Tuesday, December 20, 2016

Croatia Airlines blasts critics


Croatia Airlines' CEO, Krešimir Kučko, has responded to recent criticism directed towards the airline over its financial results, restructuring, the planned sale of its London Heathrow slots and the company's failed privatisation attempt as the country's newly formed government reportedly looks for a new management team to head the carrier. Mr Kučko notes that the airline's restructuring, which saw the company limit its development from 2013 to 2016, was a necessity and not a choice. "Had we not implemented these measures, the state support which was provided to us as part of the restructuring would have been illegal and we would have gone bankrupt. Claims that the restructuring has failed are incorrect. Thankfully, the success of the restructuring is not judged by self-proclaimed aviation experts and former unsuccessful managers, but rather the European Commission. Our restructuring was carried out under the "state aid" model due to the direct financial support provided to the company from the state through recapitalisation, that is, by turning debt into capital. This is why we had to contribute to the restructuring, which constitutes the sale of assets and taking out loans without state guarantees. Since all of this was fulfilled, there is no doubt the restructuring has been successful", the CEO says. He adds, "A similar model was used for the restructuring of Estonian Airlines, Air Malta, Cyprus Airways, Malev and Adria. They all went bust so the model is definitely not good for European airlines, however, we had no choice. And yes, perhaps some individual objectives set out in the restructuring plan were not executed".

Addressing the airline's controversial plans to sell all of its slots at London's Heathrow Airport by the second half of 2017, Mr Kučko notes, "As we have explained several times, we need additional resources to finance the maintenance of seven aircraft engines, which amounts to five million dollars per engine. I would also like to point out three things. Firstly, this possibility was foreseen as part of the restructuring plan and was not carried out only because we were waiting for the majority owner [the state] to finalise its search for a new strategic partner. Since it obviously did not happen, we decided on this move. Secondly, the transaction will strengthen the airline's finances since the slots are listed as off-balance sheet property, while the resources obtained through the sale will be added to the balance sheets but not for this year. Thirdly, this way we will rid ourselves of multi million euros losses generated by the route". Mr Kučko has also defended the company's declining market share in Croatia and believes the airline has performed well in the face of strong competition. "During the winter season our market share surpasses 65% and then in the summer, of course, it declines. In the last few years our market has been inundated by competitors such as KLM, Qatar Airways, a bunch of low cost carriers and many others. Under these circumstances it is logical that our market share has decreased, however, we remain profitable and our business operations are stable", he adds.

According to media reports, the Croatian government has ordered the national carrier to halt the planned sale of its Heathrow slots and has requested for the airline's management to draft a detailed report on the company's finances and future plans by December 15. Furthermore, there are reports that the Croatian government will name a new head of the company next year with former CEOs Ivan Mišetić and Srećko Šimunović both believed to be in the running. Croatia Airlines' current management says it is committed to expanding its operations next year with the introduction of new routes from Zagreb, the launch of regional bases in Southeastern Europe and the acquisition of 100-seat aircraft.

94 comments:

  1. Hahahahahahaha oh Lord... the Empire strikes back.

    Kucko is a joke when he openly admitted that they need to sell slots to finance the maintenance of the engines. What happens if they don't sell the slots? Will the engines go unserviced or will they take out a loan?

    This will be a very difficult winter for OU.

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    Replies
    1. I think Purger should become next Croatia CEO. He knows everything and he's always right. Under his management, Croatia would become leading airway company in the Balkan and Central Europe.

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    2. Alen Šćuric PurgerDecember 20, 2016 at 5:51 PM

      Hahahahah... Thanks, but I am sure you are joking. I am not even near to level to become junior manager in Croatia, especially not CEO. Not even near. Luckily I know my limits, not like some of "experts" who becomes CEOs in companies like Croatia. And that is the biggest problem in our countries, that people does not know their limits and then make huge damage (and even don't realize that they made damage).

      I would always be happy to help Croatia with modest knowledge that I have, but more than consulting is out of the question. Even if some lunatic propose me any junior managing position in Croatia I would refuse as total nonsense.

      Anyhow, thanks for this joke! :-)

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  2. Sorry but if the restructuring was so successful as the CEO claims then you wouldn't be selling your slots in London to cover something like engine repairs.

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  3. what happens if they don't repair the engines? Will they have to ground some aircraft?

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    1. You would have to ground the aircraft probably. In its last year Jat was forced to ground many aircraft because of this reason.

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    2. No, just wet lease new aircraft, however OU has spare engines, I think 7, but if they use spare engines and fail to overhaul d-check old engines, what happens when new engines need overhaul d-check ?

      However OU is a state company and solution will be found, Kucko however won't be at the helm of the airline, he'll be gone by the end of February.

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    3. I agree with the above comment. OU is too much of national importance for Croatia just to give up. They will find a solution for it one way or another.

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  4. "Thankfully, the success of the restructuring is not judged by self-proclaimed aviation experts and former unsuccessful managers"

    :D

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    1. Who did he have in mind in both cases?

      Luckily he is a professional and an airline expert.

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    2. For unsuccessful managers he was referring to Srecko Simunovic former CEO because they had an argument through the newspapers about the management of the company. As for self proclaimed experts I'm not sure.

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    3. Purger, ahahahahahaha

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    4. I thought the same. :D

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    5. What about Aerologic?

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    6. And Kučko is expert. Small boss of tinny Croatia office in Amsterdam. He had 3 workers under him. And there he made lot of problems. That made him huge expert.

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    7. AnonymousDecember 20, 2016 at 9:50 AM

      Sarcasm?

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    8. That kind of language is really not appropriate for a CEO.

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  5. Seems like arguments from an outgoing management team.

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  6. Ivan Misetic may have a chance to replace Kucko. His daughter is now the deputy chief of cabinet to the Prime Minister.

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    1. Misetic was replaced because of a conflict of interest since he served on the Lufthansa board too. Many of the problems OU has today is because of his decisions during his almost 20 years of leading OU. I hope he doesn't make a comeback.

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    2. That and other mistakes with plane leasing deal etc

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    3. That and other mistakes with questionable plane leasing deals etc

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    4. I used to work for OU. Not any more. I agree Kucko is not much of a CEO, but if Misetic is back to be the CEO, that would be the final nail in OU''s coffin, and OU would be history in 24 months time. And, thinking better of it, it might exactly be the plan. ..

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  7. So if a change in management is coming, we should not expect any of the plans for 2017 to realize? That would really be another wasted year for Croatia Airlines.

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    1. If a new management comes it will be trying to survive, not pursue some megalomanic plans of the previous management.

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    2. Well not really. The board can still make sure that all the plans are followed through. Now it's a different thing altogether whether these plans are smart

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    3. But how will the board do it if they can't even afford to finance the repair of engines.

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  8. They have to do something. New terminal opens in Zahreb, and they will be forced to expand, or they are out, and if they are out of Zagreb, they are out of this job. So I hope mr.Kucko is on his way out. Sooner, bettet for OU.

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    1. This revelation by Kucko is very important. Without money to finance the engines they might have to park some aircraft. If this happens there will be no expansion any time soon...or ever.

      This is really worrisome and I don't know hy government is not doing something. OU going out of business would be tragic for the whole country.

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    2. I agree with you. And I dont know what they plan to do, and with what monney. Situation is verry bad, critical I said.

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  9. Luckily everyone can see how successful that restructuration was, and how successful his all mandate was.

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  10. While I'm not a fan of the current CEO, I think it is better to have him then the former one Misetic (who seems to be a candidate for the job again) who did everything purely to align OU with Lufthansa. At least with Kucko we see some new routes and plans that are not entirely dictated by mumma Lufthansa.

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  11. The evil of all business decisions is political interference. The company should be privatised wholly as soon as possible. Everything else will be a disaster for the company itself as well for its owners- the taxpayer in Croatia.

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  12. They missed an opportunity to privatise OU 5 years ago. The chances of privatising it now are slimmer, not because of OU but because the state the world is in.

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  13. OU needs a new management team that with a real vision and solution to its problems.

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    1. Let's hope they just don't put even bigger bafoons in charge.

      They really have to decide what kind of airline they want Croatia Airlines to be. Do they want to go ahead with opening bases in other countries, do they want to sell it and so on...

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  14. Who has the patience and interest this article is a good overview of the mess inside OU at the moment
    http://www.dnevno.hr/vijesti/hrvatska/milijuni-dolara-vrijedni-slotovi-za-nagodbu-s-davorom-gjivojem-984117/#axzz4TEa53ea7

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    1. Kratak ali tako točan rezime stanja u posljednjih 20 godina:

      "Među njima, svakako bismo mogli prepoznati Ivicu Mišetića, dugogodišnjeg direktora Croatia Airlinesa koji je duže od deset godina akumulirao gubitke veće od milijardu kuna. Tu je i njegov nasljednik, Srećko Šimunović, obojica kao ogledalo vladavine HDZ-a. Ne smijemo zaboraviti ni aktualnog direktora CA, Krešimira Kučka koji je uhljebljen na to zahtjevno mjesto prema kratkovidnim mjerilima SDP-a.

      Iako bi prvu dvojicu mogli bez grižnje savjesti svrstati u kategoriju korumpiranih štetočina s obzirom na kaos koji su ostavili za sobom u hrvatskom nacionalnom zračnom prijevozniku, ovaj potonji bi se svakako mogao uvrstiti u kategorju nesposobnih i nekompetentnih kadrova koji su ostavili negativan i time neizbrisiv trag u poslovanju Croatia Airlinesa."

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  15. Adria went bust? When?

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    1. Maybe Kucko knows something we don't :D

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  16. There are only two misleading information in Kucko's statement, first one is the cost of engine maintenance. No one can anticipate the cost of maintenance by now, without opening the engine. And 5M is the worst case scenario, it can cost a couple of hundred thousands too. Second one is regarding the losses on Heathrow route. It is obvious that Mr. Kucko is manipulating the figures in order to justify the LHR slots' sale. Apart from that I find him successful, as the company is still alive without any investors for years, having a neutral balance sheet since 2014.

    Apparently his team is not good at PR, he shouldn't start this topic straight with an already given decision to sell the slots to finance the upcoming maintenance, but start with the question "how to finance the multi-million maintenance in 2017?" After a couple weeks of discussions, someone (apart from anyone in OU) would raise the idea of selling the slots, and he would have to deny it at first, while leaving the public think about this option for a while. The idea would have matured itself automatically, without any resistance from the public and the industry experts.

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  17. As much as I don't like Kucko, I don't think that the guy running the transport ministry is competent enough to decide anything about Croatia Airlines' future either.

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    1. The guy running the transport ministry is not competent enough to decide what to have for dinner, let alone other stuff

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  18. Their only option is to sell aircraft to finance all their future plans which are not bad in my opinion but this will put a lot of pressure on the airline.

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    1. My question is where did they get the money to buy A320neos and future regional jets?

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    2. At least they do not expect from rich arab daddies to buy for them like pr........ !

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    3. And who will buy it then? Doubt it's Kucko from his own pocket.

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    4. As far as regional jets go, I think we will only see the lease of Trade Air F100s. They have already been scheduled on a number of routes for next summer.

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  19. Do you think W6 flight from OSI to BSL will impact numbers from ZAG to ZRH?

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    1. Of course. Bad news for LX.

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    2. Doubt it. Look at a map and see how far Osijek is from Zagreb. There's more chance they'll capture some of the North Serbia and Southern Hungarian market than the Zagreb area market especially if they add more flights.

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    3. I am talking about all those people living between OSI and ZAG.

      Also doubt many front north-west Serbia would go to OSI and cross a border when there is a highway all the way to the airport.

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  20. Will OU actually achieve profitability this year? There was nothing to sell in 2016

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    1. I'm interested in that too. Unlike last year they didn't boast how they are already in profit.

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    2. Lower fuel cost and a maintenance division which is bringing in a lot of revenue could get them over the line.

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  21. Difficult road ahead.

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  22. How many passengers will Croatia Airlines handle this year?

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    Replies
    1. About 1.95m I think.

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    2. Thanks. What sort of growth is that compared to 2015?

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  23. Croatia Airlines' current management says it is committed to expanding its operations next year with the introduction of new routes from Zagreb, the launch of regional bases in Southeastern Europe and the acquisition of 100-seat aircraft.

    OVO NE VERUJEM DA VISE PRICAJU. TO DODAJE EXYU. NA 3 MESECA OD MOGUCE SMENE KUCKA.

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    Replies
    1. Pričali su početkom meseca tako da niko ne dodaje
      http://www.exyuaviation.com/2016/12/croatia-airlines-committed-to-regional.html

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  24. Oh my...probably the only worse thing than Kucko would be Misetic again. OU is like a textbook example of why socialism doesn't work.

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  25. The only topic about this Ceo Mr. Kucko should be to inform everyone the date that he will be fired .And due to bad management. I can't wait to hear all about his skeletons when he has left the company.

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  26. Kakva je ovo crvena traka na gornjem delu vrata na fotografiji?

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    Replies
    1. Jastucic koji se stavi kad se otvore vrata koji sprjecava da se putnici udare od ostri rub prilikom ukrcavanja

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  27. Feel sorry for OU, but glad for Osijek and Wizzair flights! Finally!

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  28. Alen Šćuric PurgerDecember 20, 2016 at 6:00 PM

    Pa da rezimiramo što piše Jutarnji. Povećanje taksi na ZL Zagreb od kada ih je preuzeo koncesionar

    ožujak 2017.:
    1,7 EUR poskupljenje taksi za domaćeg putnika
    3,2 EUR poskupljenje taksi za međunarodnog putnika
    1,2 EUR poskupljenje za transferne putnike
    0,2 EUR povećanje naknade za manu pokretljivost (plaćaju svi putnici neovisno jesu li nepokretni ili ne)
    1,0 EUR varijabilna taksa za slijetanje

    srpanj 2015.
    0,7 EUR povećanje takse za putničku infrastrukturu

    ožujak 2014.
    3,5 EUR povećanje naknade za zaštitu zračnog prometa
    5,0 EUR povećanje putničke naknade za međunarodne putnike
    3,0 EUR povećanje putničke nakande za domaći putnike
    3,5 EUR povećanje sigurnosne naknade
    10% u 10 godina povećanje naknade za slijetanje zrakoplova

    SVEUKUPNO 9,66 EUR poskupljenja po putniku od kada su preuzeli ZLZ

    + povećanja sukladna inflaciji
    + povećanje cijene parkiranja
    + povećanje najma poslovnih prostora unajmljivačima (rent'a'car, trgovci, banke...)

    ReplyDelete
    Replies
    1. Izgleda da koncedionar želi da poboljša svoj ROI dok ne dovede više prevoznika. Moguće je i da će troškove za avioprevoznike zapravo utvrđivati pregovorima, van cenovnika, te će, tako svaki dogovor više-manje delovati kao popust. Mislim da je to bila uobičajena praksa tokom 90-ih i dvehiljaditih u SAD.

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  29. OT: Hogan to be replaced due to "failed acquisitions in Europe".

    https://global.handelsblatt.com/breaking/sources-etihad-to-ditch-ceo-james-hogan

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    1. This is big news, first Tim Clark a few days ago (already removed from Emirates management) and now Hogan. May I guess that Dane's days are numbered?

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    2. "The Gulf airline is considering selling its European holdings at considerably under value, one insider told Handelsblatt."

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    3. If it proves to be an accurate information, there are some interesting times in front of us.

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    4. If they are disinvesting, that would mean leaving ASL... huge blow to the national airline!

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    5. Lol if you compare ASL to Alitalia and Darwin that is their best acquisition in Europe

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    6. They are not going to leave JU or AZ... it would hurt their pride and it won't happen. AB is already bad enough.

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    7. I missed the news about Tim Clark .... what happened there ?

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    8. Emirates profits have fallen by 75% and they are generally doing really badly.

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    9. "Officially" T Clark is (abruptly) retiring... and pigs can fly... Emirates mess just slightly smaller than Etihad...

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  30. Purger,
    how do you comment LH/EY code-share agreement?

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    Replies
    1. Alen Šćuric PurgerDecember 20, 2016 at 9:04 PM

      Too early to comment.

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    2. on je iznenadjen i uvredjen, sta ima da komentarise.

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    3. Alen Šćuric PurgerDecember 21, 2016 at 8:49 AM

      Iznenađen svakako jesam. No, to je zrakoplovstvo, stvari se mijenjaju preko noći, u 5 godina iz korijena. Ali stvarno ne znam zašto bi, pobogu, bio uvrijeđen.

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    4. Alen ne kapira uzrečice iz srpskih filmova ;)

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  31. From july Jet2.com. will base its 7th a/c at Stansted and will add twice weekly service to Split

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  32. Replies
    1. I missed you ,I adore you!!!

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  33. CTN je mogao biti verovatno pozitivan da je promenuta strategija trenunta i mapa destinacija sto bi bilo bolje i za CTN i ZAG .
    INN-NS

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