Wednesday, July 28, 2010

“Adria and Croatia should unite”

Could Adria and Croatia Airlines become one?
Eelier this month, Tomaž Lovše, the president of the American Chamber of Commerce in Slovenia, suggested that neither Slovenia nor Croatia need national flag carriers such as Adria and Croatia Airlines. He believes that both are a waste of tax payer’s money. Instead, Lovše suggests that the two airlines should unite. “The two airlines should unite due to the economic benefits they would experience from such a move. As a united airline, shares could be sold both on the Ljubljana and Zagreb stock exchange and long haul flights to New York could commence”, Lovše told the “Finance” magazine.

Both Adria Airways and Croatia Airlines are part of Lufthansa’s Star Alliance network. In 2009, Croatia Airlines carried the most passengers out of all the former Yugoslav carriers while Adria Airways came in third after Jat. Both Croatia Airlines and Adria are posting dire financial results this year but both have committed to a fleet renewal program. In recent times, Adria has focused more on its regional network while Croatia Airlines has been rationalising its summer charter flights from the country’s coast.

Earlier this year, Ivan Mišetić, the CEO of Croatia Airlines, noted that the Croatian national carrier must be privatised in order to avoid bankruptcy. However, the airline’s management now plans to bring the airline into positive financial territory by 2013 and only then should the Government decide whether the airline should be privatised.

Do you think the unification of Croatia Airlines and Adria Airways would be a rational move? Do you think it would work? Leave a comment with your thoughts.

16 comments:

  1. I believe that's like the best that could happen, but having in mind political background..... Croatia - Slovenia ?
    Merge of this two airlines can only be done by a 3th neutral "political" independent party and this will be LH in several years......

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  2. I fully agree to it. In my discussions with friends i point out again and again, that if the coutries of the former YU want to see progress, they need to work together. Sometimes I can t understand that they still insist on their no exit positions, rather than find ways for solutions. Slovenia and Croatia were having a dispute for this Piran Bay, sorry what s that?? Croatia has got 92% of the coast of the former Yugoslavia and they can t leave this half part of the Bay to Slovenia? Ridiculous !

    In my eyes it would make sense to form one airline, but privatized, with LH having 49% shares.

    I would include lots of LH management into the company, so that the airline is ruled professionally and by business aspects rather than political aspects.
    The name of the airline could be ADRIA Airways, the best name of all the former EX-Yu Airlines

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  3. Airbus A319 -132 3142 TC- ? B&H Airlines at IST 25jul10 in full cs prior lease from Turkish ex SX-OAV

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  4. I really don't see what the point of this merger would be.

    Just because you merge two companies doesn't automatically mean that they will be profitable.

    Also both companies are persuading completely different strategies. JP is based in small medium rich country which allows for single-hub strategy. OU is based in poor, medium size country which due to its geography and tourist industry is pushed towards more of a multi-hub approach.

    Mix this with regional tradition that politics meddle into business decisions. And finally add a bit of "it's somebody elses fault" thinking that persuades south slavic societies and you got receipe for disaster.

    Hopefully somebody can convince me that I am wrong :)

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  5. I think you are not wrong.

    Lovše is just a stupid guy...

    Slovenia and Croatia could not even have merged Nuclear powerplant, what about an airline hehe

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  6. Duchess of ShangayJuly 28, 2010 at 2:26 PM

    SAS model...For whole Ex-YU?

    (Well, or just repeating Yugoslav Airlines with different stakeholders...)

    I feel worth considering...

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  7. I agree ex-yugo aviation should unite to cope with new markets and to be more competitive. In these days everyone merges to cope with high prices of gasoline.

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  8. @zrak
    I dont agree that Croatia Airlines has multi hub strategy. About 90 percent of all their flights are form ZAG. During the summer season this changes, but not much.
    I have a question for all of you:
    If these two were to merge, due to close proximity of LJU and ZAG, which do you think would get more flights ? Where to ?
    Are Lju and Zag too close for them to both remanin a hub?

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  9. I think that if anything JAT and Croatia Airlines should merge. JAT is going to have MAT asa subsidery, so the Croatian, Macedonian, and Serbian air carriers will be merged together. Skopje, Belgrade, and Zagreb are far enough to be hubs for the merged airline. In addition to that, Croatia and Serbia are the two largest countries of the former Yugoslavia. They have together about 11 million citizens which would greatly help the merged airline recover from the economic crisis. Hopefully, it would also help unite Croatia and Serbia in a positive manner. I see a JAT-Croatia Airlines merger much better than a ADRIA-Croatia Airlines merger.

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  10. If nothing else, would be nice to see Croatia or Adria flying to North America. The fact that I have to take at least 3 flights to get to ex YU from the US or Canada makes my flying experience everything else but enjoyable.

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  11. If anything, flights to NYC, Chicago, and toronto should go from Belgrade. That would make the most sense.

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  12. But why shoud I go from Ljubljana to BGD to fly to North America if VIE and MUC are closer. BGD is not in the focus for most of Slovenia and western Croatia. It doesn't make sense at all.

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  13. Any ex-YU merger i dont see happening and alot will need to change here before it happens. As for transatlantics, from ZAG or LJU, i dont see it being sustainable, and do the airports have the facilities to handle such flights year round and the extra pax?

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  14. If we are going to see absurd shuttle flights between the two airports (120km?), higher prices and less flights to major destinations as a result of this, then sure - why not! And let them purchase a brand-new widebody fleet as part of the deal too... especially for those flights to New York and all the other enormous possibilities that a combined airline would suddenly have at its disposal.

    The reality is that combining two unprofitable business doesn't magically turn around fortunes overnight. Each airline (as stated above) is pursuing a different agenda, and neither with much success it seems. Politically it wouldn't work, and from an operations point of view it wouldn't work.

    Each airline needs to do a thorough review of its costs, projections and route structure. Certain high-level management need to leave and competent staff who know about running an airline need to be in the job.

    The big question remains - should airlines have to be independently profitable to remain operating, or should they be seen as part of the wider economic benefit to a country/region...

    Finally, exYU, i'm pretty sure Lufthansa doesn't own or control *A...

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  15. None of this is gonna happen, because politics are heavily involved. Both countries have quite closed economies and both airline managements are full of political cronies. This is still Balkans and common and economical sence does not rule. Try it again in about 50 years...

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  16. I think that the best solution is to merge JAT and Croatia Airlines first. See what happens and then decide to go for an ex-yu merger. Transatlantic flights will commence from Belgrade anyway through Emirates Airlines, and maybe the new merged company can start its own flights to USA/Canada from Belgrade. And for those that think it can't happen due to politics and s***, the highways are connecting the ex-yu region and the recent railway merger between Slovenia, Croatia, and Serbia are another ex-yu merger that is uniting the ex-yu region.

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