State-owned Croatia Airlines will be handed an HRK800 million kuna (USD$136 million) government boost to its efforts to become profitable from 2013.
Transport minister Sinisa Hajdas Doncic announced the capital injection on Tuesday as Croatian said it would cut its 1,130-strong workforce by 10 percent within two years and consider reducing the number of destinations it serves.
Croatian, the country's only airline, largely caters to leisure travellers and businessmen heading for the Adriatic coast. It is a member of Star Alliance.
The government will make its payment in two stages, Doncic said. It will first provide HRK652 million kuna to cover the airline's debts and a further HRK150 million to help the airline to become more competitive.
Croatian suffered a net loss of HRK9.9 million kuna in the first nine months of this year, down from a HRK39 million loss in the corresponding period last year.