Croatia Airlines on Wednesday cancelled 22 flights as a strike by the loss-making carrier's pilots and stewards over pay cuts and dismissals stretched into the second consecutive day.
The walkout, which began in the early morning hours on Tuesday, persisted as management and unions failed to reach a deal on new contracts after two days of negotiations. Previous contracts had expired in March.
Cancelled flights included connections with Brussels, Munich, Vienna and Zurich.
Another 23 international and local flights will be operated by other carriers, said the company which employs 1,100 people.
The unions have staged the walkout in protest at the salary cuts and dismissals that state-owned Croatia Airlines has announced as part of its restructuring plan ahead of Croatia's accession to the European Union.
The plan includes dismissals of around 200 employees and salary cuts of up to 40 percent, according to unions.
Unions argue that such action would not significantly contribute to the ailing company's recovery and claim that only a part of the employees will be affected by the restructuring.
"We have to give up (salaries and some rights) unlike the rest of the company who either will not have to give up anything or very little," union leader Tanja Miric said.
But Transport Minister Sinisa Hajdas Doncic warned that "there will be no concessions since they are not possible".
If the restructuring plan is not implemented "Croatia Airlines will go bankrupt", he said, calling on unions to be "reasonable".
The restructuring of public companies is among key moves undertaken by the former Yugoslav republic to revive its economy which has not registered growth since 2009.
In 2012 the airline accumulated loses of some 370 million kunas (49 million euros, $64 million) while its debts currently amount to around one billion kunas.