Croatia Airlines in the black after five years as passenger numbers decline
Croatia Airlines has published its official financial results for 2013, showing the carrier ended the year in profit for the first time in five years. The national airline was in the black with 87.450 euros. Results show the airline cut costs by 10% compared to 2012. The news comes at a time the Croatian carrier is looking for a new part owner. “During 2013 all activities were directed towards the restructuring process. Restructuring is necessary for the long term sustainability of Croatia Airlines under Croatian and European Union laws”, the airline said commenting on its financial results. It adds, “The biggest obstacle facing Croatia Airlines is the high seasonality in passenger flow. During the winter the airline has a market share of 66% but continues to record losses while during the summer the share amounts to between 23% and 36% and makes a profit”.
The Croatian national carrier handled 1.796.885 passengers in 2013, a decrease of 8% on the year before. As a result, the airline has maintained its position as the busiest carrier in the former Yugoslavia. Its average cabin load factor stood at 68.8%, just down from 69.1% in 2012. The airline recorded an increase in the number of passengers travelling on domestic flights by 5.8% while, in total, Croatia Airlines had a market share of 34%. The carrier explains its drop in passenger numbers comes as a result of the sale of one of its Airbus A320 aircraft as well the eight day cabin crew and pilot strike staged last May. The airline’s on time performance stood at 84.1%, just above the European industry average.
Croatia Airlines says the results indicate the restructuring process has so far been successful and justified. The restructuring is set to continue throughout this year and is to be completed in 2015, if the airline does not find a part owner in the meantime. The national carrier says its performance is highly dependent on that of the Croatian economy and its recovery will also lead to an improved performance by the airline.
So what are those measures exactly? The ones it will pursue this year.
ReplyDeleteI think this year will be very interesting to follow. Croatian airports will have another phenomenal year (though I doubt Zagreb will see more than 5% growth), Ljubljana strikes back with their impressive growth in 2013 which should continue in 2014 especially as more flights are being added, it will be interesting to see if Skopje manages to pass the one million mark this year as it started badly the year, and finally it will be interesting to see if Air Serbia manages to overtake Croatia Airlines as the busiest carrier in ex-YU, after all, the difference is only around 350.000 passengers.
I could also add that this year Belgrade airport is set to break another record when it handles more than 4.000.000 passengers for the first time since it opened its doors.
Unfortunately, there is also the European Commission ruling that looms over Slovenia which might have a negative impact on the Slovenian civil aviation sector.
nema sumnje svetla buducnost. ako izuzmemo pogorsanje radnickih i ljudskih prava
ReplyDeleteКоје погоршање радничких права?
DeleteOU's managment taking tricks from Enron's playbook.
ReplyDeleteWhat do you mean?
DeleteI'm refering to the "profit" OU allegedly made. Creative (Croativ? :D) accounting at best, outright rigging at worst.
ReplyDeleteYeah, I assumed you meant that but I was wondering how they managed to do it? :)
DeleteThere's an infinite amount of ways to do it, but I'm not an accountant so I don't know the exact tehnic. Each industry usually has a few tricks to "optimize" the financial reports...
DeleteIf you are not an accountant, how do you know there are infinite ways of doing it?
DeleteAt least OU releases the figures, unlike the shady backroom deals with the arabs that JU did..
Why is there a need to bring Jat/Air Serbia into every discussion that portrays Croatia Airlines negatively?
Delete@Anon 10.57 AM
DeleteBecause I'm an economist and I saw these types of manouvers many, many times.
They intentionally modified their financial reports through various techincs so they try to sell to the investors the fact that they didn't make a loss. Naturally, no one is so stupid, since due diligence quickly discovers anything strange in the books. But hey, the transportation minister can claim he "restructured" the company.
Just a quick glance over the report shows some strange things. Consider this - they lost >60m in 2012 (OK, a large amount was due to fleet revaluation, but that only indicates that in the years before the results were even worst, but they intentionally overvalued their fleet assets to boost the result). In 2013, they cut costs by 10%, but their passanger numbers dropped by 8%. Unless the ticket ASP increased dramatically, this implies that the financial results could not possibly be dramatically different in absolute terms compared to the year before (unless OU has tens of billions of $ in revenue, where 2% can make a difference of tens of millions of $). So, how did they magically make a prodit now? Auxhillary revenue? Noup. Much higher ASP? Noup. Creative accounting then?
Just a question for the "expert" : If this OU result (minimal profit), is invented, and fiction, and the result of accounting tehnics only, why they simply didn't do it years before, showing they have at least "positive zero" instead of massive losses?
DeleteSimple, there was no need for creativity. The government would just cover the losses and that's it. Now when that is no longer an option they need to be creative.
Delete@Anon 3.08PM
DeleteCreative accounting means booking various things in various periods of times to maximize performance in one year at the expense of the next one. It has its limits. If you deffer a loss to the next year, you have to sustain a hit next year. As such, creative accounting is perfectly legal. What you're suggesting is outright fraud and you can get jailed for that. Also, as the Anon above me said, they had unlimited subsidies which are no longer a source of funding.
@AnonymousFebruary 16, 2014 at 12:55 PM
Deletemv w/e is your nick.
First off OU posted its profits for 2013 and indications were from a start that OU will do well in 2013 due to cutting number of loss making routes as well as reduction in outgoings i/e expenses.
OU did have 8 days of strike which impacted on OU's operations dramatically, 8 days = 80-100 000 pax, reason for slight drop in passenger numbers (155 000 down on 2012).
OU Technika however had tremendous year with its operations working at maximum capacity and with massive profits, doing D and C checks on A319s and A320s for the first time on aircraft outside OU's own fleet.
Also by retiring one leased A320 OU is saving another $4.5 million per year.
OU has done well in 2013 its now time to see how it'll do in 2014, with service returning back to normal and no longer need to worry about 8 days of strikes that crippled the airline.
I can see OU making at least $10 million profits on projected 1.9 million pax or even $12 million on 2 million pax.
Things look for OU, despite all the hatred for OU and Croatia you have exhibited since you started posting on this blog.
Last anonymous,
DeleteYour posts are easy to recognize because you always say the same thing.
You are forgetting one important thing, OU did not fire people, something it desperately needs to do. You want to portray the situation in OU as if it is good when the reality is that it's very, VERY bad.
@AnonymousFebruary 16, 2014 at 6:13 PM
Deletethey're not brilliant, problem is as you said too many staff working for OU, or jobs that really can;t be done by one person but are being done by several, loads of managers but few actual staff doing their work and so on.
I've said it few times already OU needs to loose 300 staff and it does need to loose them asp, problem is not only the staff but the management at the helm which must go in its entirety, but overall what I am trying to say is that OU such as is isn't bad airline, give it a chance.
And i do want to see airline privatized only for sake of getting competent individuals in to OU that actually know about airline business.
Would like to see BA or even Air France take over OU (not likely to happen) or Korean air, Malaysian airlines or some other competent airline from Far East, (as long its not an Arab ?Gulf based airline).
I agree, the situation with OU is really bad, but what to expect when we have the same people not doing their job, it's hard for me to believe that OU will survive, can't say that I regret, we paid them more then anyone could spend... I hardly believe anyone will buy them, they had their chance and they missed it!
DeleteAnonymous 8:02 PM, why not Gulf-based carrier? Honestly, and I am a Croat, nor Far nor Middle East companies would wanna buy OU, that's what happens when you have an incompetent minister of traffic + a CEO criminal (in OU)!
Delete@AnonymousFebruary 16, 2014 at 8:08 PM
DeleteBecause that brings issues and problems with code share agreements OU has with US based airlines and with in the EU there might be issue of competition, for most Gulf based airlines are heavily subsidized by the state receiving unfair advantage, reason why Alitalia and LOT had to be looked over by the EU competition authorities and why Lufthansa is objecting Ethiad taking over Alitaian 33% stake.
Also they're not reliable, as soon as they see issues or don't see the return after 3 years they just leave the airline in the ditch, happened so often with Ethiad and similar airlines.
I am curious, what airline did Etihad (or any other ME3) ditch after it failed to make a profit?
DeleteThe only case I remember is Emirates' involvement in Sri Lanka but they pulled out for different reasons.
British Airways has sent its A320 to Zagreb today. Nice to see extra capacity being needed during the slow season.
ReplyDeleteIt is easy to explain why OU was profitable last year.
ReplyDelete- Prices are very high. Cheapest return from Zagreb to Brussels 235 €, Amsterdam 247 €, Vienna 205 €. Especially on seasonal flights, Dubrovnik - Venice 245 €, Dubrovnik - Athens 290 €, etc. Note that mentioned prices are cheapest available and advertised on their web site as special offer.
- All OU domestic flights are more expensive than any of JU regional (international!) flights.
- OU has just 2-3 promotion sales during one year with very limited number of seats available at promo fares. JU has promotions all the time, even two different promotions at the same time.
- OU cut catering cost a lot. On domestic flights just glass of water is offered. Even in business class on domestic flights catering is poor.
- OU hired less seasonal cabin crew then year before.
Believe me people in Croatia are not so happy flying with OU because tickets are very expensive and promotions very rare.
"All OU domestic flights are more expensive than any of JU regional (international!) flights."
ReplyDeleteAnonymous 2:00 PM, this is simply not true, since I live in Dubrovnik I know what I'm saying. DBV-ZAG-DBV ticket price (the cheapest one) is around 800-900 kuna (110-125 euros), are you seriously telling me that JU's international flights prices are all cheaper than this?
I think he meant regional ones like Montenegro, Banja Luka, Sarajevo... which are between €70 and €110.
DeleteFRABEGFRA 110-150 EUR all the time.
DeleteAt the beginning, but for how long? Air Serbia is not a low cost company
DeleteIt all depends what are its costs. I am sure that now it's much easier for them to breathe when they are no longer ripped off by Belgrade airport.
DeleteAha, ok, but the diference is not that huge, there are also promotional sales every now and then, not that often, still more than 2-3 times per year... Completely agree about catering, though, it's terrible!
ReplyDeleteWhat do they offer in business class when it's that bad? What about on longer routes in economy like the ones to London?
DeleteDomaći letovi poslovna klasa: paška skuta na kolutu palente/pure s jednim listom rikule, a slatki dio jedna suha smokva, jedna suha marelica i nekoliko grožđica. To je toliko maleno da je smiješno za vidjet. Prije su služili rusku ili francusku ili neku drugu salatu s toplim pecivom pa se tu nešto i imalo za pojest. Ostali djelovi usluge u poslovnoj klasi su i dalje vrhunski, počevši s pićem dobrodošlice s vlažnim maramicama, zatim podijele dnevni tisak - velik izbor, a uz "jelo" birate između najboljih vina, sokova, kave/čaja. Cijena: od 116 do 157 € za jedan smjer, ovisno kad kupite kartu. Ispričavam se što pišem na hrvatskom.
DeleteSuper, hvala na objasnjenju. A sta daju kada je duzi let? Tipa oko dva do tri sata?
DeleteU poslovnoj klasi na duljim letovima služe topli obrok, a u ekonomskoj hladni obrok.
DeleteThere are several ways to decrease negatives of financial statements. From revenue recognition (Enron and Nortel) to increasing asset base and decreasing liabilities by not recognizing all payables. I have not analyzed CA's financial statements, but I would focus on cash flow to determine where they played with numbers.
ReplyDelete"The national airline was in the black with € 87450,00 " no no cmon guys thats not creative accounting...it should have read 8,745,000 Euro Cents now " thats creative" . Honestly whoever dreams up these figures thinks that by showing a supposed profit which is about the salary of 3 stewardesses that international invrstors will line up to bid for this airline?
ReplyDeleteFirst of all - OU is in profit 'cause the fuel price is 2-3% lower on average than in 2012.! as i said before ten times, 70% of expenses is fuel and former croatian prime minister Sanader (in prison now) signed a deal with MOL/INA that OU will buy fuel only from INA (and INA has 5% expensive fuel from probably everyone else in EU). So my dear friends do the math and figure out how much is 5% in fuel cost in a year.
ReplyDeleteAlso, CA Technical Services made a tremendous job in 2013., making a real nice profit.
9A-CQC was grounded 'case of emergency landing, that's also "important" in this "računica" because you didn't operate the aircraft for 2-3 months.
We'll see what future brings, but I hope that by the end of this year Croatia Airlines will be bought by some investors.
Pozdrav svim ljudima dobre volje!
Have you read the article? There was a 10% decrease in costs, followed by 8% reduction in pas numbers. So, how did they magically create a profit now from last year's terrible results with this kind of an adjustment?
DeleteHow?
ReplyDelete- less employees
- cheaper fuel
- technical services worked 3x more than year before
- some processess have been modernised
- better use of Dash and Airbus aircrafts (no need for Airbus flying to Dubrovnik in winter months)
- etc. etc.,
Dakle može se, samo treba stegnuti remen.
Again, OU reduced costs by 10%, while having 8% less pax. So, even with cheaper fuel and other things you listed, it's still 10% less costs, but considering 8% less pax, with similar LF, it clearly indicates that there was a significant number of ops and that that's the source of most of savings.
DeleteDid they fire the Ceo Mr.Kucko to make this profit. Because that's +/- his salary he was making in his previous position .If so congratulations Croatia Airlines , there are some more like him in your organisation unfortunately they are also linked to him .
ReplyDeleteCompletely off-topic. An Ethiopian plane on ADD-FCO has been hijacked and is en route to GVA, running out of fuel.
ReplyDeletehttp://www.airlinereporter.com/2014/02/breaking-ethiopian-airlines-flight-702-squawks-hijacking-reasons-unknown/