The Croatian government will inject 46 million euros into its national carrier through a capital hike, as well as an additional 11.7 million euros in direct aid.
Croatia Airlines will issue 35 million new shares which will be acquired by the state in order to “return the airline’s capital to pre-Covid levels i.e. to the same levels as on December 31, 2019”, the company said.
It added, “This is one of the applicable financial support mechanisms Croatia has adopted based on the European Commission’s temporary framework for state aid measures to support the economy in the current Covid-19 outbreak”. The Croatian government already holds a 99% stake in the national airline.
On Nov. 13, the Croatian government approved HRK88.5m (EUR11.7m) in state aid to Croatia Airlines.
The assistance was green-lighted by the European Commission, and will be used to repair the damage caused by the Covid-19 pandemic, ExYu Aviation website reported.
Josip Bilaver, secretary of state in the Ministry of Maritime, Transport and Infrastructure Affairs, has said that the aid was arranged with the help of the European Commission and would serve to cover the cost of repairing damage (HRK88.5m) caused between March 11 and June 30 this year.
The funds will be forwarded to Croatia Airlines by the end of the year in order to cover the losses made between March 11 and June 30.
Croatia Airlines registered a net loss of 32.1 million euros during the first nine months of the year, up from its loss of 6.5 million over the same period in 2019.
During the first three quarters, revenue declined 59% to 71.7 million euros.
The Croatian carrier previously estimated its passenger numbers would decline some 60% in 2020, while its annual losses would amount to thirty million euros.
At this point, both targets are unlikely to be reached. The Croatian Chamber of Economy estimates Croatia Airlines will register a 52.5 million euro net loss this year, while it predicts losses during the first half of 2021 to amount to 25 million euros.