Bonuses for Lufthansa Managers, Additional Payment for Overcoming Inflation at Croatia Airlines

The German public was recently disturbed by the announcement from the national airline Lufthansa that bonuses would be paid to management ahead of the holidays. The issue was not so much the bonuses themselves, but the fact that the company had recently sought federal government assistance to avoid bankruptcy. During the pandemic, quarantine, and border closures, the German state took a 20% stake in Lufthansa to save it from the worst. Not only that, the company received state aid last year and this year, so it is not surprising that the media revelation about the payment of bonuses for 2021 and 2022 stirred up spirits. Especially since the European Commission did not look favorably on such a ‘rescue’ of Lufthansa.

This motivated us to ask the domestic national carrier Croatia Airlines whether their management, led by Jasmin Bajić, would also receive bonuses, especially since the company cannot operate without state assistance or without recapitalization. The last recapitalization occurred recently, just a few days ago, when the shareholders of Croatia Airlines decided at an extraordinary general meeting to increase the share capital by 296 million kuna, and the entire amount is to be paid by the state. This specifically means that the share capital will increase from 627.9 to 923.9 million kuna, or by 296 million kuna, through the issuance of 29.6 million new ordinary shares with a nominal value of 10 kuna each.

In any case, Croatia Airlines responded to our inquiry that they would not pay bonuses to management. As they stated in their response, ‘the employment contracts do not provide for the payment of bonuses to the company’s management, and the mentioned bonuses are not paid.’ However, that is not quite the case…

Namely, the salaries and other remuneration of the members of the company’s management, which, by the way, is included in the list of legal entities of special interest for the Republic of Croatia, are subject to the Decision of the Government of the Republic of Croatia on determining the salaries and other remuneration of the presidents and members of the management of commercial companies. And that decision is related to the salary policy in the national airline.

– When determining the fixed and variable amounts of remuneration for the members of the Management Board, criteria that correlate with the average monthly paid net salary per employee in legal entities in the Republic of Croatia are applied. The fixed part of the salary is determined by the Supervisory Board in accordance with the Government Decision, while the variable part is determined by the Supervisory Board if special conditions are met – states the document titled ‘Remuneration Policy for Members of the Management and Supervisory Board of Croatia Airlines for the period 2021 to 2025.’

This document also states that the management and supervisory board have the right to a performance bonus for achieving a multi-year plan (three years or more), but if we are to believe the company’s response, there will be no bonuses this year. Perhaps they should be asked next year or the year after…

However, although the management will not be rewarded this year, the employees will be. As stated by Croatia Airlines, based on the provisions of the Collective Agreement, a Christmas bonus of 750 kuna has been paid to the employees of Croatia Airlines.

– In addition, in an effort to contribute to overcoming the negative impact of inflation on the living standards of its employees, the company’s Management Board has decided to pay an additional allowance of 1750 kuna – states the response from Croatia Airlines.