Saturday, July 13, 2013

The Lufthansa effect

Is Lufthansa holding Croatia Airlines back?

Croatia Airlines holds the title of being the busiest airline in the former Yugoslavia, pushing towards the two million passenger mark this year. However, the Croatian carrier has entered the more competitive single European market unprepared, in the middle of a restructuring program which has enraged employees. While the restructuring program, which should be carried out by 2015, plans to see the airline return to profitability, it will also see a much smaller Croatia Airlines with fewer aircraft, employees and destinations. Many have accused Croatia Airlines’ dependence on Lufthansa and the Star Alliance team for its inability to use the potential of its vast market and passenger base.

Relations between Croatia Airlines and Lufthansa developed in the early years, with the German national carrier leasing out Croatia Airlines its first jet engine aircraft in the early 1990s. Subsequently, Lufthansa sponsored Croatia Airlines’ entry into Star Alliance while the Croatian carriers’ numerous flights to Germany are some of the rare ones operating with a profit. Frankfurt itself was the airline’s first international destination. Last year the Union of Croatia Airlines pilots said the airline was being mismanaged and controlled by Lufthansa. “All of our services are adjusted to Lufthansa as can be seen with flights to Munich, Frankfurt, Vienna and Zurich. Croatia Airlines serves as a classic feeder airline which, through the abovementioned cities, fills Lufthansa’s flights. Croatia Airlines has only eight codeshare agreements, all of which are with Star Alliance members, with four of the airlines owned by Lufthansa and another two are heading in that direction”, the letter from last year reads.

In 2010 it was revealed that the then Croatia Airlines CEO, Ivan Mišetić, was also sitting on the Supervisory Board of Lufthansa CityLine and Eurowings (a 100% Lufthansa subsidiary), in what is a direct conflict of interest as Mr. Mišetić was advising rival airlines while managing a national carrier at the same time. More recently it was revealed Croatia Airlines is considering leasing Embraer aircraft owned by Lufthansa to replace part of its Airbus fleet. Its fleet of six Bambarider Dash 8 aircraft are on financial lease from GOAL Aircraft Leasing, a company owned by Lufthansa.

Many believe that as a result of Lufthansa’s hold on the carrier, Croatia Airlines has never attempted to expand eastwards, particularly to Russia or tried launching longer flights to the Middle East (with exception to Tel Aviv). On Thursday, the Croatian government approved the conversion of 80 million euros worth of Croatia Airlines debt into capital, a move the Minister for Sea, Transport and Infrastructure, Siniša Hajdaš Dončić, described as “vital for the airline’s survival”.

19 comments:

  1. My goodness, so it’s obvious now that Lufthansa controls which aircraft OU is going to have. They decided to go with dash and buy them through Lufthansa, now they will do the same with embraer. When you scratch the surface you would probably see that they are somehow interconnect when it comes to more minor things like catering and so on.

    ReplyDelete
  2. As far as I can tell OU own nothing to LH and cooperation this intense should only continue if it results in a profitable outcome for OU. Other Croatia Airlines, grow some balls and walk away!

    ReplyDelete
    Replies
    1. Croatia owes a lot to Germany. And, German state acts in the interest of its businesses. Hence, OU represents only a small payback of the 'debt' from Croatia to Germany.

      Delete
  3. I am a bit shocked that OU still hasn't made "DANKE DEUTCHLAND" their logo.

    ReplyDelete
  4. If OU believes its future is as a feeder to FRA/MUC/VIE/ZRH and nothing more, then yes - Embraers are fine and they keep handing over market share and jobs which will actually HELP the struggling Croatian economy. Joining the EU isn't the answer, it is just the utensil...

    If OU believes it has something to contribute and wants to continue being the dominant carrier in the region, they must cut away from the LH apronstrings, which will be a shock (especially to many in OUs upper management), go back to the plan for slow but steady expansion, and work out its pressing fleet needs for the future.

    OU provides the following to a prospective buyer:
    - good seasonal profitability due to coast
    - new demand to other EU capitals from Zagreb
    - good reputation and fleet
    - good slots eg LHR

    Personally, it makes more sense to me that OU goes into oneworld (and this is from a FF with Miles&More and QR holder) where it has greater chance for survival, and so hope that IAG end up buying the airline where it can aim for sustainability and survival...

    ReplyDelete
  5. The Croatian competition authority, on its last session before EU membership, authorised the state aid to CA, under the following conditions:

    Agencija za zaštitu tržišnog natjecanja je ocijenila da Program restrukturiranja CA....jamči rentabilno poslovanje na način da će provesti unutarnje restrukturiranje odnosno provesti racionalizaciju poslovanja, povećati prihode kroz promjenu strukture flote te ujedno provesti i smanjenje flote, zatvaranje predstavništava u Austriji, Švicarskoj, Nizozemskoj, Velikoj Britaniji, BIH i Makedoniji te smanjenje broja zaposlenih.

    Konkretno, riječ je o prodaji zrakoplova Airbus i rezervnog motora, prodaji ovisnih društava, prodaji zemljišta i poslovnih prostora te prodaji slotova (prava slijetanja prema određenom rasporedu) na pojedinim zračnim lukama u Europi.

    Također, poduzetnik se obvezao provesti kompenzacijske mjere ukidanjem određenih linija i smanjenjem broja letova na pojedinim linijama. Ukupan trošak restrukturiranja iznosi 1,944 milijarde kuna, a Program restrukturiranja CA odnosi se na razdoblje 2011. do 2015.

    ReplyDelete
  6. I think june might have been good for Zagreb airport, perhaps record number, minimum 240 000, but more likelly 250 000 or even more.

    May ended with 10k minus cause of 8 day strike by Croatian Airlines but also airport staff, but airport still manged to achieve 1 million passengers 1 day early, if strike didn't happen and Croatian airlines flew all its schedules flights, airport would have ended with 240000 pax for May, meaning 1 million passenger would have happened at least 4 days earlier than last yea, on 22snd of june instead of 26th, due to the fasct that 3 days were lost, so June figures made up for a loss and airport managed to come 1 day ahead of last year indicating really good june, unless last 4 days of June were really bad.



    ReplyDelete
  7. OU spread their legs to get "injections" from LH.

    Why? To show appreciation to what Germany did 20 years ago by acknowledging Croatia as an independed country? I don't think so.

    I believe that the cause lies somewhere else. It is just because the country is economicly and politicly incapable and corrupt, same as other Ex-YU countries. Look at the airline that is soon to be formerly known as "Jat". The Arabs had to come and clean out the mess.

    There is economic standstill in all EX-YU countries. Neither Germany nor any other country is helping out just for the cause of helping. Their goal is to drag those countries into dependency and under their influence.

    Ex-YU countries are just a market for their economy and must not get on their own feet. This is actually a very convenient situation for the Ex-Yu population. They have an excuse to not work and even find reasons to blame their neighboring Balkan states for their own misery.

    Bravo narode, baš ste zasrali!

    ReplyDelete
    Replies
    1. The former Yugoslav airline of JAT (FYAOJ)

      Delete
    2. the point is the Arabs will be updating and expanding Jat and turning it into a regional carrier, while the Germans are turning a company that was great for connections (Croatia Airlines) into a feeder airline.

      Delete
    3. What happened to Balkan people that they aren't capable to successfully run their own business without foreign help?

      It was possible decades ago. There were many companies from the Ex-Yu region that were quite successful on the international market. But today, it is just a pathetic story.

      Delete
    4. Its not allowed that the difference... A successful company within shitkicking countries such as ex-yu has to be a western corp otherwise its non existant.... Could you imagine with Serbia, Croatia or any other had massive strong companies and Strong Industries it would stregnthen their economy, in return also reduce the countries debt via taxes THATS A NO NO for the world bank ... This way they are enslaved on life support

      Delete
    5. @ Yugovic,

      Governments seem incapable all over the world running state companies. This is why privatisation should have happened years ago. The reasons why they are kept government controlled are usually a lot sinister than just being incapable. While ever they have control they have access to the money the company generates....Corruption!

      @ last anonymous,

      Don't agree. No matter how small the countries of the former Yugo are, the stronger their economy's the better for all countries in the region. Germany as well as Serbia for example will make more money from a stronger Croatian economy and vis versa.

      Delete
  8. Just die already croatia airlines....

    ReplyDelete
  9. In the end everything begins with the help for independence. Nothing is for free, everything has a price tag. Germany and LH are not Mother Theresa. They have clear and hard interests- their own. The history will show if it was better to separate and ruin all the economies, becoming some dependable Statelets or to stay together in a more loose confederation. Aviation at least could try to follow the path of regional cooperation.

    ReplyDelete
  10. Zagreb is becoming major tourist destination, in first 6 months of 2013 city had 15% growth in number of visitors and 11% in number of nights.

    http://zg-magazin.com.hr/zagreb-u-lipnju-posjetilo-17-posto-vise-turista/

    in numbers, in first 6 months 342.888 tourist visited the city and they spent 612.993 nights, 11% increase on same time last year. If Zagreb can maintain 15% yoy growth, it is expected city could record 870 000+ visitors and 1.5 million nights.

    city is already most popular tourist destination among ex-yogo capitals but with such impressive growth Zagreb could cement its lead position and build on that.

    Even Chinese tourist are coming in increased numbers, fear was that new Visa regime might deter many tourist from visiting the City.

    "U Gradu Zagrebu ostvareno je 767.366 dolazaka (pet posto više) uz 1.245.669 noćenja (5,3 posto više). Osim Zagreba, kontinentalna županija u koju je stigao najveći broj posjetitelja jest Karlovačka županija, koja je zabilježila 186.517 dolazaka (12,7 posto više) te 303.522 noćenja (12,7 posto više).
    * BRISANJEM ISPOD UPISANE POVEZNICE KRŠITE ZAKON O AUTORSKOM PRAVU RH *

    Preuzeto s: http://www.putovnica.net/vijesti/hrvatska/hrvatsku-u-2012-godini-posjetilo-11-8-milijuna-turista"

    http://www.putovnica.net/vijesti/hrvatska/hrvatsku-u-2012-godini-posjetilo-11-8-milijuna-turista




    '

    ReplyDelete

Before posting a comment be mindful of other participants and readers. EX-YU Aviation News does not tolerate insults, excessive swearing, racist, homophobic or any other chauvinist remarks or provocative posts with the intention of creating further arguments. Such comments will be deleted as soon as possible. The opinions expressed by those providing comments are theirs alone, and do not reflect the opinions of EX-YU Aviation News. Thank you for your cooperation.