World Bank To Help Croatia Privatize Airline

Croatia's maritime, transport and infrastructure ministry has signed a contract with the World Bank to find a strategic partner to privatize or recapitalize the struggling state-owned company Croatia Airlines.

Transport minister Sinisa Hajdas Doncic confirmed the agreement on Tuesday.

"The Ministry has signed an agreement with the World Bank... which now helps us with finding a strategic partner, and at the end of October they will list the potential partners who will in any way 'enter' CA, either by recapitalization or privatization," Hajdas Doncic stated.

Last September, the government announced that privatisation of the airline would be initiated by the spring of 2015.

The goals were to expand the airline's network of destinations, increase its share of the market, recapitalize the company, renew the fleet of planes and undertake technological development.

The ministry then said it planned to employ external counsellors to find foreign investors and ensure they applied for the tender.

Although the deadline for this was set for the end of 2014, advisors were not chosen until February this year. They should then have conducted a three-month scan, followed by an international tender.

The government earlier launched another unsuccessful tender in October 2013, which resulted in no binding bids.

Croatia Airlines finished 2014 with some 940,000 euro in net income. In the last few years, such positive figures have been achieved only through cuts in the number of destinations and flights and by selling planes.

The European Commission views the state-ownership and state-financing of the airline as a problem, demanding an end to state subsidies.

Frequent staff strikes have been another problem. Technological...