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.