HRK 600 million allocated to bail out Croatia Airlines

(Photo credit: Croatia Airlines/A.Grubelic)

ZAGREB, Dec 14 (Hina) –The government on Monday approved state aid for the national flag carrier, Croatia Airlines amounting to HRK 600 million, HRK 350 million of which refers to investing fresh capital in the company and HRK 250 million as an equity loan.

The decision was made in line with the European Commission’s temporary framework allowing member states to provide additional support to the business sector due to the COVID-19 pandemic. Thus, CA has been given support in an effort to resolve its liquidity problems and to boost its capital.

Transport and Infrastructure Minister Oleg Butkovic said that the pandemic has had and still has a destructive impact on the global airline industry which is faced with the most difficult crisis ever.

Croatia Airlines is not an exception, said Butkovic, explaining that other airlines have recorded a decrease in traffic of 65% to 90% compared to 2019.

The national flag carrier has a strategic role in Croatia’s transport infrastructure which was evident in these times of crisis.

The government’s decision resolves the company’s urgent problems, adding that money for this was ensured in this year’s budget revision.

Finance Minister Zdravko Maric said that this model of injecting fresh capital and providing an equity loan will financially stabilise the CA airline.

The government authorised Minister Butkovic to increase the airline’s stock capital at a meeting of the shareholders’ general assembly.

An extraordinary general assembly was convened today for shareholders to decide on increasing the company’s stock capital by HRK 350 million by issuing shares and that the state would participate in that. That would increase the airline’s equity from HRK 277.88 million to HRK 627.88 million by releasing 35 million new ordinary shares at a nominal price of HRK 10.

The equity loan of HRK 250 million should stabilise the airline’s business operations and prevent negative consequences to the population and economy, which will be felt directly by the airline and tourism sectors and indirectly by other economic branches, the government said.

(€1 = HRK 7.542016)