Friday, September 30, 2011

Aid for Croatia Airlines

Financial injection for Croatia Airlines

The Croatian Competition Agency has cleared 42.4 million Euros in state aid to Croatia Airlines for the purpose of settling contractual obligations for the purchase of Airbus jets. However, unlike state aid granted recently to Slovenia’s Adria Airways, Croatia Airlines will be requested to either return the money within six months or commit itself to a companywide restructuring program. The latter is more likely to occur. The news, which gained little media coverage in the country, is significant as it illustrates the difficult financial situation the Croatian carrier finds itself in, despite a record year when it comes to passenger numbers.

Croatia Airlines has four Airbus A319s on order, scheduled to arrive within the next two years. The airline has had problems keeping up with payments for its aircraft in the past. In December 2009, one of the airline’s A319s was nearly revoked before the government stepped in with payments. More recently, Zagreb Airport warned it would impound some of the national carrier’s jets if it did not pay up its outstanding debt dating from 2009 which amounts to 9.2 million Euros.

On a brighter note, next year, Croatia Airlines will begin fitting part of its Airbus fleet with Lufthansa’s Recaro designed seats. The new look cabin will be progressively introduced from the start of the 2012 summer season.

32 comments:

  1. lLol who are we kidding. All the ex-YU airlines are just a bunch of bankrupt wannabe airlines. No professionals, no business model, no nothing.

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  2. So if I’m up to date – government gives funds to Croatia Airlines to pay off aircraft, Slovenian government gives funds to keep Adria flying, government gives constant guarantees for loans so Jat can keep flying, government pays off Montenegro Airlines debt so it doesn’t go bankrupt… wow

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  3. Really funny!
    Everybody here on this blog is sh..ing on JU which has never received direct cash injection taken from tax payers pockets in current century.
    But OU, JP, YM did. And they did it in hardcore amounts!!!
    It is funny how this aviation blog really turned to classical anti-Serbian spot, which became the mainstream fashion in the region.
    Sad!

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  4. I have to agree with the last anonymous, Croatia Airlines is always portrayed as the well run airline on this blog with supposedly good financial results, expansion plans...
    But the reality is that even with a huge rise in passenger numbers it records massive losses.

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  5. last anonymous:

    just don t react to any political comments. that s it.

    currently all the ex YU airlines are seating in the same sh....
    the reasons we know. and honestly said, that JU is having problems after all the war sanctions etc and the conflicts Serbia was involved, I can understand. But OU with the coast, and even more JP being from a 7 year old EU member country with privileges of flying routes such as FRA-VIE or at the beginning even MUC-VIE and NOW from various places in Europe to PRN, having 75% market share at the home base, that s rather poor performance...

    ex YU sees know the consequences of their split-up, same in the Soccer Leagues. Look where Red Star Belgrade was 1991? What s today with ex YU clubs? a mix of many reasons has brought them to where they stand today.

    So in regards to the airlines, we only have the possibility to follow the next actions and to guess and argue what would be best for them. But when I hear inside JP comments in regards to their future plans, I do not have big hope that they will succeed.

    Maybe we should turn our hearts towards SQ,LX,LA,TK or EK :-))

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  6. So, these two "well run" pro western European airlines Adria and Croatia received these days almost 100 mio €. Unbelievablble amount of money just to keep them afloat. Next year another 100 m will follow for sure....but LH is happy, no investment at all and these two small national carriers shuffle loads of good traffic into LH hubs.
    Just as matter of fact, OU offices in Europe are run very unprofessionally. Too big, too many, located in top expensive areas. Lots of potential for cost saving... Not to mention that for instance in FRA, couples and relatives work together. So, where is the difference to old JAT times?
    Everyone was complaining about balcanic style of running that business....

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  7. I guess the time has come to bash Croatia Airlines.
    I can agree with the premise that all airlines have problems but do not agree that they are all in the same 'shit' as someone has pointed out.
    Their problems are unique to them, and only them. It is not the same to owe 9.2 mil euros (OU) or 100 mil (Adria). Adria has a different set of problems from Croatia and from JAT.
    JAT's problem is its old fleet (among others).
    In other words, all their problems are different and require a different solution, some solutions are easier to find and some are not.
    In the case of OU, I do not think that the problems are overwhelming or unsolvable.

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  8. @ EX-YU Administrator
    @ JU520 BEGLAX

    It is not politics.
    Just take a look at 25th comment under yesterday`s topic.

    Some people like Doot really turned this blog into deep sh..

    That is not about aviation!!!

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  9. @Aero

    can t read anymore, message was deleted. Just ignore those messages, that s it.
    On this blog everybody is welcome and I think everybody who has a relation to the former ex YU, is somehow touched by JAT and Belgrade Airport. The proud aviation history of Yugoslavia is mainly told in Belgrade and with JAT/Aeroput. Still I will never forget the big DC10s in LJU bound for Cleveland and Chicago standing next to a DC9-32 or a B727-200 or my flight on the good old YU-AMA from JFK to Dubrovnik.

    Does anyone knows what S5-AAT is doing in ZAG? 03OCT 0600H local time LJU it will leave for ZAG and does not returns. Will OU take it over?

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  10. @JU520 BEGLAX

    I wouldn't necessarily say that the history is mostly told in Belgrade, but I would 100% agree that the history's main player was JAT. I remember flying ZAG to NY in the 80's. I also remember that our passports were worth more than any other. There was a time when national pride was justified.

    I wish the best for all our countries as long as we stay in peace. I also wish the best for all our airlines. Each country has the possibility to have a successful airline, but only if they are professionally run. Nepotism and political appointments are no way to run a successful business. The only people that can change the system are the voting public, but too often the ones that bother to come out to vote fall for nationalist propaganda and scare tactics. Good luck to OU, JP, JA, JU, YM, etc. They all need it.

    @Damien
    Different problems, but they all stem from the same root cause, mismanagement.

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  11. thanks E. I agree with u.
    Wish you a good weekend. Ciao

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  12. I'm sorry that I have a question OT:

    Can somebody tell me, where are
    YU-ALP and YU-ANH?

    Thx in advance

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  13. Thanx E and JU520 BEGLAX for your posts.
    Nice weekend for all of you.

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  14. It's funny to watch how airlines must fly around Kosovo. If you check OU's and JP's flight from SKP they have to make a rather large detour.

    http://www.flightradar24.com/

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  15. A bit of negative news about OU and everyone has a great weekend. It's almost sounds like people are relieved that OU needs to 'borrow money' if that is the case. OU has received 42.5 million Euros interest free and maybe completely free. Which business would knock that back?
    Unrelated; I just read an article regarding the collapse of Ansett and the mess that airline found itself in. The Ex Yu has absolutely nothing near as bad as that mess! Sometimes people on this blog bash the region as if it’s the only place in the world where you’ll find for example a baldly run airline. Guess what? It isn’t!

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  16. @Q400

    Totally agree with you! If we look at the financial reports of Lufthansa or Austrian or any of the big players we'll see huge losses which does not necessarily mean they are badly run. Crisis, volcanic clouds, and score of other problems can befall any airline since it is somewhat of a volatile business.
    OU is using this loan to buy more planes; I see nothing wrong with that.
    I'd be happy to hear that JAT does the same.

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  17. It is not true that debt to Zagreb Airport is 9,2 million EUR. I saw documents that debt is 45 million kuna (6 million EUR). After October 2009 Croatia Airlines regularly pay all obligations. Zagreb airport take mortgage on planes but Mr. Peović publicly notice that this mortgage will not be forced, so it is not true that «Zagreb Airport warned it would impound some of the national carrier’s jets». NO WORNING AT ALL WAS SENT TO CROATIA AIRLINES FROM ZAGREB AIRPORT.

    Situation is not same in JP, JU and OU:
    - OU has to pay very expensive slots, planes, offices... (after independents where they were blackmailed especially by LHR, CDG etc.) and JU succeed those from ex country with no paying
    - OU did not ask for money for debts like JU, but for settling contract for 4 new A319. OU in last few years take 6 brand new Q400 on lease, partly pay for A319, order another Q400. OU have rather new fleet what costs money.

    Of course I am not for subventions, even not for this kind of loan, but by this way Republic of Croatia just protect her ownership because if not Croatia will lost money which already was paid to Airbus.

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  18. Purger,

    So what if they had to get expensive slots? Evey airline that wants to fly into London, Paris or Frankfurt has to do that.

    I wonder if OU or JP had inherited Jat's DC-9s, DC-10s, B727s, B737s what they would be flying today. Would we have the same scenario as with Jat or would they be flying around brand new planes? Not to mention if they had to sail through the same economic and political climate thta Jat had to in addition to having a bunch of aircraft without really having the adequate market for them.

    Using the new fleet of ex-Yu carriers as an argument is plain stupid. Of course they are going to have newer aircraft, they were founded after Jat. I am sure that if Jat was to relaunch now they would not lease a Tu-154 from Taban Air but would go for some new technology.

    Comparing Jat to Croatia and Adria is like comparing apples and pears.

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  19. I think that you forget that Croatia Airlines did have to stop flying because of war in Croatia. Several times.

    I think that you forget that Croatia Airlines could not fly from ZAD, DBV, OSI for more than 2 years and from SPU and ZAG for more than one year all together.

    I think that you forget that to have fleet of 30 planes is huge capital which in beginning of 90's you can sell and buy some 10 new planes. In same time Croatia have to buy fleet of 10 planes (737 and ATR), and than change them with 13 new planes (A319, A320, Q400).

    I think that you forget that JAT get slots to LHR, CDG, FRA… in time when they did not pay for slots. This slots was not share between all Republic but just given to JAT. All other have to pay extremely expensive slots. JAT did not need to do so.

    “Comparing Jat to Croatia and Adria is like comparing apples and pears”. I totally agree, but in all comments on this post everyone compare OU, JU and JP as “same shit”. And they are not.

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  20. I actually did not forget anything.

    Croatia's situation after the war was very much different from that of Serbia. No need to go into details as I am pretty sure everyone is aware of it.

    To have a fleet of 30 aircraft is a capital, but the question here is what kind of aircraft did Jat have? Jat's DC-10s were already old just like the 727s and the DC9s. The market was very much limited for Jat to sell them. They could have sold them to some third class airline but it would have been a bargain and wouldn't prove to be a profitable move.
    So all in all, Jat had 10 733s and a whole bunch of fuel guzzlers.

    So what if Jat got the slots at those airports? Croatia got the coast with hotels and infrastructure already in place. You had full functional airports on the coast which were ready to accept tourists. That's far more valuable than having a few slots at various airports.
    Plus, do you really think that Lufthansa charged OU and JP for the slots in Frankfurt? Let's not kidd ourselves.

    I do not understand your point that OU had to spend so much money for various things. So what if they did? No one said that opening your airline would be cheap or easy. If it was really such a burden for Croats to do it thenthey wouldn't have done it.

    Adria and Croata are the ones to be really compared here since they have started at the same time under the same conditions. Jat is a completely different story and should be compared to airlines such as Lot, Malev, CSA, Tarom.

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  21. This comment has been removed by a blog administrator.

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  22. “You had full functional airports on the coast which were ready to accept tourists” – by this for sure you don’t mean:
    - DBV – totally devastated (Jat and JNA take all equipment out of it) and destroyed
    - ZAD – totally devastated and destroyed
    - PUY – most of equipment devastated
    - OSI – totally devastated

    That is 4 out of 7!

    “That's far more valuable than having a few slots at various airports”.
    Is it? Pair of slots in LHR today costs up to 110 million EUR.

    “Plus, do you really think that Lufthansa charged OU and JP for the slots in Frankfurt? Let's not kidd ourselves”.
    Ooooo YES! They charge everything!!! And even more LH is not operator of Frankfurt, but Fraport.

    “Adria and Croatia are the ones to be really compared here since they have started at the same time under the same conditions”.
    You have to be joking. Adria was founded in 1961, some 30 years before Croatia!

    “To have a fleet of 30 aircraft is a capital, but the question here is what kind of aircraft did Jat have? Jat's DC-10s were already old just like the 727s and the DC9s”.
    DC-10 was not old in beginning of 90’s – they were just 12 years old, 727 some 16 years. DC-9 was perfect plane for Serbia and on that time most of air companies have them in fleets. 737 were just few years old (some 5 years than), and ATR’s even younger. So, what are you talking about? Croatia would be very happy to have DC-10, or much younger 737-300 than those which they bought from LH (it was 737-200 very old and noneconomic plane than), or new ATR. Unfortunately Croatia just pays some 25% of those planes but did not get any of those to start company.

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  23. I have to agree 110% with Purger here!

    Remember a lot of the Croatian cost was a war zone in the early 90's and airports in Croatia were a prime target for the JNA. Only Split was spared because it was used as a UN base. Croatia experienced something like 40 billion US in damage and loss or revenue due the war years. Dubrovnik airport for example was totally devastated and was basically re built.

    It’s hard not to be proud of Croatia Airlines, which has done so much during and since the war has had a clear vision which it hardly strays from and continues to be a beacon of Ex Yu airlines.

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  24. Ohhh Purger and Nemjee...
    I like you both ...but you are
    always comparing each other !
    All this competiton and talking
    about old times !

    I really envy... I am really jealous about our young people who were born after Yugoslavia or are still little kids !
    They are living now ...their thoughts are directed to the future..

    Although i loved Yugoslavia(I am
    Slovenian ),sometimes I wish I have never lived before the wars !
    I think this wars ruined us all
    in some way...some more or less,
    but it did so .
    I also think those times then were not so bad or so good as some describe them !!!
    Yugoslavia ...that were we the people ...not Tito...it was our life.
    But we also have a future...
    we are not dead ,we still have to go further...there is so much work
    to do !
    Together or everybody alone...
    let us look forward for the future of the people who come after us !

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  25. '- DBV – totally devastated (Jat and JNA take all equipment out of it) and destroyed
    - ZAD – totally devastated and destroyed
    - PUY – most of equipment devastated
    - OSI – totally devastated

    Is it? Pair of slots in LHR today costs up to 110 million EUR.'
    ----------------

    Well if the equipment was the same as the one at the Belgrade and Nis airports then we did you a favor. This is best portrayed by the fact that the renovation of BEG became a priority.
    Also those airports became functional VERY fast so that means that finding the funds was not a problem.

    Well, you are talking about Heathrow here. No one has to force them to fly there if they think it's to expensive, there is Gatwick, Luton, Stansted...

    Plus, Crotia and Slovenia decided to leave the Yugoslav union, so what did you expect? Independence baskets from Belgrade? And let's not forget, the agression on Slovenia and Croatia was not launched by Milosevic but by Ante Markovic. ;)
    -----------------------------

    'You have to be joking. Adria was founded in 1961, some 30 years before Croatia!'

    So then we should be asking ourselves why was Slovenia smart enough to have its own airline but Croatia wasn't. Not to mention that Croatia had a far greater need for an airline with tourism and a bigger population. The chance for Croatia was at the time when the project Air Yugoslavia failed. But I guess that they weren't as innovative as the Slovenians were.
    ---------------------------------

    'DC-10 was not old in beginning of 90’s – they were just 12 years old, 727 some 16 years. DC-9 was perfect plane for Serbia and on that time most of air companies have them in fleets. 737 were just few years old (some 5 years than), and ATR’s even younger...'

    You are forgetting one thing here, the DC-10 might have been relatively young but it was the 1990s when new generation of aircraft was coming out. Boeing was rolling out its B777 and Airbus had the A330 in plans (let's not forget the A340). No serious airline would be interested in getting the old junk.
    Let's not forget that Jat was planning on replacing the DC-10 with the MD-11 as well.
    Yes, the DC-9 was pefect for Jat at that time and the 737s+Atrs were young but Jat had no market to fly them to.

    Serbs needed visas to go almost anywhere, let's not forget the embargo and finally the NATO bombing in 1999. During those times JAT had to pay to keep all these aircraft functional, that's a lot of aircraft when you are capable of flying to only a few destinations.
    After the dissolution of Yugoslavia JAT, just like Adria and Croatia restarted its operations. It launched with 36 aircraft operating to a handful of destinations. How many airlines do you know that are launched with 36 aircrafts? Not to mention that there was no fleet commonality making the expenses much greater: DC-9, DC-10, B727Adv, B737-300 and the Atr-72.

    So you are complaining that OU had the uneconomical B737-200? Well I do not know how much clearer I have to be but Jat had about 15 UNECONOMICAL planes without a market WHILE HAVING TO MAINTAIN ALL OF THEM IN GOOD SHAPE. That is why the DC-10 was flying to places like Zurich, Tivat(summer) and occassionaly to Larnaca.

    --------------------------------

    'but you are
    always comparing each other !'

    Hey, I was born during Yugoslavia but at its end (November 1988). I personally do not care about it and if I was to be asked the creation of Yugoslavia was the biggest mistake Serbs ever made.
    The reason why I decided to argue here, something I try not to do, is because I hate when people victimize themselves and when they try to portray things the way they are not.
    Croatia Airlines belongs to the same crappy group like all of the ex-Yu airlines. If it wasn't it wouldn't be a feeder airline for Star Alliance but it would have been a Balkan giant with massive profits and a decent hub.

    ------------------------------------

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  26. Regardless of all this I have received some interesting news regarding flights to Dubrovnik.
    Until, and including, August a total of 4,400 passengers travelled between the two cities.
    Both airlines operate the same number of flights, OU has a slightly bigger and faster aircraft though.

    Jat has 59% of the market (OU 41%) and has carried a total of 2.593 passengers out of which 25% (648 pax) have been transiting in Belgrade. A large share of those passengers flew DBV-BEG-SKP, something I found rather interesting.

    Cheers

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  27. Purger and Nemjee: JP was also a Yugoslavian Airlines and had touristic and Gastarbeiter flights to most Yugoslavian Airports. And overnight 1991, suddenly 85% of their market was gone. And LJU airport got bombed too, even aircrafts of JP got shoot (A320s).

    Still we should all agree that the difficult times for JP and OU are 20 and 15 years over and should not be used as the main excuse for their bad performance in recent years.

    Bytheway Nemjee: do you have pax nbrs for LH and LX at Beg during Sep with Loadfactors. Maybe also loadfactors per flights. I m curios how LX morning and evening flights are doing. Thanks

    Purger: what is S5-AAT doing in ZAG? u ll get it by Monday 0630h

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  28. JU 520:

    Exactly, the time of Yugoslavia is long gone and no side should use that argument anymore. Actually it does not justify their position anymore but rather makes them look like an idiot for not being able to fix their situation in two decades.

    Well September just finished yesterday so it's still too early. I will have them next week and then I will post them :)

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  29. It's really interesting how many people start to fight on a nationalistic basis. When 40-50 mio € are sunk into OU, we have to talk about it. Dont't mention wars and things that where 15-20 years ago: sorry. Serbs and foreigners cannot be forver responsible for every evil in Croatia. The same for Serbia. Serbia is now for 10 years peaceful and democratic. JAT had chances and chances to recover.
    But back to Croatia Airlines. Given the potential the country has and the fleet it holds, it made least of it. Sorry, but from day1 the destiny of Croatia was written by their mastermind LH. Just accept that their role is to fill LH planes from FRA and MUC.
    With another strategy and partners, OU and ZAG airport could have turned the airline and the aiport into a regional hub for the region.

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  30. This comment has been removed by a blog administrator.

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  31. Please, Administrator!
    Delete the last two messages, the guy's got crazy!!!
    What's cross these stupid argues with this blog?

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