Croatia Airlines On The Brink Of Going Bust
- by croatiaweek
- in Business
Croatia’s national carrier Croatia Airlines are currently going through some turbulent times. Croatia Airlines recorded losses in 2012 amounting to a massive 370 million kuna (50 million euros). The record deficit is the result of a 70 million kuna (9 million euros) operational loss and revaluation of its fleet worth around 300 million kuna (40 million euros). Croatia Airlines board says that its aircrafts had an unrealistic value on the books, and now they are aligned with their true value. Croatia Airlines finished 2011 also in the red, that time to the tune of around 10 million euros.
The huge debt will force Croatia Airlines to cut down its fleet of aircrafts, which currently consists of 13 aircrafts, 7 Airbus aircrafts and 6 Dash aircrafts. Croatia’s national carrier will also cut routes and staff numbers, says daily Vecernji list, saying that it was the result of recapitalization by the Government in December last year and EU regulations. The capital increase eventually totaled 862 million (110 million euros), and not the 652 million (90 million euros) which was announced.
Due to the larger recapitalization of state aid under EU rules, Croatia Airlines must make more cuts, insiders say that they will have to immediately get rid of one Airbus, reduce the number of routes by ten percent, and make staff reductions. Sources from the industry say such measures could spell the end for Croatia Airlines in such a competitive market.
Vecernji list also reports that Croatia Airlines will cut its London Gatwick connection this year, and possibly its connection to Pristina, and next year its London Heathrow connection could be in jeopardy.