ZAGREB, September 19, 2019 – The government on Thursday made the decision paving the way for recapitalisation of the national flag carrier, Croatia Airlines (CA) whereby the cabinet okayed a grant in the amount of 250 million kuna to stabilise the airline’s business ahead of the recapitalisation procedure.
The amount was determined based on an analysis of the shortage in financial resources and in line with a plan prepared by the company and approved by the Ministry of the Sea, Transport and Infrastructure.
The grant will be paid in two instalments with at least 100 million kuna being paid in 2019 and the remainder in 2020.
Prime Minister Andrej Plenković explained that the grant will stabilise the airline’s business and prevent several negative impacts to the economy which would be felt the most in the air traffic and tourism sector while the repercussions could indirectly spread to other economic branches.
Plenković underscored that the government considers that Croatia needs a national flag carrier for the purpose of developing trade and the economy, particularly tourism as well as connecting Croatian regions.
He underscores that during its 30-year history, CA has contributed significantly to Croatia’s recognition in the world.
Based on the forecast of money flows in the next 24 months, CA established that finances would be insufficient for certain repairs and overhauls estimated at 71 million kuna, for due debts to domestic suppliers in the amount of 68 million kuna, for essential investments over the next 12 months amounting to 60 million kuna and to settle loan repayments of 26.3 million kuna.
The government stated that the funds are required to enable the airline’s undisturbed regular business and to avoid inevitable repercussions on Croatia’s economy, particularly in tourism which would be several times more than the amount planned for the injection of fresh capital and the future recapitalisation procedure.
A model for the airline’s recapitalisation is expected to be prepared and presented to the government no later than 31 December so that the relevant procedure can be launched by 1 June 2020 in an open procedure enabling the participation of private investors.
More news about Croatian Airlines can be found in the Business section.
