Croatia's government adopted a decision on January 30 whereby an advance payment of HRK250 million kunas (USD37 million) to stabilise state-owned Croatia Airlines (OU, Zagreb) ahead of its planned recapitalisation, will be treated as a shareholder loan, the Croatian news agency Hina reported.

“The loan provides for the necessary financial stability of Croatia Airlines' operations ahead of the recapitalisation by a private investor, and represents a sensible strategy and action on the part of the Republic of Croatia as the majority owner of Croatia Airlines,” the government said in a statement about the financing.

The grace period on the loan has been set at two years with a fixed annual interest rate of 2%, the Ministry of Maritime Affairs, Transport, and Infrastructure said, while other terms and conditions will be negotiated with the airline. The European Commission has said it is in close contact with Croatian authorities to enforce its strict guidelines on state aid.

The government decided in September 2019 to provide the airline with the sum of HRK250 million to help it finance fleet repairs and overhauls, repay loans, settle domestic supplier debt repayments, and make essential investments needed over the ensuing 12 months, preening the company ahead of its attempt to privatise it. The carrier received the first tranche of HRK100 million (USD14.8 million) later that month, and the government pledged to transfer the remaining HRK150 million (USD22.2 million) in 2020.

In December, Croatia Airlines said it had received two offers from prospective investors without disclosing their names. Citing unofficial sources, local media reported that the proposals had been submitted by Aegean Airlines and Air Nostrum. Aegean subsequently confirmed in a statement that it had "participated in the non-binding indicative offer stage of the privatisation of Croatia Airlines, which does not include any commitments from the company", while Air Nostrum declined to comment.

The recapitalisation process should be launched by June 1, 2020, at the latest, Minister of Maritime Affairs, Transport, and Infrastructure Oleg Butkovic has said.