Turbulent year for Croatia Airlines
Croatia Airlines has seen its passenger numbers decrease by 5% so far this year and its losses increase, a report to the Zagreb Stock Exchange states. The Croatian carrier recorded similar passenger numbers on domestic flights compared to last year but recorded a 7% dip in numbers on international flights. With over 23.100 passengers welcomed on board its charter services, the airline saw a 1% passenger increase so far this year. In addition, Croatia Airlines recorded a 3% increase in ticket sales over the Internet, however, overall sale figures have been disappointing. The Croatian carrier noted an 18% drop in ticket sales on the European, American and Australian markets.
Croatia Airlines explains the slump is a result of its cost cutting measures, which have seen it lease out one of its Airbus A320s and discontinue some services. Furthermore, the airline notes the eight day strike, staged by pilots and cabin crew in May, also attributed to its losses and led to negative publicity both at home and abroad. Despite plans to lay off some of its employees, Croatia Airlines has 1% more workers than last year, totalling 1.096. More alarming for the carrier is that it recorded a loss of 10.3 million euros in the first half of the year, up on 2012.
The Croatian carrier will continue to implement cost cutting measures in the coming months and years in order to return to profitability by 2015. The airline has signalled further cuts to its route network with services from Dubrovnik to Paris and Frankfurt to be cancelled this winter. Furthermore, the airline’s CEO has tipped at the possibility of the carrier’s fleet structure changing. Croatia Airlines estimates it will end the year with a 4% passenger decrease on last year’s record numbers.
So the cost-cutting measures have yielded their first results. More employees and increased losses. I think the management of Croatia Airlines is not aware of what cost cutting is supposed to mean.
ReplyDeleteFurthermore, the fact that they have reduced their network means that they have reduced their income. However, with 1% more employees their costs have gone up. Not to mention that their fleet was reduced and with it the potential for expansion into lucrative markets. I still fail to understand why they have not launched Moscow flights. For Adria SVO is one of the most lucrative routes, I am sure it would be the same for OU. Unless they have missed their chance and can't compete with Aeroflot now.
So what miracle are they waiting for to happen for the carrier to be profitable by 2015? Also, who will cover these loses now that the airline is in the European Union? They will have to get a loan to cover their losses. This is the same damned path Adria took.
Finally, if they are referring to the introduction of Embraer jets('tipped at the possibility of the carrier’s fleet structure changing') have they thought who will pay for the training of the crew and for the rest of the expenses that come with the introduction of a new type of aircraft?
The winter months are coming, if OU recorded a loss of €10 million in the first half, then we can only imagine how much loss they will accumulate during the slow months, when all routes will see passenger numbers fall. Gloomy times ahead for the carrier.
No new aircraft types will join the fleet, blog admin is making things up as he goes, to justify his rumors.
DeleteCroatian Airlines will need to cut number of staff by 300 by the end of this year and further 200 by the end of 2014. OU cant possibly remain profitable with 1100 staff and 12 aircraft.
Also logic dictates that with fewer aircraft there'll be less passengers and less profit for the airline.
I think the management must go as part of the restructure along with 500 other employees.
But if they start firing people, won't that lead to another strike? Have they said which 300 employees are set to leave?
DeleteThanks
We often hear around a pejorative term jatovanje (most often with the point, until recently anyway), but unfortunately SOME of those people here are not able to look into their own backyard first.
DeleteIf they did, they would see an airline which is falling apart in the spiral of debt, downsizing, strikes nearly every year, mismanagement, lack of idea where they are heading, and without even the slightest idea what the future holds for their favorite airline .
I am afraid the awakening will not be that pleasant for them...
The point is, we should all try to be just a bit less biased in our comments and try not to rush into nasty conclusions while looking over neighbor's fence.
I honestly do hope OU will find its way out of the current troubles in the near future, as much as I wish JU all the luck in the near future endevours.
Most people who use the term Jatovanje are actually even more harsh in their critics of OU state and Zagreb's terminal delays. 'Jatovanje' has been a term used mainly in relation to Jat / Air Serbia continued fleet expansion / replacement plans none of which have ever seen daylight up until the arrival of 2 ATR 72 aircraft this year.
DeleteJust last week we had Air Serbia or someone associated with announce plans to order 10 A320's by year end when just days before Hogan, Etihads CEO said something completely different regarding Air Serbia's future fleet. Again Jatovanje.
Actually, they got 4 aircraft that is 2 Atr 72s and 2 Boeing B737-300. When this was announced people immediately characterized it as Jatovanje.
DeleteAs for the order, you have either misunderstood it or you believed a rumour. Hogan said that Air Serbia will place an order for brand new aircraft in the coming future while they expect the aircraft to arrive in 2015 or 2016. He also added that they have not yet decided on whether it will be from Airbus or Boeing. Bearing in mind that Jet Airways has just ordered a lot of B737 Max we can't say with certainty which aircraft Air Serbia will go for.
I follow closely the developments within the Air Serbia-Etihad deal and I have never come across a statement which said that there will be an order for A320s by the end of the year. This leads me to conclude that you were just confused.
http://exyuaviation.blogspot.com.au/2013/08/air-serbia-reveals-fleet-plans.html
Delete'Air Serbia is expected to place an order for ten aircraft from the Airbus A320 family later on this year for delivery by 2015.'
Yes you are right I miss understood the first sentence of the second paragraph...???
Now regarding the Jet Airways unilateral order of the 737 Max, this really makes me wonder how much you can believe of what Hogan said about Jat / Air Serbia, especially now when it looks like they might buy into Lot Polish Airlines too. I mean this would really limit the expansion possibilities of Air Serbia.
Read carefully, 'Air Serbia is expected..'. The airline is expected, it doesn't state anywhere that they will actually do it. So my argument remains valid while yours doesn't.
DeleteNo. Etihad's potential purchase of LOT will have absolutely no impact on Air Serbia's future expansion. If anyone will be affected then it's Air Berlin whose Berlin base is just an hour away.
Furthermore, Etihad will face a lot of problems with LOT primarily because of Polish geography. Not only is their home market low-yielding but its population is spread-out throughout the country. This means that it will be more difficult to compete with other carriers for passengers heading to or originating from secondary Polish cities.
In addition to all this, the Polish market is already heavily dominated by lowcost carriers. Wizz Air is well established at Warsaw while Ryanair is setting up a true base at Warsaw Modlin airport. Not to mention their rather strong presence in Lodz which is not THAT far away.
In addition to the above mentioned reason there is another one that should be mentioned and that is the issue of neighbouring carriers. Unlike Serbia, Poland is surrounded with airline which are competitive internationally. To the east it has Aeroflot, to the west it has Lufthansa while from the north there is Norwegian lurking which just now launched its own intercontinental flights. The Polish market is not unfamiliar to Norwegian which used to have a base at Warsaw airport.
In addition to these giants, LOT will have to face smaller regional carriers such as CSA to the south and airBaltic to the north. The latter has actually managed to undergo successful restructuring and it will phase out all of its ageing Boeing aircraft and replace them with C-series. Jat's closest threats are the loss making Austrian Airlines and Alitalia while in the east it has Turkish Airlines and Pegasus which are after a different kind of passengers, ones that are of little interest to Air Serbia.
So all in all, Air Serbia will have absolutely nothing to worry about in case Etihad does purchase a stake in LOT.
Naturally, you are more than welcome to actually present some arguments which would prove your point.
No you read carefully!
DeleteI never suggested that Air Serbia will put an order in for A320's by year end, I know better than to suggest that but for some reason persons involved with the airline most probably from the 51% side continue to make baseless fleet purchasing announcements even after the deal with Etihad.
We all know that this A320 order is not going to happen and leased A319's should start to arrive by year end but the announcements are still made. Just looks stupid from this new and improved Air Serbia management. This type of behaviour should not be tolerated by Kondic, if he allows this than he has little chance asserting his ideas and vision for Air Serbia.
You second paragraph is a bunch of mambo jumbo. It reads like this:
'Yes Etihad could buy a stake in Lot but they won't be able to do what they plan to do with Air Serbia because Air Serbia and Belgrade is in a better geographical position and somehow in my mind there is a greater possibility of number of passengers form South East Europe who have more higher yield buying potential compared to Poland and surrounding countries'....Dude!
You ignore that AirBerlin and Lot will be partners (LH is already in crises talks with Lot about their future in Star) with AirBerlin's main focus being on central Europe, AF/KLM with Airlingus Western Europe and Lot Eastern Europe. This leaves Air Serbia with a very limited area to expand to.
Not to mention we already now the impact on LCC in Poland and surrounding area and again you ignore Lots domestic network. So what happens when, and this will happen in the next few years, Serbia becomes more low cost carrier friendly. Who do yo think most Serbs will choose to fly with, full service carrier Air Serbia or Easy Jet / Ryanair?
Please, go back and read the article once more. There is nowhere mentioned that the Serbian government stated publicly that there will be an order by year end. It was written that the airline is expected to do that but ex-Yu did not provide us with a source of this statement. For all we know it could be totally made up. Naturally, this being a blog it is ok. Blogs are after all based on personal opinions and they are less formal, primarily because they are not obliged to sustain their arguments by providing us with sources. Plus, at the end of the paragraph it is stated that by 2016 Air Serbia is expected to have 24 aircraft but it doesn't state which ones or how they plan on acquiring them. This can only mean that the order is not firmly incorporated into the plan. To conclude this topic, the article doesn't cite the government or Etihad as the source of this announcement. Actually, it is not even an announcement, it is just an expectation and we all know how reliable those are. Naturally, you are more than welcome to show me where the Serbian government is actually saying that Air Serbia will place an order for 10 aircraft or whatever.
DeleteFirst of all, don't put words in my mouth just because you have a hard time understanding what I wanted to say. There is no part of my paragraph where I said that Air Serbia's future passengers are high-yielding, all I did say is that the Polish market is low-yielding. That's all.
Once more you are making unfounded arguments. I think your dislike of Serbia and Air Serbia/Jat (which did occasionally surface in the past) is disabling you from seeing the whole picture.
Air Serbia's primary market will be the Balkans and eastern Mediterranean. We can see this from Air Serbia's future destinations. New routes such as Cairo and Beirut will be added to Larnaca and Tel Aviv which are already served in that region. In the Balkans, Air Serbia will have a wide network which will include: Ljubljana, Budapest, Bucharest, Sofia, Varna, Sarajevo, Banja Luka, Podgorica, Tivat, Skopje, Thessaloniki, Istanbul and Athens. This means that Air Serbia's future niche market will be to link eastern Mediterranean and the Balkans with the rest of Europe. How is that a limited market?
Air Serbia and Belgrade airport DO have a better geographical location than LOT and Warsaw. Who are the biggest threats to Air Serbia's future expansion? Air Serbia has no intention on massively expanding in central Asia, Africa or the far-east hence why the presence of Turkish Airlines and the Persian Gulf carriers are of little importance to it.
Then we have the loss-making Alitalia whose future is uncertain as its losses are increasing with each passing day. Not to mention that due to their financial difficulties they had to downsize their presence in the Balkans- the latest cut being Thessaloniki. Then we have insignificant regional carriers without any business strategy and those are Croatia Airlines, Tarom and Air Bulgaria. These are no serious players and should not pose any problems for Air Serbia-Etihad. The first serious player who could be a threat to JU is Austrian Airlines which still has not managed to overcome its financial problems.
I have already explained the threats of LOT's geographical location so there is no reason to do it again.
Also, the fact that LOT and Air Berlin will be partners doesn't mean that one will not dominate over the other. With Air Berlin's growing presence in north America I really doubt LOT will keep its current N.A. network. What I see happening is LOT preserving a few North American routes to cater for ethnic travellers but the primary gateway for that part of Europe will be Berlin. Simply because Germany is much bigger and its market is higher-yielding.
DeleteAlso, what kind of domestic market does LOT have? Most of its domestic routes were handed over to EuroLOT which, even though 67% of it belongs to the state of Poland the same as LOT, it is still a semi-autonomous airline whose primary role is to operate out of secondary Polish cities. LOT is currently downsizing for a reason, most of its network is heavily loss making.
AF/KL? You should not use them as your argument because, unlike the other airlines you mentioned, they have a partnership with them, not a stake in them. Huge difference.
The main difference between the Serbian and Polish markets is that the lowcosts are already well established in Poland while this is not the case with Serbia. In other words, Etihad has an upper hand in this regard.
10.5m loss in the first half? How are they going to cover that? How's their capital right now?
ReplyDeleteThis is a start of an and of Croatia Airlines...
ReplyDeleteThat is not my comment. Again one who use my nickname.
DeleteThat is not start of an end of Croatia Airlines. End starts in 2010. That is just last breath.
Admin is in holiday. First insult is here from 4:00 PM. That is 8 hours now.
DeleteI don't understand why admin does not have more moderators that can control this blog all the time. I start to wonder if those insults are not removed intentionally. 8 HOURS!!!!!
"EX-YU aviation news does not tolerate insults...". To call someone pedophile is slander and that is not just insult but criminal act. So Admin that is normal that slander stays in this blog for more than 8 hours?
Offcourse they are not left intentionally. I wasn't able to access the blog... I'm a human being after all. They have all been removed now
DeleteA question to purger, why don't you register with Google account? I really like to read your opinions, however this thing with people taking your name is just BS and annoying.
DeleteBtw Ex-Yu could you do an interview with purger or publish his analysis, I watched AJB show and was really impressed, unlike many he knows his airplanes (it gives some credibility when you see someone arguing live and not behind an online avatar). And whether one agrees with him or not he builds his arguments quite nicely, and obviously has more interesting things to say compared to what he could say on AJB. Maybe some interview like text or just his analysis? Thank you.
Thank you ExYU. I know that it was not left intentionally. But you should have several moderators on this blog to control it when you are absent, because of "strange" guys to come on it.
DeleteVasingtonskver, thank you for your compliments.
It is very interesting that almost every state owned carrier makes losses:
ReplyDeleteCroatia Airlines
Jat
Adria
B&H Airlines
Montenegro Airlines
former MAT
Tarom
LOT
Czech Airlines (now owned by Korean air)
SAS
TAP Portugal (2012 they even made profit)
...
THE PROBLEM IS: most of those carriers are being managed by "not passionate people" who only know what economy is but who don´t know how to lead an airline!
To create a profit, person who manages an airline has to be "in love with flying" and to have a good "smell" for routes.
Actually the CEO of Ryanair would disagree with you. In an interview from a few years ago he said that the main problem with airline CEOs is that they are aviation enthusiasts. This enthusiasm is preventing them from taking painful decisions.
DeleteHe said that to be a successful aviation CEO, one must not care for aviation but for profit and profit alone.
Naturally I don't think he is right but it is an interesting way of seeing things.
Yes, you could be right, but people having their own airline also think differently than the CEOs of state owned carriers.
DeleteIn order to survive, an airline like Croatia Airlines needs transtit passengers.
Temporarly, Croatia "lives" due to Point-to-Point flights.
Only transit passengers are those from Sarajevo and few from SPU and DBV.
People from DBV or SPU fly mostly direct to west Europe and not via ZAG.
I agree with you when it comes to the network but in the case of Croatia Airlines things are not that simple. In order to be competitive within the transit market they need a few things: a decent airport and a good network.
DeleteZagreb airport is vile and it is a joke. Even Belgrade airport which, in my opinion, is ugly and outdated, has all the basic things needed to be considered a hub. Without decent airport infrastructure at ZAG, OU can never successfully position itself as a regional leader (a term which is regularly abused by quasi-aviation professionals in ex-YU but still, you get the point).
Then comes the network. I think people from the ex-YU region, and especially Croatia, are overestimating the importance of transit passengers from the Adriatic coast. Surely there is a market but its volume and yields are far from being enough to sustain a true hub network in Zagreb. If Croatia Airlines was serious about turning ZAG into a true hub then they would have seriously looked at other destinations such as Sofia, Bucharest, Thessaloniki... I will not even mention other cities in the wider region. Adria has been far more adventurous in this regard.
I see Croatia Airlines as a carrier without a goal and without a purpose. It is just flying around aimlessly, collecting debt and incompetent employees with political background. Which is pretty much the case with every airline in the ex-YU region. Thank God for all of us that at least Air Serbia will be run by a professional and efficient management from now on.
I would also like to add that very often we see people complain about OU being controlled by LH. Though I believe this is true to a certain extent, I think the true reason for OU's future collapse is because of the incompetence of its politically appointed management rather than decisions coming from Germany.
Actually MAT was never state owned. It was a private stock holder company mostly owned by 2 major shareholders.
DeleteWhat kind of restructuring is that? More employees, less planes (-1 for now), less routes to be flown from autumn and more debts??? Good luck to Croatia Airlines, will need a lot of it in order to survive in the next couple of years with the Management they have...
ReplyDeleteJust one thing Croatia Airlines does have professional staff working for them I travel several times per year via Amsterdam and I can say only one thing the Station Manager there is not incompetente.
ReplyDeleteThe only people that should be worrying by Croatia Airlines should be the ones that are not professionals in the business and there are quite a few but again first they have to stop with Politics and start with saving Croatia Airlines. Use the other airlines as example stop inventing .
ReplyDeleteNo problem
ReplyDeleteKiša pada,
Kroacija (Erlajns) propada.
Vjetar piri,
(Er) Srbija se širi.
A niste sami mogli. Tata Etihad ce bit vas gospodar.
DeleteНеће, тата република Србија ће бити са 51% акција лепи. Плус извршни директор Ер Сербије биће Србин и то из Републике Српске.
DeleteAre there any chances Etihad buy BNX. What they need is to ask a question to the government about the price. The government will sell it off. They desperately need some money.
DeleteBL1
By the way, for Etihad's Thursday flight, the day before there were 27 empty seats where 10 were assigned for airline employees while 17 were sold in 24 hours!
ReplyDeleteYou have to be flexible and ready to adjust your business whatever it might be to keep up with the changes of this very fast moving world. I think most in Eastern Europe have been found napping for way too long.
ReplyDeleteOU has to change the core of its business strategy completely. Adria has moved first and is making some positive announcement in how they would like to restructure the airline for the future. I think at this time Adria is in a more secure position than OU.
If Adria starts to produce profits and OU continues like this I wonder what Adria plans might be for Croatia or even OU. Could we see Adria as the airline of both Slovenia and Croatia in the near future?
Better get a wiggle on OU!!!
This comment has been removed by the author.
ReplyDeleteOT,
ReplyDeleteWith the livery of the week Air Serbia A319 and the this story's related picture of OU A319, you can compare the two.
For mine you can see here that OU has a real good livery.
Would anyone expect a different view from you? You just love your OU and that's fine... Obviously you love comparing too, starting a popular game here known as "mine is bigger than yours" again and again... Funny character you are, Q400.
DeleteP.S. For mine you can see hear that JU has a real good livery. ;-)
Here I meant, typing mistake...
DeleteNo other contenders????
DeleteLooks like we have a tie!
Lol...it's usually that way...svako u svom jatu ;-)
ReplyDelete