Friday, January 13, 2017

Croatia Airlines sells morning Heathrow slots


Croatia Airlines will sell five of its morning slots at London's Heathrow Airport after reaching a compromise with the government, which was initially against the move. The Croatian carrier will continue flying to one of the world's most congested airports, but will now have only four afternoon slots at its disposal (on Mondays, Wednesdays, Fridays and Saturdays). The airline confirmed that it has signed an agreement with Delta Air Lines over the sale of its slots, however, it says the transaction is yet to be fully finalised. The deal is valued at 19.5 million dollars with Delta expected to take over its five new slot pairs from April 1, 2017.

Commenting on the deal, Croatia Airlines' CEO, Krešimir Kučko, said, "We are extremely pleased with the outcome and the sale price. We will use the revenue to invest in our fleet, that is to say the overhaul of aircraft engines". Up to seven engines will be serviced from the proceeds of the sale. "In any case, this will strengthen the company", Mr Kučko added. The sale of slots at London's Heathrow Airport was foreseen in the airline's restructuring and consolidation measures. It is unclear how the reduction in frequencies to Heathrow will affect the company's London operations. At first, the airline planned to run daily flights between Zagreb and the British capital, and one weekly service each from Split and Rijeka this summer. As an alternative, Croatia Airlines could also resume operations to Gatwick Airport, which was removed from its network in 2013.

Earlier this week, sources from the Croatian government told local media that the slot sale had been halted and that the airline had backed out from plans to sell its arrival and departure times at Heathrow. It was claimed that in its place, a long-term loan would be taken out in order to boost the carrier's liquidity. Croatia Airlines originally planned to sell all of its slots and suspend operations to Heathrow Airport by the second half of 2017, a move which was strongly criticised by the government, the Croatian National Tourist Board and aviation analysts. However, the carrier argued that the route has been producing losses of up to 37.5 million euros over the past thirteen years. Meanwhile, British Airways will continue to maintain flights between Heathrow and Zagreb, while Monarch Airlines will launch services from Gatwick to the Croatian capital this April.

138 comments:

  1. 19 millions seems a bit low for premium morning slots

    ReplyDelete
    Replies
    1. They are kind of 'second best' but should still be worth more than $4 million per weekly pair (4m x 5p = 20m).

      Oman Air paid $75 million for 7 weekly pairs of truly best slots (arrival 5:30am, departure 8:30am), because their existing slots were in the evening wave.

      So if they paid roughly 10 million per weekly pair I would have expected Croatia to earn at least 6-7 million per pair of slightly less premium slots. Yet they earned 4m per pair. Probably indicates someone's personal earning.

      Delete
    2. Even in their estimates Croatia Airlines said they would be worth 5 million. So it is interesting.

      Delete
    3. Forgot to mention, Monday and Friday slots are excluded which must have affected the price. These should be the most wanted slots.

      But I still think the price is inadequate.

      Delete
    4. Let's hope it was all above board.

      Delete
    5. @AnonymousJanuary 13, 2017 at 9:11 AM

      I totally agree, Kucko was personally benefiting from this, we'll see what the Croatian Government does and if it halts the sale.

      Sale is not finalized and Government must agree to it. Sale price seems low and I think USKOK should take a look at this thoroughly.

      Delete
  2. Haha they managed to pull it off. Terrible.

    ReplyDelete
    Replies
    1. They are playing this game like a chicken without it's head ... stupid

      Delete
  3. 4 more pairs remain for sale, probably to stay afloat in 2018 or 2019. Meanwhile OU probably won't be introducing LGW (which would be suicidal anyway).

    Unless they find a strategic partner at the last moment this really does not look good.

    ReplyDelete
    Replies
    1. Can't believe they will only fly 4x per week between Croatia and the UK. :(

      Delete
    2. with 4 weekly flights in the afternoon they might as well just suspend the flights. The only reason they didn't sell all of the slots straight away was public and state pressure but that was the original plan.

      Delete
    3. All remaining slots are afternoon? They only had 5 morning slots and sold them all?

      It could be that Delta was not interested in the afternoon slots at all.

      Delete
    4. The real reason they didn't sell the remaining slots is due to what someone said earlier - to keep them so that they have something to sell in 2018 in order to ensure that they show a profit

      Delete
    5. Hope they will be alive in 2018! They should be ashamed, both Kucko and employees who can see the real situation and do absolutely nothing about it!

      Delete
  4. So they lied to the public only to get us to shut up so that they could finalize the deal?

    ReplyDelete
    Replies
    1. Obviously. I think they handled this entire saga really poorly. BTW interesting how the announcement that they won't sell slots was made when they were probably putting the signature on the deal.

      Delete
  5. So they will fly back to Gatwick or?

    And what do you think, will it BA boost Zagreb and Split service from LHR?

    ReplyDelete
    Replies
    1. SPU probably but not ZAG, don't forget that Monarch is launching flights to they will take most of the passengers dropped by OU.

      What might happen is that they might end up sending the A321 more often.

      Delete
  6. At least we know a profit will be shown in 2017

    ReplyDelete
    Replies
    1. Cooking the books is a specialty among ex-Yu airlines. If only they perfected their business as they have creative accounting.

      Delete
    2. There is nothing to cook there and you should really drop those conspiracies. Profit is very easy to calculate: total earnings minus total costs. LHR sale, or aircraft sale, generates non-primary earnings and directly affects total earnings which can make the difference between profit and loss.

      Now, generating the income and making the profit by selling assets creates going concerns - and this is something the auditor warns of in the audit report. But from the accounting perspective the profit is there and you cannot say that the company is losing money but then something happens and they are profitable. The International Accounting Standards don't work like that.

      A profit is a profit. If there are serious risks behind them, the auditor gives a warning - but does not deny the profit. This is how it works and there is no 'creative accounting' whatsoever. Stop it.

      Delete
    3. That's why you should look at the operating income and profit which is only related to core operations and doesn't reflect one time earnings/expences

      Delete
  7. Do we know approximately how many passengers they risk losing by reducing LHR to 4?

    ReplyDelete
  8. OT Nice surprise! QR is going to fly daily to Belgrade. http://www.aviatica.rs/qatar-airways-svakodnevno-beograda-uz-premijum-uslugu/

    ReplyDelete
    Replies
    1. Wow... they are sending their premium A320 to BEG? I guess business class loads were good for them.

      So this winter we will have 25 weekly flights to the Persian Gulf. Up from 22 this year.

      Delete
    2. I see this as a pre-emptive move against EK.

      Delete
    3. Which is unnecessary because EK is not coming to Belgrade. But let QR preemptively go to 14pw as far as I am concerned :)

      Delete
    4. Nice news, congrats BEG!

      Delete
    5. @AnonymousJanuary 13, 2017 at 4:06 PM
      If it came to a 2.7 million airport then it can come to virtually anywhere if you ask me.

      Delete
    6. What's interesting is that they are bringing their premium heavy aircraft to Belgrade. Their loads upfront must have been damn good.

      Also, in stead of being so excited about EK, ask yourselves why it took this long (FZ included) to connect ZAG and DXB. Even QR arrived just two years ago.

      Delete
    7. Anon 8:01,

      It's not about the size of the airport. Emirates will stay out of BEG not because of EY, plain and simple. Just as they stayed out of Berlin against any market logic.

      Delete
    8. Berlin is not served by EK because of the bilateral. The German government has been reluctant to change it because of Lufthansa.

      Delete
    9. "What's interesting is that they are bringing their premium heavy aircraft to Belgrade."
      All of QR A320 have 12 C class seats. The difference is that the A320 they will send now has lie flat seats as opposed to regular C seats. So you were wrong in that the aircraft will be "premium heavy". The prdouct in C will be better with an EQUAL amount of seats.
      Also when reading the article I felt as if I was reading a QR advertisement.

      Delete
    10. It's a superior premium product so in a way it is 'heavy' compared to the light version which has the regular seats.

      Seems like you are bothered by qr increasing their beg operations. lol

      Delete
    11. Not at all and I am hoping I will give them a try one day :)

      Delete
    12. Anonymous 8:01 and 9:01, that is great news, but you should ask yourselves why ZAG has both Qatar with A321 and EK with B777. As simple as that. Good luck!

      Delete
    13. Let's also ask ourselves why it handles 2.7 million passengers each year.
      Also, just because these flights were announced doesn't mean they will be successful, 300+ seats won't be easy to fill. Especially since QR never sent anything larger than A321.

      Delete
    14. Each year? Delusional much or just bitter?

      Delete
  9. This reduction might explain how they are going to start Oslo, Stockholm, Moscow and Dublin.

    ReplyDelete
    Replies
    1. Not really. Unless they fly each only once per week, they will need an additional aircraft.

      Delete
    2. They are NOT going to be launching any of these destinations. They can barely afford to pay for their engines to be fixed.

      Delete
    3. Why is anyone so fixed on the ENGINE story? Of course they have to pay to overhaul their engine, as ANY other company has to as well. The same goes for FUEL, PERSONELLetc. How ist JU going to pay their engine overhaul if they make a huge Minus at the end of the year?

      Delete
    4. They pay it from revenues from their business, which is where you should be paying it from. What I would like to ask you is what it the fixation with Air Serbia and bringing it up whenever Croatia Airlines is mentioned in some negative limelight. It's as if you have to compensate the mess at Croatia Airlines by mentioning Air Serbia to make yourself feel better.

      Delete
    5. @10.52. where did they make the huge minus this year? Have they delivered you their results? Can you share them with us if you received exclusive financial results from Air Serbia?

      Delete
    6. has anyone gotten the results from Croatia? NO. So why make a huge fuss about it?

      Delete
    7. Because the airline (it's CEO) said they need this money to finance engine repairs (you can read the statement in the article). Normally you would finance this from your revenue. It means that your revenue is very low which is why you had to sell assets to cover something like this.

      Delete
  10. Now there are only planes left to sell and that's it.

    ReplyDelete
    Replies
    1. How many aircraft does OU actually own. They did a few sale and leasebacks a while ago.

      Delete
  11. Mislim da ce OU propasti za koju godinu, pa ce se ZAG pretvoriti u leglo LCC kompanija kao sto je BUD zadesila takva sudbina.
    Bez (jake) nacionalne kompanije jednostavno nema mjesta za nekakav regionalni hub u Zagrebu.

    Mozda su trebali prodati samo 2 slota tako da zadrze svakodnevnu liniju za LHR sto i ne bi bio preveli udarac za business ljude koji svakodnevno putuju na toj liniji, koji se vrlo cesto vrate natrag odmah sljedeci dan. Ovako samo 4x tjedno ce si stvoriti samo jos vece gubitke jer ce biti manje fleksibilnije letjeti za LHR. Ako nista drugo, nadam se da ce ovo potaknuti BA da nadoknadi taj gubitak LHR iz ZAG.

    ReplyDelete
    Replies
    1. Trebali su prodati sve ili nista. Ovo je totalna glupost. Jedna u nizu iz CA.

      Delete
  12. Using this cash to pay for aircraft engine overhaul..... so what are they using ticket revenue for?

    ReplyDelete
    Replies
    1. Probably salaries for employees

      Delete
    2. well it is very easy- If your expenses are higher than you revenues you have to get additional revenues. How is JU going to pay their expenses?

      Delete
    3. Feel better for mentioning JU? :)

      Delete
  13. Attn: Admin, why can't you ready all the comments from yesterday's news at the same time? Did anyone else experience this??

    ReplyDelete
    Replies
    1. Because of the large amount of comments, you must press the "Load more" button which is above the comment box, as is indicated at the bottom of yesterday's article.

      Delete
  14. With more and more competition at ZAG, it is going to get more difficult for OU. I'm not saying an airline like EK will take away OU's passengers but it will take a few that were going via Vienna or Munich or Frankfurt. Now if ZAG gets New York flights too it will take another few off and so on. So it will hurt them.

    ReplyDelete
  15. Such a shame and such a misguided decision.

    ReplyDelete
  16. Does CEO Kucko have some sort of special powers? He has survived 3 different governments.

    ReplyDelete
    Replies
    1. No but it does show that this and the previous government are completely uninterested in Croatia Airlines.

      Delete
  17. The decision to sell the slots is a good one and has hence been approved by the government. Considering the airline loses money on the route because there is not sufficient premium demand (and no I don't mean those 400€ tickets) it is only logical to stop flights to LHR and move to LGW. Unlike many mentioned here, you do not do business because of prestige but to make money and that is what is happening here (OU says it burns money on the route). BA will certainly be losing money on the ZAG route as well but can compensate it for the network effects the route is generating They do not fly to BEG probably for the same reason, because it could not produce a profit. Probably JU will be losing money too as do many airlines by the way. Keeping it just to say you fly to Heathrow is commercially destructive and any responsible doing it should be fired immediately. So in commercial and business sense (and that´s a CEO´s job) it is a good decision and has thus been supported by the government.

    ReplyDelete
    Replies
    1. if it was a not slot restricted airport (say Warsaw) and they cancelled the route nobody would say a word. Although its exactly the same reasons (non profitability of the route). In the LHR case they can even make money of it.

      Delete
    2. No one would say anything? There was a 100 comment discussion here when they suspended Pristina a few months ago :D

      Delete
    3. @10.11 how come it took them 13 yars to realise Heathrow was loss making?

      Delete
    4. Dear Mr. Kucko.
      Don't be shame to sign you name here as you are only one that can write such comment as this one.

      Companies pay huge amaount of million EUR for LHR dlots. They kill for tham as those slots are pure gold. LHR is profitable for everyone, so ider you are telling lies ider you are extra incompetente and can not make LJR profitable.

      Delete
    5. Let me put it this way for everyone to understand: Chances for OU losing money on LHR route are the same as JU making money on JFK route. And I'm pretty sure this sale will have consequences which has not been foreseen neither by the Kucko nor by the government (keep in mind that ZAG lost 5 LHR flights now).

      Delete
    6. A brief look at the destiny of all small carriers who have so far resorted on selling their LHR slots says it all. You can fool yourself as much as you wish but the LHR slot sale is a (yet another) clear indicator of self-cannibalizing that will last until there is nothing left to cannibalize. And then, game over.

      Delete
    7. @10.11 how come it took them 13 yars to realise Heathrow was loss making?

      good question but same answer as to why Ju flies to JFK and LHR- PRESTIGE

      Delete
    8. Companies pay huge amaount of million EUR for LHR dlots. They kill for tham as those slots are pure gold. LHR is profitable for everyone, so ider you are telling lies ider you are extra incompetente and can not make LJR profitable.

      WHO Pays huge amounts to get LHR slots? YES its those who make money (USA) or those where money does not play any role! (middle East Carriers) Lufthansa sold slots in LHR through the sale of BMI to BA.

      Delete
    9. If Heathrow was loss making, what can they expect from other routes? Kucko is nothing but a liar!

      Delete
    10. This is why BA stopped BEG few years ago. Empty C class...

      Delete
    11. Does BA still fly to DBV?

      Delete
    12. Even BA's economy class was not that full.

      Delete
  18. There was some talk of new codeshares between OU and Delta yesterday in the comments...this might be a part of the slot sale agreement, especially if Delta will launch flights to Croatia from the US.

    ReplyDelete
    Replies
    1. This is what they said last year but who knows Emirates said the same
      http://www.exyuaviation.com/2016/07/delta-rules-out-ex-yu-interest.html

      Delete
    2. We'll just have to wait and see, suppose the announcement should come soon. If it doesn't, well, maybe next year!

      Delete
  19. I think that JU is about to sell some slots as well, their books in 2016 must be looking terrible. They neither want to release P&L nor passenger numbers for 2016.

    ReplyDelete
    Replies
    1. Wishful thinking on your part. They don't release those until March. Plus in December they said they surpassed last year's numbers. BTW I haven't seen that information released by any ex-yu airline yet.

      Delete
    2. If crippled old Jat never thought of selling them then Air Serbia certainly won't either... especially since both the loads and the yields are there.

      Delete
    3. True that Nemjee. In fact even in its worst years 2011-2013 Jat actually started flying to Gatwick as well. They had 12 weekly flights from Belgrade to London during the summer (9 to LHR and 3 to LGW).

      Delete
    4. London was always a stellar performer for JU. Jat used to be always full thanks to the interline it had with VS.

      Of course, circumstances have changed but Air Serbia still does well on the route. It won't change. People also complain that BEG is not served by BA but I don't see what value they would bring. Their service has gone down and the connections they would offer are already available via CDG, AMS, DUS, FCO, FRA, MUC...

      Delete
    5. Their value would be Oneworld carrier on routes to North America. That's about it. It would compliment QR's flights to the East, at least for FFs loyal to that alliance.

      Delete
    6. Well there is also AB which is in oneworld and they are present in BEG through their code-share on JU flights. But I agree pretty much.

      Delete
    7. There is also oneworld carier at JFK hub (AA) that could make effort to connect to Air Serbia for North America connections.

      Delete
  20. OU je na putu bez povratka ! Purger uz par entuzijasta iz struke pokusava, ali cini mi se da samo gubi vreme (i zivce) !

    ReplyDelete
  21. OT: Dec; LJU +18,7%

    ReplyDelete
    Replies
    1. So LJU bounced back. Bravo!

      Delete
    2. Because Adria increased flights during the winter. Their numbers are still down on 2015.

      Delete
    3. How many passengers did they handle in total in December?

      Delete
  22. Don't get all the fuss. Adria sold the LHR slots years ago and they are still around and flying.

    ReplyDelete
    Replies
    1. You mean: they are barely still around and flying.

      Delete
  23. I am going to guess that the airline is in such desperate need of cash that the government simply could stop them selling some slots without causing major problems. It sounds to me like a liquidity issue (again).

    ReplyDelete
    Replies
    1. An airline announcing profit for the last 2 consecutive years (and likely for the third year, 2016) shouldn't face difficulties in finding loan. I suspect that Kucko made some prior arrangements to prevent anyone intervening the sale process (could be an MoU with financial obligation, or whatever), that's why we at first noticed a united opposition (all state institutes, ministries, media, aviation enthusiasts, even some individuals from OU management) towards Kucko's move, but then the government has been obliged to approve it for some "unknown reasons". The trap set by Kucko sounds like the most logic explanation of this mystery.

      If that scenario is true, we should see Kucko replaced in earliest convenience (February?).

      Delete
    2. "An airline announcing profit for the last 2 consecutive years (and likely for the third year, 2016) shouldn't face difficulties in finding loan."

      You think bankers are that gullible? They know very well how those profits were achieved after 15 seconds of looking at the balance sheets. Good luck finding a loan without state guarantees.

      Delete
  24. Replies
    1. zaista? aplaudiraš idiotima?

      Delete
    2. A i ti se kačiš na jednog te istog trolera.

      Delete
  25. Hasn't anyone questioned the period Kucko preferred to serve to public yet?? Why are we talking about "last 13 years" period? Why do you think OU and Kucko does not simply use the last year's, or 2015, or last 3 years financial results, but 13 years period (it's also weird because OU started LHR operations in 1997, 20 years ago)? I really want to see the results from 2004, start of the period carefully selected by Kucko to justify the sale.

    ReplyDelete
    Replies
    1. Agree, Anonymous 11:46!

      Delete
  26. Do you think that BA will maybe increase its capacity from ZAG to LHR?

    ReplyDelete
  27. When I read this yesterday morning, I was really disappointed, but then I saw the Emirates news on this blog and was really happy! Still, selling slots is bad news, what's wrong with these people and what's next?

    ReplyDelete
  28. To me this sale as well as the others before, is just delaying the inevitable with the hope that in the meantime somebody buys OU and invests money.

    ReplyDelete
  29. Shouldn't they stop selling these flights if the sale will happen?

    ReplyDelete
    Replies
    1. Are they still selling them?

      Delete
    2. From what I could see they are. It will be awkward rebooking passengers or refunding them.

      Delete
    3. Do you think they will start flying to Gatwick or will just keep these 4 flights in the afternoon?

      Delete
    4. Just 4 flights, they can't compete with Monarch.

      Delete
    5. 4 flights to LHR? I asked if they will fly to Gatwick

      Delete
    6. And I said that they most likely will not because they can't compete with Monarch. They will stick to 4 weekly to LHR.

      Delete
    7. Ah, ok, sorry. Thanks for the info ;)

      Delete
  30. OT:
    Turkish Airlines will reconnect Zagreb-Istanbul 14 pw from the summer schedule.

    ReplyDelete
    Replies
    1. Yeah, another great news for ZAG! Turkish vs Emirates!

      Delete
    2. Turkish vs Qatar vs Emirates...too strong competition for Turkish..

      If comes true to introduce direct flight to Beijing and New York from Zagreb, then it gonna be a very interesting year from Zagreb Airport!
      What about Seoul service? It will stay only charter or?

      Delete
    3. *for Zagreb Airport

      Delete
    4. I think Korean will stay seasonal, which is also good.

      Delete
    5. This is nothing new, it was supposed to be 14 from the start. They only reduced their winter flights.

      Delete
    6. I don't recall TK mentioning bringing back flights to 14 pw?

      Delete
    7. Morning flight daily A321, in the afternoon A320.

      Delete
    8. When they introduced the cuts in winter the summer schedule remained unchanged. Nothing new here, as already said above.

      Delete
  31. In normal world managers are happy when they buying new assets in Croatia is opposite. God save as from Croatian managers. OU is traveling to history like all good companies in Croatia.

    ReplyDelete
  32. OT

    Israir loaded their summer TLV-BEG flights into the system. The airline previously announced that they would stay in BEG only until the end of the winter season.

    BEG-TLV will have 9 weekly flights in summer.

    Air Serbia: 5
    Arkia: 3
    Israir: 1

    What's interesting is that Israir has the option to book flights from BEG. Fares have not been loaded yet.

    ReplyDelete
    Replies
    1. Israir flies regularly four times per week to Belgrade at the moment, days 1,4,5 and 7.

      Delete
    2. What is the demand like between the two cities? Mainly business pax?

      Delete
    3. No, mainly torusts from Israel.

      Delete
    4. I am sure Belgrade is not appealing for Israelis as a summer destination as they usually go to some summer destinations like Cyprus, Greece or Spain.

      Then again who knows what will happen in the end. I am happy that this is working for them.

      Delete
    5. http://www.pressonline.rs/plus/kofer/388526/srbija-za-izraelce-obecana-zemlja-.html

      Delete
    6. This comment has been removed by the author.

      Delete
    7. Kad sam bio skoro u BEG kazu Konobari kako najvise ima Izraelaca mozda vidimo na toj liniji veci avion :)
      INN-NS

      Delete
    8. Belgrade is popular with Israelis and Turks

      Delete
  33. Dobro je da su barem nekoliko slotova ostavili da nisu sve prodali i i od zarade neka otvore neke nove destinacije.
    INN-NS

    ReplyDelete
  34. Final nail to the coffin of OU, but at least the Croatians can now look at the pretty french airport and emirates planes...

    ReplyDelete
    Replies
    1. We're not only gonna look at it. We gonna use it as well.

      Delete
    2. Sounds good to me, Anonymous 2:41! Can't wait to use Emirates!

      Delete
  35. What about a passenger like me who has booked and paid for 9 round trips between Heathrow and Zagreb from before when the news of this 'slot sale' broke, having been completely screwed by the Lufthansa strike of November 2015, has now had to 'cover' the OU bookings with other bookings in case the slot sale went ahead, with no assurances of any safety net arrangements like alternative flights guaranteed (Zagreb would tell me nothing when I phoned them), have accommodation and ground transport all booked etc etc. Does OU not understand how upsetting this all is for the passenger. This has cost be a lot of money, not to mention stress etc etc. And when last I looked, seats on LHR-ZAG were still being advertised into December 2017. I trusted OU. I believed the smiling CEO about promises of good service. What mistakes to make!

    ReplyDelete

EX-YU Aviation News does not tolerate insults, excessive swearing, racist, homophobic or any other chauvinist remarks or provocative posts with the intention of creating further arguments. A full list of comment guidelines can be found here. Thank you for your cooperation.