Friday, October 17, 2014

Croatia forms commission for airline sale

Government relaunches Croatia Airlines sale

Croatia has formally relaunched the sale of its national carrier. The government kicked off its search for a strategic partner for Croatia Airlines and appointed a commission, headed by the Minister for Sea, Transport and Infrastructure, Siniša Hajdaš Dončić, to handle the procedure. It is expected for a tender for the submission of bids to take place in early 2015. The government foresees allowing a company from the European Union to acquire a majority stake in the airline but those from outside the bloc will be limited to a 49% share. It expects the new owners to invest funds into Croatia Airlines, modernise its fleet, expand its route network and market share, further develop its profitable maintenance division and support the development of Zagreb Airport.

The government is trying to find a strategic partner for Croatia Airlines for a second time, following a failed attempt late last year. "The time has come to try to find a strategic partner for the second time”, Mr. Hajdaš Dončić said. He added, “I believe that this time we will have potential partners. We have potential for growth and expansion". Croatia Airlines, which recently marked its 25th anniversary, posted an annual profit last year for the first time since 2007. "For the first time in a long time Croatia Airlines’ operations are stable, but for that to be sustained in the long-term, some kind of a merger is needed", Prime Minister Zoran Milanović stressed.

Several airlines have been eyed as potential strategic partners for Croatia Airlines. They include China Southern Airlines and Garuda Indonesia. Garuda’s President and CEO, Emirsyah Satar, said last year, “We are looking to expand our business into Central Europe, in a country which has solid connections to the rest of the European Union. This is why Croatia and Croatia Airlines are a logical choice for us”. However, Garuda failed to submit a bid during the previous tender process. Talks with China Southern Airlines were held behind closed doors, however, it too failed to put in an offer. Over the year, both Turkish Airlines and Etihad Airways have ruled out any interest in acquiring Croatia Airlines. On the other hand, Qatar Airways says it is again pursuing acquisitions in foreign airlines. In 2014, the Croatian carrier is expected to post a net profit for a second consecutive year and see a modest increase in passenger numbers.

69 comments:

  1. Great... now they can employ even more friends and buddies.

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  2. Tesko ce se prodati CTN
    INN-NS

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  3. They missed all the chances they had, too bad!

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  4. Mr. Kucko (Ceo ) if this is true ,that means his days at Croatia Airlines are coming to an end. Then finally we can get back to business real business not what we have seen until now

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    1. Why do you say get back to real business? When in the history of OU was business conducted professionally without politics and friends? Misetic and Simunovic era maybe?

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  5. They should beg the investors on their knees, find the people who know how to negotiate, otherwise, no one will invest in OU!

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  6. What kind of product does OU offer in economy class?

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    1. Domestic flights - a bottle of water.

      International flights - depends, usually two types of sandwich, a turkey and a vegetarian (an excellent one), plus coffee and beverages. Sometimes they offer snacks with olive sauce or something.

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    2. Ah ok, so more or less the European standard. Do they offer free alcohol beverages? Like beer, wine, spirits...

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    3. Yes they do, at least wine and beer, as far as I know!

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    4. Hmm actually, I am curious, what beer do ex-YU airlines offer on their flights? I know Air Serbia has a choice of Jelen and Heinken.

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    5. I usually drink coffee or juice so I don't know, I suppose Ozujsko beer!

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    6. OU offers Favorit beer(from Istria) + one foreign beer for free. Wine is also complimentary.

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    7. Does anyone know what foreign beer they offer?

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  7. What about Kucko , how do you think he got the job ,due to his previous experience .Don't think so where ever he was he was sent away look what happened in Zurich and not talking about Amsterdam if it wasn't his friend in the government he would have been fired,they didn't fire home before because they felt sorry for his family because they were living in Amsterdam

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  8. My advise to Croatia Airlines would be first offload their Ceo (Mr.Kucko )

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  9. What do you guys think, what's the most likely scenario for the 2nd attempt of trying to sell OU?

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  10. Sorry for OT but:

    The ''fog-season'' has started in Skopje
    TK 1003 ISTANBUL - ATATURK TURKISH AIRLINES 08:10 CANCELLED
    ST 1992 BERLIN - SCHONENFELD GERMANIA FLUGGESELLSCHAFT 09:55 DIVERTED TO THESSALONIKI
    ISTANBUL - SABIHA GOKCEN PEGASUS AIRLINES 10:55 DELAYED
    GOTHENBURG WIZZ AIR 11:30 EXPECTED 11:55
    VIENNA AUSTRIAN AIRLINES 11:40 DELAYED

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    1. I always thought Sarajevo has a fog and smog problem...

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  11. In air transport and in airport traffic more passengers than in August 2013

    In August 2014 almost 138,000 passengers were carried by the biggest Slovenian air carrier, which is 7% more than in August 2013. With its planes slightly more than 160 million passenger-kilometres were made (i.e. up by 9% in the same comparison).

    In August 2014 almost 163,000 passengers travelled through Ljubljana Jože Pučnik Airport, which is 6% more than in August 2013.


    http://www.stat.si/eng/novica_prikazi.aspx?id=6579

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    1. brilliant stuff, looks good for 2014. 1.55 million pax for Ljubljana perhaps this year and 1.7 million for 2015.

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    2. OU isn't about to go bankrupt, OU is a very successful airline has been for some 25 years now. Yes OU has internal issues and problems that need to be resolved, such as incompetent and corrupt management of the airline, reason why Croatian government wants to privatize the airline in the first place.

      Who is going to buy Croatian Airlines is matter for the Government to decide, and its unlikely to be the EU airline, as stated by Croatian Government a few times already.

      As admin of this blog failed to quote Jutarnji List, I am posting link to relevant story relating to privatization of OU, Nippon Air is being mentioned.

      http://www.jutarnji.hr/japanska-tvrtka-usla-u-utrku-za-privatizaciju-croatia-airlinesa-/1228275/

      Most likely choices are in the far East as Croatia is aiming to bring 3 million tourists from the far east by 2020, right now there are around 1 million coming from that part of the world. Croatian tourism strategy is to double the revenue to around 15 billion euros and bring in 20+ million foreign visitors by 2020.

      As part of this strategy, Croatia wants to find Far Eastern airline and partner that will help achieve this strategy, and this is one of the reasons why Croatia is so keen on Japan, South Korea or China.


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    3. Did you read the article? It says that CAPA (an aviation portal) thinks how All Nippon Airways could be interested in Croatia Airlines. The title is completely misleading. Neither has ANA expressed any interest. It is just that they could because they would be a perfect match. It would be great if ANA bought OU but the article from Jutarnji is complete rubbish and is good that admin didn't quote them.

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  12. http://www.blic.rs/Vesti/Drustvo/503300/Drama-na-aerodromu-Avion-prinudno-sleteo-u-Beograd-mislili-da-putnica-ima-ebolu

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    1. How on Earth is one suspected of having Ebola? And who exactly suspected it?

      This of course could be subsequent media sensationalism (you can write anything to try and sell more rubbish paper and attract more dumb readers) and the true story is that it was "simply" a standard (non-Ebola) medical emergency.

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  13. I bet it will be one of ME duo,EY or QR;the chinese companies are a bit of a long shot,but China Southern is my dark horse,it has interest in Europe (former Adria buyer)

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    1. It definitely won't be EY, they have already chosen the horse they want to ride on ... Why not JU ?

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    2. Why not Qatar, though I highly doubt it, but it would be interesting to see Etihad on one and Qatar on the other side and certainly great for all the passengers!

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    3. Qatar should better buy Genex,lend them some planes to feed their flights...

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  14. Not that this is ever going to happened but what do you think reaction would be if Air Serbia puts in a bid. I don't think that the price is going to be huge, probably lot less than what EY and especially GoS had to put to get AirSerbia running. I know that running two hubs in such proximity might be a problem but maybe keeping them as separate entities and having them work together on maintenance, destinations etc. Maybe it could work.

    Heck, now that I think about it it would mean two governments working together since the most JU could buy is 49%. Sorry, never going to happened, they are much better at fighting than making money. .

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    1. Why not ? It makes perfect sense. JU would be a better partner than would LH. Infact, under the JU umbrella, OU would have far greater independence than it currently does

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    2. What would be the name? Air Serbo-Croatia or Croatia-Serbia Airlines? JAT 2.0? Ex Yu Airways?

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    3. What are you talking about ? They would remain as 2 separate airlines keeping their own brands, in the same way that EY and all of it's equity partners keep their own brands and identities. The advantage would be in cost/overhead takeout ie. back office consolidation, aircraft / fuel purchasing, sales/distribution costs, airport costs and most importantly, in enginerring and maintenance. They would feed each other's hubs and avoid direct head on competition, aligning networks accordingly

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    4. @ 1:54

      "Under JU umbrella"?, equalizing JU and LH? Well, some people really don't have any sense for reality in which both JU and OU belong in the same, minor and unimportant category.

      And, by my knowledge, new MAJORITY shares owner of OU is coming from the UK , and it's almost done deal, just not in public yet, until formal part is fulfilled

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    5. I know that JU has a lot of work still to do to change itself let alone start digesting other companies. On the other hand, opportunities like this don't come very often where some relatively strong company operating in the same region who could potential become big competitor come for sale.

      From the business stand point, at the right price it would make a lot of sense long term, however... Say what you want but this is a small market and some form of consolidation will have to come sooner or later.

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    6. Anon 2:28 Don't get all bent out of shape for this. Everybody here is speaking rhetorically. Chance of GoS owning big Croatian company is infinitesimally small for a long long time

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    7. AnonymousOctober 17, 2014 at 2:28 PM

      I'm gonna believe it when I see it. I highly doubt anyone from the UK are interested in it unless it's some tour operator.

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    8. Fully agree with the way you've put it, and frankly speaking I would have been happiest if ex-YU was never fallen apart and if ex-JAT Yugoslav Airlines remained alive, and progressed- I'm absolutely positive that it would have looked like TK today. But I'm furious when some people refuse to accept fact that JU and OU are almost the same- both controlled by other big players, both with similar fleet size, similar passenger numbers, similar product, maybie even same should be the word. And then they show off with company which is more arabic then serbian, and trying to make it look like it some world's extra super power, although despite all the growth and improvements it's still, and will remain for a long while just small-sized insignificant airline.

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    9. @ 2:53

      It's not tour operator.

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    10. Well, Air Serbia might not be Lufthansa or British Airways but on a regional level it is not insignificant. In the first year of operations it increased its passenger numbers by 600.000 and it plans on flying to all regional destinations twice per day. The same approach will be implemented when it comes to its European network.

      I for one am happy that Abu Dhabi will be taken over by Air Serbia. It will increase their revenue and their passenger numbers. I hope more aircraft will be joining the flock soon. Shame that they decided against the third A320.

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    11. @SMOctober 17, 2014 at 1:46 PM

      It won't happen, first off AS hasn't got the money, 2nd AS is a direct competitor in the region. Thirdly, Croatian government won't allow non EU ownership, only partnership based on 49% steak, with commitments for future fleet expansion and long term investments. Fourth, AS ownership even of 1% would be political suicide for any Croatian Government, the electorate would go ballistic, especially in Slavonia and Dalmatia, where Serbs are still largely hated.

      Rijeka, Pula, Zagreb, Varazdin are very tolerant places, but many places in eastern and southern Croatia, war wounds heal slow. Anyways, you get the idea.

      Initial price for 49% steak in OU might be low, perhaps only $100 million, but investment commitments might be considerable, for OU has 16 aircraft, 12 in the fleet and 4 on order asset alone valued at $750-800 million.

      Nippon Air is being mentioned as a potential buyer of 49%, we'll find soon enough, what ever the case new 49% steak owner will need to invest heavily in to OU, with fleet expansion and route expansion being main goals of any future merger talks.


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    12. So it will be a fight between Garuda, ANA and China Southern?

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    13. And why are you so sure that only an airline, or even more precisely, only an asian airline, can be succesful investor ?

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    14. @Anonymous October 17, 2014 at 3:59

      Did you ever learn to write?

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    15. And what if JU (backed by EY money) made the highest bid ? how would the Croatian govt explain that one - particularly if it was supposed to be a 'clean' privatization exercise in accordance with EU regulations ?

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    16. Croatian govt is liberal, they wouldn't mind, but others would (stupid HDZ for example)!

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    17. Ah... HDZ. The fascists. That's why it's good that the current government is running the privatisation process.

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    18. Abu Dhabi is NOT being taken over by Air Serbia.Etihad is simply wet leasing an aircraft to operate the BEG-AUH route over the winter season before returning with its own metal in the summer season

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    19. With an A330-200!!!

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    20. Air Serbia doesn't have such an aircraft in its fleet

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    21. Etihad will probably launch BEG flights with the A332!

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    22. @ Anon 3:59

      I fully understand the situation as far as politics is concerned. That's why I mentioned it in the first place. But you have to admit it would be funny if JU supported by EY puts in a bid for 49%, promise the highest investment and come out as not the only but the top bidder. If you are following transparent bidding process they would have no choice but t cancel the whole thing if they want to avoid it.

      In reality, there is a lot of companies in Serbia owned by Croatian companies. At the beginning there was some fuss but at the end it all turned out OK for them. The truth is that we haven't seen investment go the other way at any scale (we can argue to the about why, I don't want to get into that, there must be 100 valid reasons). OU being such a high profile company I agree that it would be a political suicide for a liberal government so close to the elections. But at the end of a day it shows how narrow minded we all are. At the end of the day this company would stay in Croatia, employ Croats, pay taxes in Croatia and if you could get more money or more local jobs why wouldn’t you entertain such an offer if it ever came.

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    23. Great comment, SM, thank you!

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    24. @SMOctober 17, 2014 at 7:17 PM

      forgot to mention the EU would also step in demand all sorts of stuff, including information on bidding process itself, with Croatia in the EU things are far more difficult now for non-EU companies to own EU business.

      Hypothetically, if AS did have the necessary funds and we are talking about $300-500 million, 100 million for initial 49% + long term investments and renewal of the fleet might be bit to much for AS who lacks any money, for Government of Serbia and Ethiad are pumping money in.

      Any acquistitions for AS at this moment are out of the question, they first need to restructure their fleet, operations, make decent profits, than think of any long term investments.

      Remember how and why Swissair went bankrupt ;)

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    25. If it happens, bid would be by Etihad, not Air Serbia. BTW EY should invest in FI, not OU.

      Swiss went bankrupt because of McKinsey and SR111.

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  15. Of course OU/JU would have to stay separate brands and I understand the synergies, but those names are funny.

    Let's imagine the long haul solution:

    a) both OU and JU feed Air Serbia flights out of Belgrade.
    b) some routing could be BEG-ZAG-YYZ.
    c) half of the widebodies painted in OU, half in JU livery, some serving BEG-ORD and the others ZAG-JFK.

    I hope for a), perhaps b) only if it makes sense, probably not. Two tiny long haul hubs as in c) nowadays does not make sense.

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  16. Seems like YU-APA broke down in Zurich. YU-ANK was sent to bring the passengers.

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  17. LDA ipak odobrila codeshare izmedju AB i EY =D =D
    INN-NS

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    1. privremeno, ali verovatno ce da bude stalno. Lufthansa prestaje sa letovima za abu Dhabi.

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  18. @Anon 2:28

    What, IAG, Virgin or is it easyJet...gimme a break :D

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  19. Has everybody forgot that the Ceo of Croatia Airlines (Mr.Kucko ) .publicly said he was against Croatia Airlines getting sold .My question would be ,what is man still doing in his position .have some dignity and step down and stop being the laughing stoke of the airline business nobody can and will take you serious.

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    1. That is so true, by the way the man in the picture , knows more about the airline business than the Ceo himself. Unfortunately he had no ties with this government like the present Ceo

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  20. I really think OU and JU could cooperate, as two biggest airlines in Ex-Yu, I dont believe JU can actually buy 49% of OU, but they can cooperate in other ways, like make a codeshare agreement. It would be really great to see them working together on some point.

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    1. I think that opportunity is now long gone.

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  21. I really hate this stupid discussion about Air Serbia buying OU. I mean the Croats then would do everything to sabotage BOTH companies .
    Thanks god that Etihad not only saved Air Serbia from
    bankrupcy but also will prevent any illusional bratstvo i jedinstvo-nonsense.

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  22. OU should do the right thing as a new EU member; conduct a "tender" that meets the minimum requirements of competition on paper, and agree to whatever it takes to become a part of LH. OU is already a Star Alliance and Miles and More member. LH probably does not want the marriage, but if the government in Zagreb did a serious charm offensive, and swallowed their pride, it would happen.

    JU is now part of the new Etihad Global Alliance, and OU needs to keep their existing alliance.

    All the nonsense of East Asian partners, Qatar Air (part of One Wolrd anyway), and maybe other Gulf suitors is a waste of time. Stick with LH, at any cost, and the future is secured.

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    1. This scenario would not benefit anyone.

      First of all, why in the world would LH want to buy OU? Their main interest is efficiency. Purchasing power of the entire Western Balkans is such that it may fill 1-2 A330s on a good week. There is nothing to gain for LH here and the current status quo suits them perfectly.

      OTOH, any Croatian government would be really hard pressed to integrate OU into LH. This would become a real hot potato for them, not just in the eyes of a typical voter, but would also cause major problems otherwise (unions, etc...). Not to mention that OU effectively stops existing--which can't be good for a company!

      Regarding far East airlines, I agree it is far fetched, but changing alliances plus a partner that has money to burn would be good indeed.

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