Croatia: National air company in dispute with Ryanair

Croatia: National air company in dispute with Ryanair

Croatia Airlines is awaiting the EU General Court’s ruling that would determine whether the European Commission’s decision to approve an 11.7-million-euro state injection into the company last year was in line with the block’s rules. The case, brought forward by Ryanair, is likely to be finalised during the third quarter. The budget airline has filed similar complaints about state aid granted to Air France, KLM, TAP Air Portugal and Condor, all of which are related to Covid-19 assistance. The Luxembourg-based General Court has ruled in Ryanair’s favour in the above-mentioned cases but stopped request that the airlines to immediately pay back the funds.

Commenting on the situation, Ryanair said, “The EU Commission’s spineless approach to state aid since the beginning of the Covid-19 crisis has allowed member states to write open-ended cheques to their inefficient zombie flag carriers in the name of faded national prestige. The EU commission has hastily approved over thirty billion euros of discriminatory state aid since the crisis began”. Croatia Airlines was compensated with 11.7 million euro for losses incurred as a result of the coronavirus outbreak and the travel restrictions introduced by Croatia and other countries to limit the spread of the virus in the period between March 19, 2020, and June 30, 2020. Ryanair, which will open a base in Zagreb in late August, said last week that Croatia Airlines is “irrelevant” in its decisions concerning the Croatian market.

In addition to the 11.7 million euros Croatia Airlines was given to cover losses incurred between March and June 2020, the carrier has also been granted 33.2 million euros as an equity loan by the government and has been recapitalised by the state through a 46.2 million euro cash injection to “return the airline’s capital to pre-Covid levels i.e. to the same levels as on December 31, 2019”.

Croatia Airlines has said that “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”. Croatia Airlines registered a 47.3 million euro loss in 2020 after state aid and financial grants are accounted for.