Aid for Croatia Airlines

Financial injection for Croatia Airlines

The Croatian Competition Agency has cleared 42.4 million Euros in state aid to Croatia Airlines for the purpose of settling contractual obligations for the purchase of Airbus jets. However, unlike state aid granted recently to Slovenia’s Adria Airways, Croatia Airlines will be requested to either return the money within six months or commit itself to a companywide restructuring program. The latter is more likely to occur. The news, which gained little media coverage in the country, is significant as it illustrates the difficult financial situation the Croatian carrier finds itself in, despite a record year when it comes to passenger numbers.

Croatia Airlines has four Airbus A319s on order, scheduled to arrive within the next two years. The airline has had problems keeping up with payments for its aircraft in the past. In December 2009, one of the airline’s A319s was nearly revoked before the government stepped in with payments. More recently, Zagreb Airport warned it would impound some of the national carrier’s jets if it did not pay up its outstanding debt dating from 2009 which amounts to 9.2 million Euros.

On a brighter note, next year, Croatia Airlines will begin fitting part of its Airbus fleet with Lufthansa’s Recaro designed seats. The new look cabin will be progressively introduced from the start of the 2012 summer season.