been used on here so much it's effectively the equivalent of beating a dead horse...however, in this case it really is appropriate. Also, the figurative horse is literally dead while simply being kept on permanent life support with some cosmetic operation here and there. Like Lenin in his Red Square mausoleum. It makes no sense and it's not sustainable without anything changing for real.
And regarding the money being kept in Croatian pockets...who cares if you're not one of those minority shareholders and the pockets aren't yours. A regular Croatian citizen is not going to see any benefits of those taxes being paid in Croatia, when they're literally going straight back into keeping the patient on life support. It's a vicious cycle.
All jokes aside, this is a joke. 39M would be perfectly fine if the package foresaw a proper industrial plan, new routes, new endeavours.
ReplyDeleteThis is just throwing money down the toilet.
39 million wasted (on top of how many millions more?) in a country with serious structural problems is never “fine”, is what I think.
DeleteWhat structural problems?
DeleteStructural problems like not being able to be part of any structure without Kradeze membership booklet, worse than KPJKPH back in 1950
DeleteJasmineeeeeee! Oprosti sto sam ranije danas pito dje si. A ti bio nazicat para ko i vazda, masala
ReplyDeleteBore off!
DeleteBoring and irritating, as always.
DeletePa so's odma' ljutis Jasmine, bolje ohani, ispi kahvu, sigurno s'jadan umoran od tol'ko posla
DeleteKiev had more Pax last year than LJU. You do not want OU to end like Adria. And all this crying over taxpayers money.. your life will not get any better nor you will see any benefit of those 40mil staying in the budget.. because they will not stay, they will finish in someone else’s pocket. Foreign carriers will never do good for Croatia, Croatian citizens, economy etc… so be happy OU got the money and they will continue flying the Croatian flag.
ReplyDeleteFor the hundredth time - it's not the problem they are getting money, the problem is they have been wasting it for 30 years. With all those money they received so far, they should have been the size of Aegean. And it would be nice to be proud of those flying the Croatian flag, not ashamed for their incompetence and theft
Delete,
We really need to break away from LH, they are taking the best slots during the summer.
ReplyDeleteThe ECB will just print one hundred billion more € and give it to the Croatian government !
ReplyDeleteI accuse the OU management of not using that opportunity to buy one hundred A380s for its Osijek-Mostar flights ...
A3 needs to take care of OU ASAP!!
ReplyDeleteNational sinkhole......part XXIII
ReplyDeleteThe A220 is what is going to kill them.
ReplyDeleteI guess you have never heard of Air Baltic. Your comment is truly laughable.
Deleteanother state dose for junkie.....
ReplyDeleteWhat I find strange is that Croatia has a few more functioning airlines with their own equipment. It's not like Slovenia that had just Adria.
ReplyDeleteRest had been said in the comments above, but nobody mentioned that some domestic company could just as easily chose to start regular flights if OU fails.