Croatia Airlines (OU, Zagreb) is faced with the prospect of bankruptcy if critical cuts that entail a 20% workforce reduction coupled with 40% wage cuts does not come into effect, Croatian Transport Minister, Siniša Hajdaš Dončić, has said. Mr Dončić made the revelation amidst an on.going strike by Croatia Airline pilots and cabin crew to protest the impending cuts which has caused mass disruptions to the airline's network. The walkout began early Tuesday, May 14 as management and unions failed to reach a deal on new contracts after two days of negotiations. The strike also has forced Lufthansa (LH, Frankfurt Int'l) and Brussels Airlines (SN, Brussels National) to temporarily suspend all of their codeshare agreements with the Croat carrier. So dire has the situation become that the Government has now reportedly looked beyond the bankruptcy and is considering a future in which a renewed national carrier is borne, albeit with half the current staff and with Zagreb holding a 49% stake. Reportedly, a foreign carrier, ideally non-European, would be preferred for the remaining majority stake, though with Croatia's upcoming entry into the European Union, it is uncertain how this would proceed given EC regulations regarding foreign ownership of EU airlines.