Tuesday, March 7, 2017

Croatia Airlines leases back Heathrow slots


Croatia Airlines has leased back five weekly slots pairs it sold to Delta Air Lines on January 27. The move will allow the Croatian carrier to maintain up to nine weekly flights to one of the world's most congested airports during the summer season, which begins on March 27. The two airlines concluded a Slot Use Agreement, whereby Croatia Airlines will "babysit" the morning departure and arrival times for Delta until October 29, 2017. "It cost us nothing. Zero kunas. Through negotiations with Delta we reached not only the best possible price, but we also regulated the use of Delta's slots this summer season through a special agreement", an unnamed source close to Croatia Airlines' management told the "Nacional" weekly. The Croatian carrier earned 19.5 million dollars from the sale.

Croatia Airlines will maintain services to Heathrow next winter season but will only utilise its four weekly afternoon slot pairs on Monday, Wednesday, Friday and Saturday. "We are extremely pleased with the agreed price because we managed to get double the amount then we initially expected. It should be noted that the UK government has approved the construction of a third runway at Heathrow and plans have been made to add another 25.000 flights using the two existing runways by 2021. Therefore, the value of the slots will decline and we would never have been able to reach such a deal", a source from the airline said. He added, "The slots were offered to a number of carriers but the best bid was made by Delta. The most valuable departure and arrival times are during the early morning hours before 08.00. Those between 08.00 - 12.00 loose 30% of their value, while those in the afternoon up to 80%. The price was also impacted by the fact that Croatia Airlines does not have daily slots at the same times".

The Croatian government recently extended the term of the carrier's CEO Krešimir Kučko by another six months after which a public call will be issued for the selection of a new management team. According to sources from the airline, Mr Kučko plans to run for the top job once again. The sale of the airline's slots became a contentious issue, which was criticised by some in the Croatian 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 next month.

92 comments:

  1. koja glupost. nekad nema logike..

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  2. Just suspend London, they have no competitive advantage over Monarch or BA. Also, the coast is already connected with direct flights so no need to transfer in Zagreb.

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  3. So all that drama about them selling slots and in the end they will be staying and they also managed to get some money. I call that a smart move.

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    1. It was their failure to communicate that they will keep flying in the afternoon. In fact they were the ones that said they would completely pull out of LHR by mid 2017. I'm sure some people decided not to buy a ticket with them because of it.

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    2. I call that creative accounting.

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    3. They will sell the four other ones they have left. Mark my words. Next year around this time.

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    4. Oh and BTW they never planned to keep these slots over the summer. They were just lucky because of operational reasons Delta could not start using these slots immediately this summer and they gave it to OU to use for free to babysit them like the article says.

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    5. They will stay for as long as Delta does not start using the slots it purchased. Once they start it's bye bye LHR. And I think it is no coincidence that the OU management would not disclose how much they pay for the lease of these slots because that money basically reduces the sale price they agreed with Delta. The only thing they get in return is another summer season on LHR, which should not be bad except the OU management claims the route is not profitable. So if we are to trust them, they have agreed to lease expensive slots for a route that was already loss-making without this additional financial burden (the slot lease). How can that be a good deal is beyond me.

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    6. @ 9:08 I agree, this was really poorly managed by the airline on all fronts, especially PR and communicating to passengers.

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    7. The last anon - they leased it for zero kunas, read the article more carefully.

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    8. Thank you Michael, I have read it very carefully. There is an unnamed source from the airline who said "it would cost OU zero kunas". Which I don't believe for a second, until I read an official announcement that will confirm they don't have to pay anything.

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    9. What amateurs ! The whole argument for selling the slots in the first place was that the route was loss making and for that reason, they had to sell the slots. Now they are flying again and will continue to make losses.

      Or, was that never infact the case and the real reason was that they needed to show some money in order to service engines and do whatever else ?

      Seems to me that OU mgt don't know what is fact or what is fiction.

      Either way, it throws out even more questions that need to be answered

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    10. OK guys, let's give credit where credit is due. If LHR is loss making for them, it's not in summer for sure. So, if they got slots for free, the decision to continue flying is no brainer.

      I think better question is would the slot sale price be any different if they didn't get the option to fly LHR this summer.

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  4. I really like the Croatia Airlines tails in this pic. Looks great! One of my favourite airline liveries

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    1. As creative as Jat Airways' 3 dots.

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    2. No I didn't like the Jat 3 dot or egg livery at all. This livery is modern and contemporary and will always stay that. Bit like Air France.

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    3. What's really creative and a timeless piece of design is the Croatian coat of arms.

      The airline logo is THE most obvious logo, having the CoA in mind, I could have imagined. And all that in spite of great Croatian school of design which has been around for some time.

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    4. I don't think the coat of arms is a piece of design, on the contrary, I find it trivial. They could have done far better in terms of design.

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    5. Well ever since the independence Croatian designers have been pushing for this graphical solution trying to brand the country. They all agree that red and white squares from the coat of arms, together with blue from the flag, are simple yet highly recognizable symbol of Croatia (see football team and fans, or any sports team). There was even a new flag proposal which included only red, white and blue squares, but it was rejected by Tudjman's regime as not traditional enough. Google for it, it looks quite nice :)

      Same as Switzerland and their companies use white cross on red from national flag. You see it - you know it's Swiss. Nothing to do with JAT dots.

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    6. I agree, you see it and you know it is Cro. I still don't like the design of the coat of arms, they should have modernized it. But then again, Tudjman decided. Full stop.

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    7. Tudjman is dead, Croatia belongs to a new generation

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  5. Ovi objasnjavaju neke stvari. Kakvi kraljevi. Croatovanje se nastavlja.

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    1. I jos obrazlozuju kako su oni, toboze, napravili jos jednu pobednicku finansijsku kombinaciju. Koja luda kuca.

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    2. So tell us, what's the feeling when you comment your own comments?

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  6. Kucko staying and probably winning another term :(

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  7. Wait so what happened with their claims that LHR was loss making and costing the airline millions of euros?

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    1. That excuse was maid only to serve its purpose for that point in time.

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  8. And what happened with rumors that as part of this deal Delta would start flying to Zagreb?

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    1. Don't always trust Anonymous users on the internet ;)

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    2. It will be United :D

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    3. There was some talk of new codeshares between OU and Delta. This might be a part of the slot sale agreement.

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  9. I think it's beyond my level to even comment these financial machinations. This airline just takes the cake. Seriously flying on borrowed time.

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    1. I think Montenegro Airlines is ahead.

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  10. Privatise them ASAP.

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  11. This is a proof that Purger was right when he said that those flights are extremely profitable. If they were not, the leaseback would have never happened. Croatia would stop flying immediately.

    Haplek

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    Replies
    1. Apparently they are profitable during the summer but major loss makers during the winter.

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  12. with 4 weekly flights in the afternoon next year they might as well just suspend the flights.

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    1. They will eventually. That's the plan from the start.

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  13. just when you think that things can't go any stupid in this region, someone has to surprise you...

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

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

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    1. This government is completely uninterested in Croatia Airlines so they don't care.

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    2. I'm not a massive fan of the guy but I fail to see what he did wrong? He managed to navigate the airline during restructuring when his hands were pretty much tied in terms of development. Afterwards we have 8 new routes within 2 years and he also renegotiated the Airbus NEO order successfully.

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    3. I was critical of OU so many times, but these folks criticizing this particular thing as some extra stupid deal are either completely ignorant, or are one of those who have been predicting the downfall of OU for years. You know; always the same two arguments; they even said that this sail will be reason for OU ending 2016. in the black. Now that someone who is clearly more informed explained to them what nonsense they've been saying, they've immediately switched that same "argument" for 2017. Hahabahaha!!!!
      I can already see it: the year is 2030. Croatia is still flying. It's profitable. And they are still playng the same old tune; here it is, just you wait in 2031. OU is done! LOLOL!!!!!!!!!

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  16. I actually think this was a good deal. They will keep flying to LHR, they got money from slots and now they are able to use Delta's slots. Don't understand all the people complaining here.

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    1. You do understand they don't use the slots for free? They have to pay for the lease. So they are basically cutting off a part of the sale price they got for those slots.

      And all of that on a route that is allegedly loss-making.

      The only way this does not turn into a financial disaster is that Delta let them use the slots for free this summer. If that is the case, then it's fine. But I'm not sure I can pull out such conclusion from the article.

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  17. When LHR's third runway opens slots will be worthles. Better sell them while they still have some value.

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  18. So, they claimed this route was making multi million losses and then they sell the slots and lease them back, just to lose more money?

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    Replies
    1. Yes. It doesn't make any sense but they think we are all dumb and crazy.

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  19. OU je na putu bez povratka

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    Replies
    1. Od kada ono? 2010? Ili 2005?

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  20. I don't remember there ever being so much controversy when Adria sold its LHR slots.

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    Replies
    1. That was 15 years ago!

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  21. "We are extremely pleased with the agreed price because we managed to get double the amount then we initially expected".

    In the normal world managers are "extremely pleased" when they buy new assets not when they are selling to get quick money.

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  22. I wonder how many passengers they lost because of this entire saga. I personally know 2 people who didn't want to book a ticket with OU to London because they were not sure whather the flights would be around. They chose BA instead.

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  23. Bravo OU, bravo! Expensive airport with ridiculous competition. Sell them at once.

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    1. Alen Šćuric PurgerMarch 7, 2017 at 11:20 AM

      This is why so many airlines kill for those slots and pay even 75.000.000,00 EUR for 7 weekly pair of slots. Because it is expensive with ridiculous.

      Others find this "competition" as opportunity for code-share, collaboration, interline, connections... They also use alliance terminal, VIP lounge, discounts as member of alliance, connections, code-share via LHR, possibility to earn money on transfer, local transportation prepay (sale), hotel sale... Lot of opportunities for extra money earn. Just few cities in Europe have that possibility, and London is No. 1 between them.

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  24. Good move by Croatia Airlines. They get to use the slots for free this summer and they will reduce frequencies next winter by operating fewer flights to LHR and therefore reduce costs.

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    1. I think the best option for Croatia would be that they sell all slots and terminate all routes. On that way they will not make any debts.

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  25. Come on, nothing is free...maybe they really didnt pay for lease after they sold the slots but for surely that lease has been paid in this price of 19.5 millions... they earned less money because they took the slots back in lease for this summer and thats how they paid for this lease.

    Or someone really believe that something could be free here...

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  26. The issue is that without the morning slots they can suspend the rest too. The morning slots are perfect for transfer passengers. In an earlier article there were some statistics which showed that most passengers on the flights came from Skopje and Sarajevo. You will loose these when you end the morning flights. They could have just sold all the slots in one go and get some money out of it. The afternoon flights will just be loss making.

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    1. That's not true actually. The stats showed that most passengers were P2P. What you are confusing is that out of all the transfer passengers most were from Skopje and Sarajevo.

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  27. OU managed to outperform Wizz and easy jet between Zagreb and London. When BA started flights it went downhill. I hope they don't suspend London completely.

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  28. I think the only reason they didn't sell all the slots is so they can sell something in 2018!

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  29. The problem with London is that it is so highly seasonal the airline can only make a profit during the summer. That's why all the LCCs and leisure airlines fly to Croatia on these routes only during the summer.

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    1. BA flies year round to ZAG and it is not complaining.

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    2. Not going be a very comfortable ride with BA soon. Look at the world news section:

      "BA to offer less legroom than Ryanair"

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  30. It's still surprising that they sold the slots for just $19 million. It seems quite low for morning slots.

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    Replies
    1. Especially since they were saying they would get 30 million USD.

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    2. But now they say they made double then what they hoped for....

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  31. Cool OT!:

    http://www.croatiaweek.com/zagreb-first-stop-on-breitling-dc-3-world-tour/

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  32. The whole thing was handled badly from the start but overall I'm happy they are staying at LHR for the time being.

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  33. This is called artificial book keeping.
    The current Ceo Mr.Kucko must really think that people are bLind and illiterate

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  34. OT:
    Kako pisu vecernji list i poslovni.hr, novi terminal ZLZ ima ukupno 14 izlaza (samo su tri za autobus) naspram starog terminala koji ima 18 izlaza. Nadalje, novi terminal ima samo 13 stajanki za avione, dok stari ima 22?
    Nadalje, gorivo ce se i dalje dopremati iz cisterni sto ce izazvati dodatan kaos na stajanci.
    Ima li netko sluzbenih informacija ili su ovo sve samo floksule?
    http://www.vecernji.hr/hrvatska/zracna-luka-franjo-tudman-premala-1154286
    http://www.poslovni.hr/hrvatska/ca-zabrinut-zbog-novog-terminala-325133

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    1. Novinari malo preteruju, Dash ne može da se poveže na mosta ali svakako može most koristiti kao izlaz tako da ona tvrdnja 6 Dash aviona a samo 3-4 autobuska gate-a je smešna.

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    2. Kako moze koristiti most kao izlaz a ne moze se spojiti na most? Nije mi to jasno.


      Ja cesto letim iz ZLZ, letio sam i kad je jako prometno i navecer kad je promet jako slab, i nikad nisam dozivio da je na stajanci vise od nekoliko aviona, kao sto se ne sjecam da je za medunarodne letove ikad koristeno vise od 6 izlaza istovremeno - a tih 6 je onaj rush hour u 8 ujutro. Tih svih 18 izlaza se na starom terminalu nikad nisu do kraja iskoristila, vjerojatno su to koncesionari imali u uvid. Tako da ja isto smatram novinari malo previse pretjeruju.
      Ali da istina stoji ovo za cistsernu - zbilja je jako lose sto to nisu sredili kako spada.

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    3. Pa ako je točno ovo da će se koristiti i stajanka od starog onda nije bas da su samo gluposti... pravis sve novo a onda se vracas tamo na staro...

      Ali nesto oko broja izlaza mi nije jasno...ako pise da ih ima 14 sa 3 za autobuse a ima 8 mostova, sto znaci 8+3=11 ukupno... nesto fali u racunici, mozda ipak ima jos izlaza za autobuse...

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    4. Ima 8 izlaza na mostovima (6 međunarodni i 2 domaći) i 6 izlaza u prizemlju za buseve (3 međunarodni i 3 domaći), dakle 14 izlaza

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    5. Titman@ Tako što će putnici izaći preko stepenica na polovini mosta i ukrcati se u avion

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    6. It's all true but let's not exaggerate with conclusions. Their biggest problem and most definitely a huge issue is the statics. The whole structure is apparently "sinking".

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  35. 21,987 passengers used INI in February which is around 1,300 than in January. So far the airport welcomed over 43,000 passengers up from 36,000 last year.

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    1. So, 250000pax this year?

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    2. Not 36000 last year but 2 years ago

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    3. INI is on (relative) fireeee!

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    4. INI management expects at least 300,000 passengers this year and with BEG on track to reach 5,5 the two airports might come close to handling 5,9 million passengers.

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    5. Not even near to 9,6 million Croatia will have in 2017:

      3,2 ZAG
      2,6 SPU
      2,3 DBV
      0,6 ZAD
      0,6 PUY
      0,1 RJK
      0,1 OSI
      0,1 LSZ + BWK

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