Tuesday, December 16, 2014

IFC to find Croatia Airlines partner by 2016

IFC eyes advisory role in search for Croatia Airlines partner

The International Finance Corporation (IFC), which finances and provides advice for private sector ventures and projects and is a member of the World Bank Group, is interested in advising the Croatian government in its search for a strategic partner for Croatia Airlines. In October, the government formally relaunched the airline’s privatisation process, following a failed attempt last year, and appointed a commission to handle the sales procedure. As an external consultant, the IFC would seek out potential investors and report back to the commission. The IFC is expected to submit its final offer to the Croatian government for advisory services within the next ten days.

According to media reports, the IFC guarantees it will be able to find Croatia Airlines its new owner within a year. The Corporation has a strong presence in the Middle East and China, where the government hopes to find a strategic partner for the carrier. The IFC is already active in Croatia and has invested nineteen million euros in Zagreb Airport’s new passenger terminal. Furthermore, the Finance Corporation has an 18% stake in the holding firm Zagreb Airport International Company (ZAIC), which runs Croatia’s busiest airport. It has also provided a loan of 35 million euros for the construction of the new terminal.

Meanwhile, the government yesterday granted approval for Croatia Airlines to hire a PR agency to inform the public on the company’s restructuring program and the latest developments in its search for a strategic partner. The government will fork out 52.000 euros for the service. Preparations for the sale of Croatia Airlines have been more structured and advanced than a year ago, when the government last tried to privatise the carrier. It foresees for 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. The government expects from 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.

62 comments:

  1. The first steps for privatisation you first replace the Ceo who has no interest in Croatia Airlines getting privatized. That would be the most important and then investers will come and show interest in Croatia Airlines. This Ceo Kucko has said many time that he is against Croatia Airlines getting privatized.

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    1. Why is that man still there?
      I thought according to Purger he was leaving in september....

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  2. Hope Croatian government will be smart enough to accept IFC (WB) help, fire Kucko as soon as possible!

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  3. "The government expects from 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."
    - Not much then. Just the above? No other items on this Father Christmas list?

    On a more serious note, clearly the HR Gov thinks that they cannot attract a European investor, so they have hired IFC to talk and negociate behind the scenes with ME/Asian investors and do business in the way that they want to do business, i.e. no open bidding and transparent public deals. Probably the right thing to do.

    Personally though, I would have probably tried to allocate X millions of Euros a year to OU and consider it an essential facility to the tourism industry with an aim of promotion Croatia and setting (high) expectations of Croatia as a destination. So, accept losses but create positive experiences for the passengers and their expectation as to what you experience when you choose Croatia as your destination. That costs money though!

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    1. How the EU would react to this?

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    2. You can do that. Look at Etihad Alitalia deal, no tender whatsover but direct talks.

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    3. Good luck OU, hope Croatian government will be smart enough to fire Kucko immediately and make an arrangement with IFC!

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    4. @SeasonToBeMerryDecember 16, 2014 at 10:18 AM

      U'd want OU to operate as it did under old regime, no change than, hm, Are you Mr Kucko btw ?


      OU can claim $12 million subsidies per year as per Croatian and EU law to support domestic network, that is all, for this they need to maintain certain number of flights, I think around 3000 or there about (not out Zagreb), these flights are highly unprofitable, reason for relatively high subsidy airline is receiving, Trade air has taken over few lines now and OU will simply pay Trade air out of subsidy money as a sub contractor, with OU getting little benefits but maintains control of all routes, TradeAir gaining vitally needed revenue they can turn profit on for they're using small fuel efficient aircraft.

      Croatia needs to complete its restructuring, turn in profits, prove that its model is working, OU as an company is highly valuable commodity with assets valued at $420 million, annually OU's turnover is around $325 million, still largest in Ex-Yu buy a significant margin and airline is making decent profits.

      Selling OU right now would be a really bad move, first off the recession limits the number of potential buyers and value of Airline is greatly diminished, some estimates I've read placed value of $80 million for 49%, all to make a quick sale, naturally with security that investor invests in to new planes. Considering the fact that OU has paid almost half the amount for four brand new A319, investment of $80 million would be beyond ridiculous, Government wants to sell OU, but they know any sale of OU must be based on market terms and values, OU is worth over $400 million, today, with four brand new A319s in 2017 OU's assets will exceed $700 million, I really can't see any potential investor coming to OU with less than $250 million and offering great deal that would satisfy Croatian tax payers but also ensure long term viability of the OU.

      Croatian Airlines must be privitized, but not at any cost and not at detriment of Croatian tax payers and travelling public. OU must maintain high quality of service and standards it has achieved over past 25 years, the airline is rightfully among best airlines when it comes to Service in the EU, this can't be sacrificed to turn in better profits or find investor who cares only to create OU another milk cow, for that you can always turn to RyanAir, I'm sure we all know how that is going.







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    5. OU might be worth $400 million to you, but certainly it is not worth $400 million to any investors. When buying an airline, the buyer is simply purchasing market share. With OU choked from every side (Adria, Wizz in Budapest, Vienna not too far away, Air Serbia, Charter airlines and seasonal routes to the coast, Star Alliance and Lufty, etc) nobody will be willing to buy it for $400 million.

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    6. @ Anon 7:16PM

      I’m wondering what market terms you are using when you say that OU is worth $400M. Basic market rule of supply and demand or market economy for that matter is that something is worth as much as somebody is willing to pay for. If OU was listed on any exchange, its valuation as a company would be very easy to establish; this way we’ll have to wait and see.

      I think you are mixing the asset(s) value with company value. The fact that OU has paid off half of the cost of its Airbuses means nothing if company is not making any profit. As a general rule when it comes to mergers and acquisitions, investors are usually guided by the earnings and final valuation is usually in single digit multiples of earnings. How big or small this multiplier is based on the risk, future prospects, amount of additional investment , how eager you are as a buyer etc. etc. As in investor you want to recoup your investment in some reasonable time, otherwise it’s easier is to go to the bank and buy some guarantied investments.

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    7. LOL - one of the best airlines in Europe, LMAO.

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  4. Najveci su patnici Dubrovcani koji na povratne karte za Zagreb moraju potrositi do 200eura. Alternativa je autobus koji je pokora! Cak su i letovi iz Tivta via Beograd za Zagreb jeftiniji 10-20 eura. Boli me briga hoce li OU propasti, promijeniti direktora ili vlasnika, ali neka je promjena nužna, jer se i nakon dviju subvencija (drzavnih i gradskih) Dubrovcanima nemilosrdno grabi iz dzepova kako bi se pokrili troskovi uzrokovani nesposobnoscu i neznanjem. Nacionalni pohlepnik, a ne prijevoznik.

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    1. A sto reci o letovima za Bruxelles? Skupi su za poludit, a zna se tko putuje u Bruxelles i kako se to placa.
      Nisam znao da su tako skupi Dubrovnik Zg. Sramota.

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    2. koliko ja znam avio karte za dubrovčane su subvencionirane od samog grada Dubrovnika, tako da na plaćenu cijenu grad vraća određeni postotak (nisam siguran ali je više od 50% cijene)..

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    3. Video sam billboarde u Dubrovniku koji promovišu taj povraćaj novca od cene avio karte do ZAG. Jedino što nisam baš najbolje shvatio kako to u praksi funkcioniše. Na neku adresu se pošalje e-ticket i broj računa, i onda grad uplati novac?

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    4. Dubrovnik svakom Dubrovčaninu koji leti za Zagreb vrati 125kn. No to sad malo znači kad su karte skočile na 600+kn... Prije sam znao kupiti kartu za 247 kn i onda dobiti još ovaj povrat od 125kn. I uvijek sam spreman kupiti kartu do 450kn, ali takve se sada rijetko nađu. Putujem jednom do dvaput tjedno za Zagreb i u zadnja 4 mjeseca nisam išao avionom jer nikad nije bilo ništa jeftinije od 550-650kn.

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    5. @AnonymousDecember 16, 2014 at 4:05 PM

      Ja sam letio za Dubrovnik za 300kn ili 560 kn sa povratnom, to je bilo u desetom mjesecu, zasto su cijene toliko skocile sada?.

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    6. Vjerojatno zato što mogu jer su avioni gotovo uvijek puni do posljednjeg mjesta. A kao netko tko je rođen i živi u Dubrovniku, mogu samo reći da je Dubrovnik jedna od najbogatijih općina u državi i Dubrovčani (općenito) nisu toliko siromašni, dobar dio njih su pomorci ili žive od iznajmljivanja apartmana što se itekako isplati! Ja sam, primjerice, krajem 10. mjeseca platio povratnu kartu Dubrovnik-Zagreb-Dubrovnik 1100 kuna (oko 150 eura) i to business klasu jer nije bilo mjesta u ekonomskoj. Avion (Airbus 319) je bio pun do posljednjeg mjesta!

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    7. @AnonymousDecember 16, 2014 at 7:47 PM

      pa koliko dnevnih ima za Dubrovnik iz Zagreba ? Znam da u ljentim mjesecima imaju oko pet dnevnih letova za Dubrovnik i oko 7 za Split.

      Pa ako je svaki let popunjene mozda bi bilo dobro da imaju vise dnevnih letova za Dubrovnik

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    8. Biznis klasa na letovima za DBV iznosi najmanje 950kn po smjeru.

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    9. Zimi imaju 3 leta dnevno... Dubrovnik je manje-više uvijek izvrsno popunjen!

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  5. http://www.blic.rs/Vesti/Politika/519755/DUG-POSTAJE-JAVNI-DUG-Drzava-preuzima-obaveze-Er-Srbije-od-193-milijarde-dinara


    State will settle all old jat debts by March 31st of next year.

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    1. FFS, 193 miljarde, to oko $2 miljarde, WOW!!!

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    2. My bad, pas sam procitao clanak, 19.3 ne 193, ili oko 200 miljuna eura,

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    3. A znaci samo 200 milijuna USD. Pa kao da je to neki novac?

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    4. @AnonymousDecember 16, 2014 at 7:38 PM

      mislis $227 miljuna, s time da AS ce platiti nekih 40ak miljuina a Srbija preostalih 227 miljuna.

      Naravno to ne uljucuje narednih 65 miljuna Srbija je platital za deal sa Etihad, itd...

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    5. Normalno je da Srbija plati 227 milijuna jer taj iznos obuhvača sva dugovanja Jata. Ravnanje tih dugova bio je preduvjet Etihada da uopče razmisli o ulasku u Jat, što je takodjer normalno. Isti preduvjet postavili su i za ulazak u Alitaliu.

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  6. Ja tek sad primetio da CTN A320 imaju CFM56-5B4/P engine dobar izbor.
    INN-NS

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    1. i zato je danas "zanimljiv dan za Srpsku Aviaciju"

      facepalm*

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    2. Pa jeste ja neznam dali ce danas ili ovih dana pricati za letove PEK-PVG -BEG. ;)
      INN-NS

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  7. OT: A Serbian tourist agency is in the process of starting their own airline. They have submitted an application for an AOC. They plan on starting with MD80s. I wish them good luck, they will need it considering there are so many failed startup airlines in this region. Perhaps now is the best time to start an airline because oil is so inexpensive.

    http://tangosix.rs/2014/16/12/saznajemo-nova-domaca-aviokompanija-u-procesu-registracije/


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    1. To je odlicno zato sto je na bazi TUI-a I by samo steta ce koristiti Avione tipa MD80.
      INN-NS

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    2. Ja ga nebi uzeo zato sto MD 80-83 trosi 3400 I/h
      A npr B738 trosi sa CFM56-7B-27 ( 121.5kN ) 2526 kg/h izvor AB za B738.
      Ja bi na to gledao a i 738 ima veci kapacitet putnika a i komfor je bolji.
      INN-NS

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    3. I jos nesto :
      MD-80-83 mesecni leasing je 0.025-0.039
      B738 mesecni leasing je 0.205-0.375
      Jeste dosta skuplji ali ja bi uvek pre uzeo B738 ako se neko dobro razume neka kaze sta bi on uzeo.
      INN-NS

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    4. For tour operators and charter carriers, they need capacity but they don't need high utilization. This means that fuel efficiency is not nearly as important as lease rates and maintenance fees. Even if we use 0.04 and 0.2 for the lease rates, that is a yearly savings of nearly 2 million on lease costs when leasing an MD80. There is no chance that a tour operator will recoup the extra money it spends on lease rates for an 738 by saving on fuel, especially now when oil is around $65 per barrel because their planes mostly sit on the ground during the off season.

      To add to all of this, spare parts for MD80 series aircraft are cheap right now because lots of them are parked right now.

      B738 is surely a nicer experience, but most passengers have no clue what they are even flying on, and tour operations are the exact opposite of premium. :D

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    5. Glas onih koji se ovde dobro razumeju se cesto izgubi medju onima koji su kao margarin, u sve se mesaju.

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    6. Aleksandre slazem se sa vama da oni gledaju drugacije na to nego mi .
      Ja se bojim da ce oni uzeti MD 80 od BUC posto oni ih nude na Wet-Lease .I naravno i to je samo zelja za 738 =D
      I sa vama se slazem da ljudi neki ovde dolaze samo da se svadjaju .
      INN-NS

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

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    1. You really need to give it a rest. This site is not for discussing editorial policies of other websites. You have a problem - take it up with them. It is somewhat sad that you came here again just to continue discussing whather some other website, which has no relation to this one whatsoever, should have written something or not. Therefore, you didn't come here to discuss aviation, you came here, once again like so many times before, to vent your frustrations. Sorry, but this is not the place for it.

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

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    3. Sorry, I'm not going to stoop down to that level and neither is that language allowed here. You have to realise that this is an aviation blog and not an arena where you project your personal, non-aviation related, issues with others, accompanied by the foulest of languages and physical threats. You have completely missed the point of this blog and the reason its here. Have a nice evening.

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  9. OT: I know we were discussing BEG airport a little bit yesterday and AKL as well as it came up randomly in discussion, so I went and read the AKL wikipedia page http://en.wikipedia.org/wiki/Auckland_Airport. Around 2006, they were faced with nearly identical problems that BEG faces today regarding separation of arriving and departing passengers, growth, having only one operational runway, among other things, and some of the solutions to the problems were quite nice. I encourage anyone who is interested to go through and read about it. I wonder if such solutions could be applied by BEG until a concessor arrives and builds a new terminal?? Those solutions are still in place at AKL and it handles like 15 mil passengers a year, and is a hub for Air New Zealand which has like 100 planes in its fleet.

    NS|SAN

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    1. But they have only 16 airbridges as BEG. You do not need to build new terminal. You can extend C gates and that will be enough for much bigger number of airplane operations. The have big advantage for numbers of internanational passengers in big wide body airplanes.

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    2. 16 airbridges (almost 1/3 are obsolete) don't make the whole terminal. Core of T1 and T2 doesn't have the bones to grow into a larger, more functional and modern terminal. BEG absolutely needs a new terminal operational in a couple of years.

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    3. Well, those "obsolete" airbridges - although, they are perfectly functional, although esthetically questionable, but are not obsolete in my opinion - will be replaced in the Stage 3 of the reconstruction, next year.

      I would really appreciate a reply from someone who actually knows a thing or two about airport management and operations. What's missing if they decide to extend C gates and make a proper waiting room with, say, 5-6 bus gates on the ground level?

      As I understand, most of the traffic increase comes from transfer pax, which means check in facilities are adequate as is. T1 is completely underutilized. There are also some parts of the building which are used as airport offices (fmr domestic arrivals, part of the T1 check in area closest to the tarmac, departures level at landside T2) that could be used for the expansion as well.

      Stage 4 should be adapted to include lounge space on the new top floor while inbound pax corridors could overlook the parking area. I would go a step further and build an entire new inbound passport control there, while current passport control area would be used for bus gates.

      International arrivals are in dire need of total revamp. Current space is very limited, but could be used in a much better way.

      Finally, the landside area could expand to the open parking area, while a new parking garage could be constructed at the site of the current taxi parking. This expansion could also be used to extend airside into current landside area, as to provide retail space etc.

      That's potentially 20-22 air bridges and at least 6-7 bus gates (they are relatively easy to add in the future). Mind you, the big LH MUC hub has 24 airbridges! What's missing here except a shiny new building and why would it be necessary?

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    4. Your laundry list of fixes and expansions is quite long, not very cheap to implement and would have a prolonged major impact on operations. At one point it makes more sense to invest in a greenfield development rather than to fix existing, and that point depends mostly on growth projections. If passengers numbers are expected to flatten out after 2015, I doubt it would make sense to build new. However consensus seems to point to more growth, although not at the same rapid rate as in 2014. Many older airports around the world wrestled with the same dilemma. FRA T1 was a mess for years because they had to basically rebuild the whole airport in the same place while LHR T5 was greenfield but took a very long time at astronomical cost. There is no ideal solution here, but I would say that new modest but expandable terminal for BEG seems to be the better choice.

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    5. I think someone here has wet dreams about new terminal building and no money for it and no more passengers to fill it. Present terminal building can be easily extended with new C bridges and can easily do it with much bigger number of passengers. much better option to start planning for it. are new cargo building and adjunct facilities and new runaway.

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    6. And the new runway is needed because someone has a wet dream about 2 runways or is there a better reason?

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    7. Just because AKL build second one.

      Unless you want to sent everything on Batajnica or to operate night renovation of runaway like in FRA you need second one.

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    8. I want to operate night renovations, much cheaper than 2nd RWY.

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    9. you don't have a clue how complicated is that job? i believe serbs can do it as a germans but soon we need to start with preparations for it.

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    10. It's a mess but it's cheaper and faster than a 2nd runway. Not sure what you meant by Germans, others have done it too. Second busiest single runway airport in the world - San Diego has done it too, with night time closures only, it can be done without Germans. Anyway, serious job needs serious planning and spectacular execution.

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  10. I am happy to inform you that my proposal regarding the format of the timetable at BEG.aero has been accepted and the pannel has just been updated.

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    1. Speaking of timetables, does anyone know why JU's flight from Sarajevo today was delayed by 4 hours?

      NS|SAN

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    2. Аеролоџик, у чему је разлика између старог и новог? Сад сам отишао на бег.аеро, кликуо на Ред Летења па на Сезонски Ред Летења и на мапи кликнуо да одредиште, било које одредиште. Све падне у несвест и да ми грешку 404. То све треба на Голи Оток.

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  11. OT: Etihad's first A380 is finally delivered and is currently flying to Abu Dhabi:

    http://www.flightradar24.com/ETD9380/

    Danijel
    AT

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    1. and how is that related to ex yu??????

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    2. It flew exactly over BEG!

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    3. Аir China B747 flew-in yesterday from Astana:

      https://fbcdn-sphotos-b-a.akamaihd.net/hphotos-ak-xfp1/t31.0-8/q86/s720x720/887331_904959906204617_4976582918800182143_o.jpg

      https://sr-rs.facebook.com/beg.aero/photos/pcb.904706436229964/904706372896637/?type=1

      https://sr-rs.facebook.com/beg.aero/photos/pcb.904706436229964/904706412896633/?type=1

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    4. Ex-Yu, any news flash about all the aircraft that visited Belgrade during the summit?

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