The Croatian government has given permission to Croatia Airlines (OU, Zagreb) to take up a EUR8.5 million euro (USD10.2 million) loan from two banks, state-owned Hrvatske poštanske banka (HPB) and private Privredne banka Zagreb (PBZ), to finance the necessary maintenance of engines, HINA newswire has reported.

The governmental approval was needed since under Croatian law all state-owned entities need a nod from the state to loan more than HRK7.5 million kunas (USD1.2 million) in one go. However, the state has not issued any guarantees for the carrier and the loan has been taken up on commercial terms, with repayment in quarterly instalments due to be completed by the end of 2022.

The banks have co-financed equal parts of the loan amounting to EUR4.25 million euros each.

Simultaneously, the carrier has commenced prepayments for its four A320neo aircraft due to arrive from Airbus in 2021 and 2022, EX-YU Aviation has reported.

According to Poslovni dnevnik, the carrier is also facing pressure from its employees which have warned of a possible strike, accusing Croatia Airlines of poor management leading to, among others, delayed maintenance of aircraft before the peak summer season, frequent short-term wet-leases, cancellations, and poor pay conditions for employees which are generally in high demand in the industry.

This has prompted the management of the carrier to issue a statement in which it denied that Croatia Airlines is on the verge of collapse, HINA newswire has written. The carrier has made a HRK25 million kuna net profit in 2017 and HRK6.6 million kuna in 2016, and expects a positive result in 2018. It has also called on the unions to engage in a constructive dialogue rather than to go on strike.

According to the ch-aviation fleets module, Croatia Airlines currently operates twelve aircraft - six Dash 8-400s (out of which 9A-CQA (msn 4205) has been on maintenance since May 1, Flightradar24 ADS-B data shows), four A319-100s, and two A320-200s. Until May 5, it had been leasing a Fokker 100 from Trade Air.