The Croatian government has adopted a decision to inject seventy million euros into the loss-making state carrier Croatia Airlines and to covert a further 78.8 million euros in unpaid state loans into equity. The government will provide the funds through recapitalisation, with the seventy-million-euro sum to be spread over two years, amounting to 35 million euros in 2026 and a further 35 million in 2027. Furthermore, three former shareholder loans, totalling 78.837.348 euros, issued to the Croatian carrier will be converted into capital. The airline was granted the loans by the government as part of the Covid-19 support provided to the aviation sector. The loans were originally due to be repaid by the carrier, with the total amount including interest expected to reach 85.831.988 euros.
Croatia Airlines’ finances have been significantly impacted by its decision to transition to an all-A220 fleet by 2027, which has resulted in increased costs and losses. The Croatian government has said its decision to recapitalise Croatia Airlines is based on commercial considerations rather than extraordinary state aid, arguing the move is fully aligned with the “market economy investor principle”. According to the authorities, the flag carrier was generating positive financial results prior to the start of its fleet renewal programme, which underpins the government’s assessment that the investment is economically justified. This claim can, however, be contested, given that since 2018 the airline has recorded a profit only once, in 2023, when the sale of aircraft was included in its net result of two million euros.
The recapitalisation is intended primarily to support Croatia Airlines’ transition to the Airbus A220 fleet, a process which the government says has placed additional pressure on the airline’s liquidity and capital position in recent months. Officials note that the measure is designed to secure the carrier’s ongoing operations while creating the financial conditions for its “long-term development”, with transition-related costs cited as the main driver behind the need for fresh capital. In support of its decision, the government points to a series of business plans approved by the airline’s Supervisory Board, as well as detailed financial projections covering the period up to 2045. These documents indicate that the fleet transition is expected to become profitable “in the near future”.
The government added that its conclusions are backed by independent assessments, including limited assurance reports prepared by Moore Audit Croatia. These reviews covered the airline’s long-term financial forecasts as well as calculations related to investment returns, net present value and internal rate of return, which the authorities say further confirm the commercial viability of the fleet renewal programme.
