Croatia Airlines – Desperate to Be Privatized

Photo by Croatia Airlines.

The Republic of Croatia has been attempting to privatize its national airline, and at last, two bids have been submitted for the loss-making airline.

Founded in August 1989, Croatia Airlines is a little over 30 years old, having celebrated its 30th anniversary in 2019. This inception during the breakup of Yugoslavia saw its boom due to the high rise of tourism in Croatia. Nonetheless, the airline has not been making any significant profits since 2007, and it has had its controversies. For instance, it was once reported their crew had been forced to use butter to lubricate an aircraft’s door to close it properly.

There is a strong demand for flights to Croatia, particularly in the summer months to the coastal beach cities. Croatia Airlines has been operating at full capacity, but lack the funds to expand their fleet. However, they have four Airbus A320neos on order, which are due to be delivered in the upcoming years. Even though the flights have been full, the airline has still failed to profit.

A Croatia Airlines A319. Photo by Croatia Airlines.

Because the airline has been losing money, the government has injected money into the company to make it more attractive to potential bidders. In September 2019, the airline received 250 million HRK (approximately 33 million EUR), and the government, which owns almost 100% of the company, has set a deadline of June 2020 to either sell or recapitalize the airline.

The new bidders are Aegean Airlines of Greece and Air Nostrum of Spain, who have submitted non-binding bids to Croatia Airlines’ privatization advisors. In November 2019, the Croatian Minister for Sea, Transport and Infrastructure mentioned the government's plan to sell up to a 70% stake in the national airline. Croatia Airlines’ privatization is therefore a matter that will for sure be of interest in the upcoming year.