Croatia Airlines (OU, Zagreb) is to be recapitalised through a HRK350 million kuna (USD54.7 million) share capital increase in accordance with European Commission-sanctioned, COVID-19 state aid measures, a notice to shareholders by board chairman Jasmin Bajić said.

An extraordinary meeting of shareholders on December 14, 2020, will decide on a proposal that the Croatian government injects cash in exchange for the issuing of 35 million new ordinary shares with a nominal value of HRK10.00 each (USD1.56). This would increase the share capital of the company to HRK627.8 million (USD98.1 million), representing 62.8 million registered shares valued at HRK10.00 each.

The transaction would take the form of an investment agreement between the Croatian government and Croatian Airlines. It aims to recapitalise the airline and boost its cash reserves to pre-COVID-19 levels, or as they were on December 31, 2019. The deal would be in accordance with state financial assistance provided for under the “Provisional Framework of the European Commission for State Aid to Support the Economy in the Current COVID-19 Pandemic”, the notice to shareholders read.

The transaction would be effective from the day it is registered with the Commercial Court in Zagreb.

Shareholders will also be asked to vote on the re-appointment of Zlatko Mateša, Nataša Munitić, Zoran Barac, and Mirko Tatalović for another four-year term to the airline’s board.

Croatia Airlines recorded an operating loss of HRK222.4 million (USD35 million) in the first nine months of 2020, resulting in a net loss of HRK243.5 million (USD38 million), the airline announced on November 13.

It said this represented a worse result by HRK195.1 million (USD30.5 million) compared to the same period in 2019 and was a direct result of lower travel demand due to COVID-19. Revenues between April and September plunged by 70% on the back of 11,709 fewer flights flown and a 69% or a 1.17 million drop in passenger numbers.