Croatia Airlines: Three Models for Potential Rescue of National Carrier

Lauren Simmonds

Croatia Airlines is still far from out of the woods when it comes to doing business. Publishing losses and continuing to go downhill, what are the potential rescue options for Croatia’s national carrier?

As Poslovni Dnevnik/Josip Bohutinski/VL writes on the 12th of November, 2019, PBZ and DBV consultants engaged in finding a strategic partner and recapitalisation model for Croatia Airlines (CA) should propose a solution by the end of the year. Vecernji list has since discovered that three models are on the table currently.

One of the models, as has since been learned, is to create a holding company for Croatian airports and thus Croatia Airlines. The second solution is for pension funds to take over Croatia Airlines and the airports, and thirdly, for those same pension funds to take over ACI along with the ailing Croatian airline.

All the state-owned airports – Dubrovnik, Split, Zadar, Rijeka, Pula and Osijek – would be included in the holding, except for Zagreb Airport, which is under a concession. These six airports are also included in the model with pension fund options. The state has a 55 percent share in them, while the rest is held by counties and LGUs.

Croatia Airlines is continuing to publish concerning losses, down from 82.9 million kuna last year while all Croatian airports except for Osijek operated at a profit. The total profit of these five airports for 2018 amounts 213.1 million kuna, and the losses published by Osijek Airport amounted to 266.900 kuna.

Poslovni’s interlocutors say that companies that would otherwise “feed” each other would merge with the idea of creating a holding because Croatia Airlines makes up a good deal of traffic for those airports.

However, the merger of the airports and Croatia Airlines, as they say, would also be a political issue because in some cities they oppose the idea entirely. Airport profits are also a draw for pension funds.

Pension funds could also be offered another lure – ACI, for the same reason. The Republic of Croatia owns just over 78 percent of its share capital, and generated 30.9 million kuna in profits last year. Although the focus of the consultants’ engagement was on other airlines that would take over Croatia Airlines, they said that there was no particular interest in doing so.

Pension funds are interested in investing in airports and ACIs and aren’t even attempting to hide that fact. They say their idea of ​​taking over Croatia Airlines and recapitalising the company if it’s ”bundled” into a package with ACI and several airports seems attractive.

The best model for them would be to take over the entire package, but they note that the Croatian national carrier is a ”bottomless pit”, whose survival is impossible without a deep restructuring of the company.

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