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ZAGREB (Croatia), November 12 (SeeNews) - A tie-up of Privredna Banka Zagreb (PBZ) and DVB Bank SE (part of Germany-based DZ BANK Group) is considering three options for the survival of loss-making state-owned flag carrier Croatia Airlines [ZSE:CRAL], local media reported on Tuesday.
In April, the government in Zagreb picked the PBZ/DVB Bank SE consortium to provide consultancy services for the planned recapitalisation of Croatia Airlines, as well as to help the company identify possible strategic partners.
The three models currently considered by the advisors allegedly include a synergy among Croatian airport operators, local pension fund managers and state-controlled marina operator Adriatic Croatia International Club (ACI), news daily Vecernji List reported, quoting unnamed sources close to the consultants.
One of the models envisages the establishment of a holding company to include Croatia Airlines and the operators of the country's state-controlled airports, while another model suggests that the pension funds take over Croatia Airlines and the airport operators, Vecernji List said.
A third option being considered is for the pension funds to take over the flag air carrier and ACI.
In particular, the holding company would include the Croatian airports in the cities of Dubrovnik, Split, Zadar, Rijeka, Pula and Osijek, excluding the Zagreb airport which is run under a concession contract by international consortium Zagreb Airport International Company (ZAIC).
The government controls stakes of 55% in each of the six airports, while the remainder belongs to county and municipal governments. Five of the six airports are profitable, reporting a combined profit of 213 million kuna ($32 million/29 million euro) last year. The Osijek airport, on the other hand, posted a 267,000 kuna loss in 2018, Vecernji List said.
This compares with Croatia Airline's loss of 83 million kuna last year, thus making a nice bundle since the members of the potential future holding company are interdependent, with the flag carrier providing for a good part of the turnover at the domestic airports, especially in the winter season.
Opatija-based ACI, which operates 22 marinas across Croatia, is also profitable. The company reported last month that its net profit fell 14.6% year-on-year to 33.7 million kuna in the first nine months of 2019.
At the end of October, Croatia Airlines said that the PBZ/DVB Bank SE consortium has started exploring investor interest for its planned capital increase.
Transport minister Oleg Butkovic said in September that the best possible recapitalisation method should be chosen by the end of the year, with the aim of launching it by June 1, 2020 at the latest.
Also in September, the government decided to provide the flag carrier with 250 million kuna of fresh capital, aimed at helping it stabilise its operations ahead of the planned recapitalisation. Later the same month, Croatia Airlines received the first 100 million kuna of the pledged state aid.
The airline's consolidated net loss widened to 48.4 million kuna in the first nine months of 2019, from 34.4 million kuna in the like period of last year.
The company's shares last traded on the Zagreb bourse on November 6, closing flat at 34.8 kuna.
The Croatian government controls a stake of almost 99% in the flag carrier
(1 euro = 7.44313 kuna)