Tuesday, November 17, 2015

Croatia Airlines awaits new owner

Politics delays Croatia Airlines' privatisation

November marks a year since the Croatian government formally relaunched its national carriers privatisation process, following a failed attempt in 2013. However, Croatia Airlines' future ownership structure will be determined by a new government, with parties locked in coalition talks following close elections earlier this month. Who comes to power could ultimately determine who manages the company and the way it is privatised. The current management, headed by Krešimir Kučko, is in favour of the airline being recapitalised, rather than taken over by another carrier. Recapitalisation would entail changes to the airline’s capital. This may occur, for instance, when a creditor exchanges a loan for a stake in the company. Mr Kučko believes a thirty million euro investment would be appropriate for the airline. “The arrival of a strategic partner won’t generate much money for the state but will allow Croatia Airlines to develop at a quicker pace”, Mr Kučko noted, adding the carrier should avoid similar arrangements made during the privatisation of ČSA Czech Airlines and Jat Airways. However, the CEO believes the airline can survive if it stays in state hands, but warned the company would develop at a slower pace.

In late May, the Croatian government formally selected the International Finance Corporation (IFC), the World Bank’s investment arm, to seek out potential investors by this October. At this point, it is unknown whether the IFC has come up with prospective buyers. The government itself has pitched the Croatian carrier to several airlines so far, but little interest has been shown. According to the head of Croatia Airlines, a strategic partner does not necessarily have to be another carrier, but rather an investment fund which would inject fresh capital into the company. In March, Assistant Transport Minister, Dan Simonić, said the government is prepared to sell a majority stake in the airline, retaining only a 25% share. He added at the time that local pension funds were interested in acquiring a 5% - 10% stake if the government were to find a serious strategic partner that would treat the investment as a long-term commitment.

Croatia Airlines is in the final months of a four year restructuring program, which has seen the carrier return to profitability but also limit its opportunities for growth. The airline plans to expand its operations early next year with the lease of Embraer jets and the development of its east European network. “For quicker growth and a return to the position we once held, but lost due to restructuring imposed by the EU, fresh capital is certainly welcome and it should come through recapitalisation. If we are to go at it alone, we will develop as well, but it will be at a somewhat slower pace", Mr Kučko said. The government has noted that a future strategic partner will be required to expand Croatia Airlines' route network and market share, modernise its fleet, further develop its profitable maintenance division and support the development of Zagreb Airport into a regional hub.

28 comments:

  1. Why not just merge Adria and Croatia Airlines. Could be a neat carrier.

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  2. If elections are repeated, which is a big possibility at the moment, that would mean they will be held in January '16 which would mean Croatia Airlines would be in limbo until then. Instead of starting the first year after restructuring ready with a new owner and fresh capital they will just prologue the "business as usual" policy which I don't think they can afford anymore with so much competition. If Limitless starts domestic flights (which I am hoping) they will also lose their monopoly within Croatia as well. Time to get things moving and fast.

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    1. The elections won't be repeated, but anyway the destiny of OU is not bright.

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  3. Definitivno 2016. godina ce biti presudna za ex-yu operatere. ADR i CTN imaju poslednju sansu da naprave nesto sto ne vodi u gasenje. Pitanje je samo sta je to nesto i sta su cekali do sada. ASL se kocka sa Amerikom sto mozda moze doneti rezultat, ali moze i potpuno unistiti kompaniju. MGX je svakako prezaljen i treba ocekivati bankrot i formiranje nove kompanije mozda u cvrscoj vezi sa Etihad alijansom.

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  4. "...Kučko noted, adding the carrier should avoid similar arrangements made during the privatisation of...Jat Airways".

    Ha ha ha! Kakav buzdovan. You can only wish in your wildest dreams to be so lucky to have arrangements like Jat Airways had. And then he still goes on about some selective master plans devised by him, like OU has got all the time and resources in the world to chose, while the situation is actually "spasavaj sta se spasiti moze". The worst type of post-soviet style parasites that one can get are found in OU.

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    1. Really? selling 49% for a LOAN is a good deal, are you stupid?!?

      OU doesn't have the luxury of the government paying it's bills. like JAT does...

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    2. Loan? What loan? I'm not sure I'm following what you talking about.

      Stop spinning same old stories again . We can all see where Air Serbia is today and where it was 2 years ago. It was slightly behind OU, and now its so miles ahead of it, that OU will never catch up again. They are playing in a very different league at the moment.

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    3. Air Serbia has definitely improved and has become an airline which many aviation fans like to see but (and its a big financial but) because what Air Serbia has done requires proportionally huge investment for an airline its size, an investment which realistically might never be returned, gives Kucko statement some credibility. In saying that, if Air Serbia can get away with it with support from the Serbian government than go for it and if there are positive knock on effects for the greater Serbia economy than that's great too.

      OU biggest problem is finding off season work for it's fleet. Solve this and the airline would be highly profitable, could invest more into the service they offer, could also drastically increase the fleet and even add A321 size aircraft.

      There are ways it can be done especially now that Croatia is an EU member country and now that restructuring is all but done, the proposed 30 million euro capital raise will all be for nothing unless they can solve or attempt to solve the seasonality issue.

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    4. Cekaj ne moze da se zivi od mesec i po dana sezone? Smanjite kompaniju na velicinu za zimsku sezonu kad ne znate bolje.

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  5. Maybe we will see Ivan Misetic return to OU if HDZ forms government :D

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    1. Wasn't he in some conflict of interest? Didn't they discover he was also on some board at Lufthansa while running Croatia Airlines at the same time?

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    2. I think Misetic was involved with the company that financed the Q400s for OU. So yeah, definitely some conflict of interest there.

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    3. Misetic's company could recapitalise OU so his return is possible. Kucko said he wants Croatia Airlines to be recapitalised by Croatian companies anyway.

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  6. @Ex-YU Aviation
    Another typo, but this time in the title: awaitis -> awaits.

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  7. Sorry for OT, but can somebody explan me this? There (link: http://www.airbus.com/company/market/orders-deliveries/?eID=maglisting_push&tx_maglisting_pi1%5BdocID%5D=96146) airbus says that there are no orders for AirSebia, and that Adria and Croatia have them. I wonder if those "Airbus Neo" planes are ordered by Etihad?

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    1. Of course they are ordered by Etihad - much lower price that way.

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    2. Nope, Etihad buys the planes and ASL instead of paying a loan for them to a bank pays rent to EY (far above the current rate) to lease them.
      And at the end of the day JU owns nothing.
      Just like the A330-200 which is going to be leased for 500.000$ a month!
      That is an exorbitant amount, much , much higher than market price.

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    3. Yep, I'm sure you participated in the talks with Airbus and was given an exclusive insight into how much the A330 lease will cost and from who they will lease.

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    4. OK, but if those planes will be property of Etihad will Etihad pay back Jat deposit for A320 or they will just forget about those multi-million deposit and put it in their pocket?

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    5. Anonymous November 17, 2015 at 2:03 PM

      Airbus has nothing to do with ASL's lease of EY's A330-200.
      What is known is the lease rates globally for aircraft.
      For 325,000$ a month you can lease a 777-200ER who sits about 70-80 more passengers than an A330-200

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    6. Jeste masina koja kosta vise od 100 Milijuna Jura moze da se iznajmi za cenu kikirikija.

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    7. Cena Leasing-a A332 se krece za starije modele od 280 USD do 775 za novije tako da mislim da od ASL nece biti stariji od 4-5 godina posto je recena cifra od 500 .
      INN-NS

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    8. Guys that is very important:

      OK, but if those planes will be property of Etihad will Etihad pay back Jat deposit for A320 or they will just forget about those multi-million deposit and put it in their pocket?

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    9. Since we have heard very little these past few years regarding the initial deposit made by the Serbia Government for the Airbus aircraft, you can safely assume that the deposit was part of the Etihad purchase on behalf of Air Serbia. How or if Etihad plans to credit Air Serbia or the Serbia government of this amount..... time will tell I guess.

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  8. Yeah then Etihad will give you the planes for free cause they are nice people.

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    Replies
    1. Svejedno letece se od Lanke Sri do NYC dok vas bude drala LH.

      Delete

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