Croatia’s national carrier, Croatia Airlines, ended the first nine months of 2026 with a net loss of €64.7 million, more than three times the €20.9 million loss recorded during the same period last year. According to the company’s published unaudited financial report, despite an increase in passenger numbers and operating revenue, the airline recorded a substantial deterioration in its financial performance, primarily due to sharply rising operating costs, financial expenses, and costs associated with its fleet renewal programme.

Croatia Airlines’ operating revenue reached €221.2 million during the reporting period, an increase of 8% compared with the previous year. However, operating expenses simultaneously rose by as much as 20%, from €226.2 million to €270.5 million. Consequently, the operating loss increased from €21.5 million to €49.3 million. Particularly concerning is the fact that the airline recorded a loss of €15 million in the third quarter alone, which covers the most important part of the summer tourist season, compared with a loss of €2.9 million in the same quarter of the previous year.

A further deterioration is evident in the EBITDA indicator, which fell from a positive €12.4 million in the first nine months of 2025 to a negative €23.9 million in 2026. This is a particularly important indicator, as it confirms that the negative results cannot be attributed solely to depreciation associated with new aircraft or financial expenses. Operating costs are growing significantly faster than revenue, pointing to serious challenges in achieving operating profitability.

These results come despite positive traffic indicators. Between January and the end of September, Croatia Airlines carried 1,656,468 passengers, 7% more than during the same period last year. The passenger load factor increased by 1.2 percentage points to 67.5%, while passenger revenue rose by 6% to €183.9 million. Nevertheless, the average gross fare was 1% lower, while unit operating costs increased by approximately 10%, with unit operating revenue remaining almost unchanged. This relationship demonstrates that traffic growth has so far been insufficient to offset rising costs.

At the same time, the airline also recorded an increase in its workforce. As of 30 September 2026, Croatia Airlines employed 1,035 people, an increase of 25 employees, or 2.5%, compared with the previous year. The number of operational employees increased by 19, while non-operational staff grew by six. According to the company, the introduction of the Airbus A220 resulted in the addition of nine pilots, while the number of cabin crew members increased by eleven. The average number of employees during the first nine months rose from 996 to 1,025, while total personnel expenses increased from €38.4 million to €40.9 million, representing an increase of approximately 6.6%.

Although part of the additional recruitment is an expected consequence of fleet renewal and increased traffic volumes, rising personnel costs represent another source of pressure on the airline’s financial performance. It is important to emphasise that hiring additional operational staff is not necessarily an indication of inefficiency, particularly during the introduction of a new aircraft type and the associated need for appropriately trained crews. Indeed, the airline’s employee productivity indicator improved by 3%. Nevertheless, in circumstances where expenses significantly exceed revenue, it is reasonable to expect that any increase in headcount, including non-operational personnel, should be accompanied by corresponding productivity improvements and long-term organisational optimisation.

In explaining its financial results, Croatia Airlines emphasises unfavourable external circumstances, particularly rising jet fuel prices linked to geopolitical conflicts in the Middle East. Fuel costs increased by €20.7 million, aircraft maintenance costs, excluding personnel expenses, by €7.6 million, air traffic service costs by €3.3 million, and depreciation by an additional €4.2 million. The airline states that factors beyond its control had a negative impact of €48.4 million, equivalent to approximately 75% of the total reported loss.

External cost pressures undoubtedly represent a serious challenge for the entire aviation industry. However, it is important to distinguish between unpredictable market conditions and costs associated with strategic business decisions. Fleet renewal, although necessary and justified in the long term, entails additional financing, depreciation, staff training, and the simultaneous maintenance of different aircraft types. The financial results therefore raise questions about how much more financially demanding the transition period has become compared with initial expectations, and when investments in the new fleet can be expected to deliver tangible positive results.

The Airbus A220 fleet replacement programme represents the largest modernisation project in Croatia Airlines’ history. By the end of September, the airline had taken delivery of eleven aircraft of this type, followed by two more in October. Their introduction is expected to deliver lower fuel consumption, simplified maintenance, and improved operational efficiency in the long term. However, during the transition period, the airline faces the costs of simultaneously operating different aircraft types, delivery delays, and prolonged procedures for returning older aircraft to their lessors. According to the report, cumulative Airbus A220 delivery delays have reached 73 months, further complicating operational planning and cost control.

The airline’s financial stability also deserves particular attention. In December 2025, the Croatian Government approved a capital injection into Croatia Airlines totalling approximately €156 million, of which €85.9 million relates to the conversion of government receivables into equity and €70 million to cash contributions. The first €35 million was paid at the beginning of 2026, while the remaining €35 million was originally scheduled for 2027.

However, at the end of October 2026, the General Assembly of Croatia Airlines adopted a decision to increase the company’s share capital by an additional €35 million through the issuance of 35 million new ordinary shares, each with a nominal value of one euro. The new shares will be subscribed and paid for by the Republic of Croatia, increasing the airline’s share capital to approximately €248.2 million. This means that the final phase of the capital injection, originally scheduled for next year, is being initiated earlier than planned.

Although this forms part of an already approved financial support programme rather than a new capital injection beyond the previously announced framework, the change in its implementation schedule deserves attention. Given the exceptionally poor financial results, increased operating costs, and pressure on liquidity, it is reasonable to question whether the accelerated capital injection is linked to the need to secure additional financial resources sooner than initially anticipated. Such a connection appears plausible, although the airline has not explicitly confirmed that deteriorating financial performance was the reason for changing the original timetable.

Despite government financial support, net cash flow from operating activities was negative at €7.2 million during the first nine months, compared with a positive €14.6 million a year earlier. Cash holdings at the end of September amounted to €20.4 million, although the increase in available cash must also be viewed in the context of the government capital injection and the sale-and-leaseback of two spare engines, transactions through which the airline secured an additional €25.7 million. At the same time, long-term liabilities increased from €219.3 million to €280.5 million, primarily due to higher aircraft lease obligations. These indicators confirm that the airline’s financial stability remains heavily dependent on the successful completion of its fleet transition and the maintenance of adequate liquidity.

While it is important to acknowledge that Croatia Airlines had anticipated negative financial results during the multi-year fleet renewal process, the magnitude of the reported loss and its rapid increase warrant serious attention. Positive traffic indicators and fleet modernisation are important steps for the airline’s future, but they do not in themselves guarantee financial sustainability. Particularly concerning is the fact that even passenger growth during the summer season was insufficient to significantly mitigate the negative result, while the earlier-than-planned implementation of the final government capital injection raises additional questions about the national carrier’s financial requirements during the transition period.

Croatia Airlines therefore faces a challenging period in which, alongside completing its fleet renewal, its key priorities will be increasing revenue per unit of available capacity, controlling costs, and improving operational efficiency. The upcoming winter months, traditionally characterised by weaker demand, could place further pressure on the airline’s financial performance. Ultimately, the long-term success of the fleet renewal programme will not be measured solely by the number of aircraft delivered or passengers carried, but above all by Croatia Airlines’ ability to translate technological modernisation into financially sustainable operations.