Saturday, May 13, 2017

Croatia Airlines outlines future plans


Croatia Airlines' CEO, Krešimir Kučko, has said the carrier will focus on three profit centres in the future and expand its fleet to ensure it maintains its position as a "regional leader". Speaking to the "Regional International" magazine, Mr Kučko said, "Croatia Airlines is one of the few European companies that has successfully implemented a restructuring program in accordance with EU rules on state aid. It is now a restructured and profitable company". He added, "Our strategic objective is the development of three basic profit centres: network flights, seasonal and charter flights, and the company's technical centre. We plan to expand our technical maintenance operations for foreign airlines and widen the existing capacity of the technical centre in Zagreb".

The head of Croatia Airlines noted that the introduction of two wet-leased Bombardier CRJ 1000 aircraft this summer is the first step in the carrier's plans to expand its fleet. "In accordance with the company's development plans, we plan to introduce aircraft of similar capacity to the CRJ as an addition to our existing fleet. This will bridge the difference in the capacity of our Airbus aircraft, which have 144 to 174 seats, and the Dash 8 Q400 with 76 seats", Mr Kučko explained. He added, "The introduction of a third type of aircraft (100-seater) will further optimise the entire fleet and allow even better adjustment to capacity on the Croatian market, which is highly seasonal. In 2021, we will begin the renewal of the Airbus fleet by introducing the first two Airbus A320neo aircraft. Two more of this type will be introduced in 2022".

The airline is bullish on its financial prospects for this year after recording a net profit of 1.2 million euros during the first quarter, which was generated primarily as a result of the sale of its London Heathrow slots. "We want to continue our positive financial trend, which we have recorded four years in a row (2013 - 2016). In the medium term, we will invest in our core business and flight services, aircraft maintenance and operations, as well as in activities which ensure a high level of security. In order to strengthen the company's position as a regional leader, we are planning new business partnerships with other airlines, in particular with fellow Star Alliance members", Mr Kučko concluded.

76 comments:

  1. What about setting the base in SKP, PRN, SJJ?

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    1. Seems like they have given up on the idea. Thankfully.

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    2. That was nothing more but one of the possible strategies on the table...more like a false PR for the competition.

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    3. Mislim da je Mzlz igrala ulogu u tome da se na kraju osustalo. Sto mi se cini logicnije poceti stvarati nekakav mini hub plus pojacavati frekvencije prema tim potencijalnim bazama nego uzimati avione I bazirati u drugim zemljama pogotovo sada nakon otvorenja novoga terminala.

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    4. Da, jer bi iskreno bilo jako, jako glupo da ih nastave stititi da su otvorili te baze.

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  2. Good luck OU. One thing I still do not get is how do they expect to optimise the fleet with a third aircraft type. Won't that increase costs?

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    1. Same. This always increases costs.

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  3. Bilo bi u redu na pocetkom zimskog reda letenja, kad ostanu bez slotova na Heathrowu, da nadomjeste jutarnji let s Gatwick.

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    1. Ne ostaju bez slotova. Tokom zime imace jos 5 slotova na LHR.

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    2. Koje ce prodati pocetkom godine.

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  4. Bravo Hrvatska !

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  5. Mr. Kučko,
    How can you say that you will focus on maintenance for extra profit when so many mechanics like myself have left because of being underpaid. Constanhrly people are leaving.

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    1. Someone said here long time ago that Serbs are working there right now..

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    2. @AnonymousMay 13, 2017 at 11:27 AM

      There might be few Croatian Serbians working there, to work in Croatia, a Serbia national needs a working visa or sponsorship, something that isn't easy due to strict EU immigration laws.

      Out of staff of 80 or so, only 5-6 are Serbs, a friend of mine works there, and he said it is mostly Croatian staff, there are few from Hungary, Slovenia and Serbia, but mostly Croatian staff.

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  6. "We are planning new business partnerships with other airlines, in particular with fellow Star Alliance members"

    It will be Adria. You will see.

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    1. Maybe they lease some crj900s from Adria.

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    2. Or maybe LOT?

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  7. I realy don't understand most of the world airlines are focusing in network , seasonal , and charter flights a long time ago , croatia airlines just now realized what they have got to do ? Are they serious ?

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    1. Better now than never

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  8. I think that "regional leader" should be a banned phrase. But still, Kučko is offering less megalomania and I think OU stands a chance here.

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    1. Fully agree. This "regional leader" idea should be given up by all airlines/airports in the region.

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  9. "We plan to introduce aircrafts of SIMILAR capacity..." So no CRJ in the fleet. But this is a statement of May 2017. Things could change :D

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    1. As Mr Kucko always do!!

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  10. Those OU birds in the photo look nice lined up at the new terminal.

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  11. Hopefully they put a greater focus on charters like they say. It's an area they have paid much attention to.

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  12. I love how all ex-YU CEOs make grand statements and then in the end few things change.
    Croatia Airlines will only be able to expand when it either becomes profitable (for real though) or if it finds an investor who will be able/willing to throw money at them.

    Otherwise we are going to see more of the same. Let's hope the seasonal routes they will add will bring the needed capital and that revenue will be high enough to cover the expenses.

    I remember some years ago, DL's CEO Anderson said that every airline can make money during the summer months but the thing is not to burn it during the winter ones. That seems to be the case with all ex-YU carriers.

    Personally, I wouldn't hold my breath as far as OU goes. Especially now when they have to face even more competition at their home airports.

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    1. Agree with you Nemjee. There is very strong indication 4k invest will take a stake in Croatia Airlines at the end of the year and I think this will be bad for OU but let's wait and see.

      Also Kucko's term should be up mid-summer.

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    2. Hmm... if 4K does indeed invest in OU then it will be interesting to follow future developments at both LJU and ZAG.
      From what I could see until now, LJU seems more determined to attract new passengers through lower fees while ZAG's managements insists on higher yields.

      If nothing changes then we could see OU concentrate more on the O&D market while JP would work on expanding its transfer hub at LJU.

      The two airports are too close to each other in order to have the same model.

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    3. 4K will be a very interesting development if it happens which I doubt unless they are willing to pay a pretty decent fee for OU. Remember they got Adria for only 1 million Euros and if I remember correctly, Ljubljana was forced to sell the airline when there were hardly any buyers. Not the same situation at OU, not yet or in the near future anyway.

      4K taking a stake in OU would see an eventually merger or more realistically Adria would become part of OU. No disrespect to Adria but in my view if 4K really wanted OU than this would be stipulated by the Croatian side if a merger was on the cards. So again this is why I don't think it will happen.

      After seeing what has happened recently with JU than I can't see what more OU can do or what an outside investor can bring to OU apart from more capital (which will come at a cost). Best just to continue running a lean operation, grow safely and organicaly.

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    4. I think we can all agree that OU will eventually sell the remaining LHR slots after which its list of assets will become rather thin.
      In addition to that, unless they turnaround the company and start making money I don't see how they will keep on paying their bills. Other option is to start getting loans which will only result in more debt which is never pretty.

      As for JU, just because their whole story ended in this mess doesn't mean it will happen to everyone else. Unfortunately it seems to me that Etihad has failed in all of their projects with the exception of Air Seychelles. Jet Airways seems to be doing fine but only because they pulled their act together and started running their airline like a proper business.

      I do agree that OU should start running a lean operation and to grow organically but somehow I don't see it happening.

      How will they recapture the lost market on the coast? If you are a UK based tour operator who has millions of revenue from doing business with easyJet or/and Thompson, why should you switch to working with OU? Same applies to the German and the Nordic market.

      OU needs cash to promote itself as a reliable and worthy partner. Money it does not have... just like its brand is pretty unknown in the west.

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    5. I don't think you can say they lost the market on the coast. Their planes are full during the summer and if anything they are flying more passengers from the coast not less but its true that they have not kept up with the coastal summer growth rate. The question here is would of it been feasible for them to do so.

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    6. Nemjee, well said. A critical eye is always welcome. I don't believe either the profitable airline story. Finanza creativa.

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    7. Personally, given the current circumstances I think the coast is lost for them.
      They did not grow fast enough in order to remain competitive/relevant when faced with their competition. Look at all the capacity that will be added by easyJet. Slowly but surely they are building up their presence along the Adriatic coast.

      OU might be flying full but the real question is if these are all leftovers? Crumbs left by their competition?
      Kucko might have grand plans for the airline's future but I just don't see them happening. Like I said, in order for those things to happen OU needs a lot of capital, something they don't have and unless someone steps in I doubt they will get it.

      I think Trade Air might have a chance if they keep on being smart. I also think it was such a shame Dubrovnik Airline went bankrupt. Croatia needed an airline like that.

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    8. Again, being a bit harsh Nemjee. OU still is the busiest airline on the Croatian coast. Even today they will operate 20 of the 59 flights out of Split for example and still hold 20% share at Dubrovnik with Easyjet in second place with 10%. The other airlines are the ones picking up the 'crumbs'.

      It will be more true to say that OU being slow to grow on the coast means that competitive airlines like Eazyjet have been able to take advantage of the growing demand where OU has just maintained its core market with limited growth. So you can argue that OU has not lost anything but they have not gained anything either.

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    9. Also, not really one to defend Kucko but what grand plans are you referring to?

      Replacing the airbuses in 5 to 6 years time and adding a 2-4 regional aircraft don't really sound that grand to me but is realistic with OU just keeping up with the growing Croatian travel demand.

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    10. His grand plans of somehow turning OU around and creating some sort of a strong regional player. Speaking of regional jets, weren't they supposed to join the fleet this year? To me it seems as if it's a topic that comes up a few times per year but nothing real happens in the end.
      I mean what happened this year? We saw two CRJs join the fleet on a summer seasonal basis with Trade Air's Fokker jumping in from time to time. This is not a long-term solution, it's an interim one.

      Maybe I am harsh but I think I am just being realistic and I look at their long-term prospects. Maybe they are doing fine today but given current market trends they might not be tomorrow or the day after.

      At the end of the day, they are a loss making business that was left without its safety net the moment Croatia entered the EU.

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    11. Everyone was afraid that Macedonia would suffer when MAT went bust. It ended up being the best thing for the whole country. Imagine if finally Zagreb opened up to all airlines especially lowcost. I am sure four million would be easily achieved. Maybe someone like Ryanair, easyJet or Vueling could fly domestic routes.

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    12. Summer lease of two CRJs is very expensive. They are using it to start new and unproven destinations. Only one of 4 new destinations - Oslo, has a change of being profitable. They will realize by the end of the summer this was an expensive mistake.

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    13. Will the CRJ operate to OSL and HEL? Those are some long flights, CASM might be too high.

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    14. Anonymus 4:07, well not really. Oslo and Stockholm are doing very well, Helsinki a bit less. The slow one is Bucharest.

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    15. I guess that's how OU is winning over Air Serbia.

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    16. Anonymous 6:56, Stockholm will be beaten by cheaper Norwegian when they start on June 10. Only Oslo will do well out of four, which is not enough.

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  13. I will repeat again, how can they tackle seasonality if they are only introducing seasonal routes?

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    1. They don't care. Always a lot of bla bla.

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  14. What I understand as of mid summer Croatia Airlines will have a new CEO and Kucko is on his way as politicians have finally understood that they need a professional to run the airline instead of selling their assets and then claiming profit.

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    1. I think Kucko is safe as the government might collapse meaning his contract will get extended.

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    2. With the political (and economic) crisis in Croatia I think the government doesn't really care about OU. It's the least of their worries.

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    3. Political / Economic crisis? Happening? Enlighten me? Where?

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    4. Political crises yes, economic crises no.

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    5. Erm... maybe you haven't noticed that the future of Agrokor is uncertain as well as the future of the 60.000 people that work for them!!

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    6. Also, you are forgetting that there is more to Croatia than Dubrovnik, Split, Istra and Zagreb.

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    7. @AnonymousMay 13, 2017 at 12:11 PM

      A political crisis was always on the cards due to Most/HDZ coalition, last HDZ/Most coalition collapsed due to both parties can't stand each other.

      Agrokor, is now being taken over by the state. however long term solution's State might sell its share (25%) to 3rd party or back to smarter Agrokor management. We'll see.

      There's no economic crisis, Croatia is growing at 4%, hardly economic crisis, 17 million tourist expected to visit Croatia this year. Croatia is expected to earn €8,5 billion in revenue from Tourism, and exports are expected to grow by 10-12%/ YOY.

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    8. Yes but like I said, it's 3% for the whole country while in the continental parts where I live it's a completely different story.

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    9. You wrote "Croatia is growing at 4%..." ...

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    10. Croatian coast and Zagreb is growing at like 8% while the rest of the country is rotting away with a negative GDP growth.

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  15. OT. Interesting article by The Economist on troubles facing ME3 and TK

    http://www.economist.com/news/business/21721956-aviations-most-successful-business-model-under-strain-super-connector-airlines-face

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  16. 'Other' Star Alliance partnerships? Yes we know. When is UA planning those flights? It's been rumoured. Start date?

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    1. I heard EWR-ZAG on the B767 was imminent, I think the route will do well.

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    2. "U januaru ste rekli letovi u aprilu. Od toga je proslo godinu dana..."
      Maratonci

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    3. @AnonymousMay 13, 2017 at 2:24 PM

      ??

      Can you lease expand what a heck are you guys talking about, United to Zagreb????

      No idea where's that coming from.

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    4. The famous UA customer service, they make FR and W6 look as luxurious carriers...

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  17. "Regional leader"
    What is Kucko on?

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  18. To continue positive financial trend ... OK!

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  19. I think not extending OTP in the winter is a big mistake. The same for SOF, that will hold the EU presidency for 6 months - big potential there.
    What about DUB? Why not launch flights before FR?

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    1. koja laz, sad sam kupio za moje u decembru za 601 euro povratna

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    2. Lucky you ! Sounds like you got a bargain price in the process too !

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