A significant upgrade for the Croatia Airlines fleet.
Seven years after the Croatian national air carrier Croatia Airlines agreed with Airbus to buy four new passenger aircraft, an agreement has finally been reached about the completion of the transaction. Croatia Airlines and the French manufacturer have signed a new, fifth annex to the contract for supply of four A319 aircraft which was originally signed in 2008. Based on the latest annex, instead of A319 model, Croatia Airlines will buy four larger and more advanced aircraft A320neo, which should be delivered in 2021 and 2022, reports Jutarnji List on October 14, 2015.
Although the company did not disclose the value of the contract, unofficial sources from the Croatian government claim that the value of the contract has remained “almost the same”. If this information is accurate, that would be a tremendous success for Croatia Airlines. The original value of the contract in 2008 amounted to 175 million euros, or about 1.33 billion kuna according to today’s exchange rate. Since A320 is a larger and technologically much more advanced aircraft, its usual list price is significantly higher. Airbus has reported that the catalogue value of the contract with the Croatian company is about 424 million dollars, or slightly more than 2.8 billion kuna.
It is clear that, if the claims about the value of the contract are correct, Croatia Airlines has managed to negotiate a serious discount, since it will receive planes with thirty more seats and which consume 15 percent less fuel than older A320 model. This should conclude the multi-year soap opera with the acquisition of new aircraft, which has at one time seriously threatened the survival of the company itself.
The contracts for the purchase of new aircraft in 2008 were concluded in politically sensitive moment during the process of Croatian accession to the European Union. The contracts were often interpreted as a result of political efforts by the Croatian government to ensure the support of France in the process.
Croatia Airlines did pay the first instalment worth seven million euros, but when the second instalment worth of 50 million euros came due, the company was already in serious financial difficulties and unable to pay for it. Delivery was delayed, and the company entered a restructuring process which reduced the number of planes. This is why it was believed that Croatia Airlines will try to completely withdraw from the contracts.
It was speculated that the company could ultimately try to find a third partner which would take over its orders and commitments to Airbus. However, in the last two years, attitudes have changed somewhat, and after negotiations with Airbus, which allegedly lasted for a whole year, the new transaction was agreed.
After the purchase of new aircraft, Croatia Airlines will sell most of its existing older Airbus planes. The company will also continue with its search for a strategic partner and about fifty million euros in fresh capital.