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| Croatia Airlines' CEO in favour of recapitalisation |
The CEO of Croatia Airlines, Krešimir Kučko, has said the Croatian government should avoid adopting similar privatisation models to those used by the Czech Republic and Serbia for the sale of their respective national carriers. Mr. Kučko believes that Croatia Airlines should instead be recapitalised. This would entail changes to the airline’s capital structure (the proportion of equity to debt). This may occur, for instance, as part of a debt restructuring, when a creditor exchanges an outstanding loan for a stake in the company. Croatia Airlines’ CEO believes the part owners of both ČSA Czech Airlines (Korean Air) and Air Serbia (Etihad Airways) are now refunding their investments in the two carriers through the lease of their own aircraft to their acquired subsidiaries.
It has long been tipped that Mr. Kučko and the Croatian government are at odds over Croatia Airlines’ future. Mr. Kučko is believed to be in favour of the national carrier remaining Croatian owned or recapitalised by local companies, while the government has been searching for strategic partners in Asia. It is the first time Mr. Kučko has publicly cautioned the government over its privatisation plans. The government has previously said it will continue the search for a new part owner for Croatia Airlines later in the year, following a failed attempt in 2013. Mr. Kučko says last year’s botched sales attempt was a result of “bad timing”.
Croatia Airlines recently posted its first profit in six year, making it more attractive to potential investors by demonstrating financial stability. According to Mr. Kučko, the carrier has now become a profit oriented company. In addition, he adds, the airline is still undergoing restructuring which, when completed in 2015, should see the company grow its destination network and “redefine” its fleet. Croatia Airlines is the busiest carrier in the former Yugoslavia and a rare profit making airline in the region. However, it faces high seasonality and its success is much dependent on the tourism season in the country.
Do you believe Croatia Airlines should be recapitalised or offered directly to a foreign partner, having in mind previous privatisations in the region such as B&H Airlines and Air Serbia. Send a comment with your thoughts.
It is way too late for such plans. Croatia is broke now to pop that kind of cash. I think Adrias and Croatias role in the Balkans are not important anymore because Turkish is snaging the passengers from their momma Lufthansa. Lets see how long before they flash the toilet.
ReplyDeleteKucko is an idiot, but to say that Croatia Airlines has no important role beacuse of Turkish? Come on, 6.304.089 passengers, more than 10 million tourists. It could be great for them, but Lufthansa and the fact that we have a stupid government who put Kucko as a CEO makes it really hard!
Deleteyep
DeleteKucko is kucka
And where is USKOK when you need them? I'm sure they'd find some criminal activities in Kucko's business model!
DeleteThat man is ruining OU and a lot of people's life's! He is a fraud. Living in Amstelveen, near Amsterdam. With a mortgage, a car of the company that is used by his wife to drive to her work in The Hague. Cashing weekly allowances!!! His place is in Zagreb and not the Netherlands! USKOK do something about that!
DeleteWell well finally the truth has come above water .Thanks to Kucko nobody is interested in OU .government must finally see that the CEO has no business plan for selling the company because the only plan is to safe his ass as NO company will will give him a job .Company is government owned he does want to do what government says. He is really arrogant so there is only one solution and that is get this man Fired maybe then the company can get saved.
ReplyDeleteHahahahaha so here we have the CEO with his own idea, and the government with another one. How long will this farsa last? The interesting thing is that the minster is silent.
ReplyDeleteThis man comes from the Sales Department of Croatia Airlines the shits department, if they were good the airline wouldn't be in so much troubles .The only Department that really justify their salaries is Operation and Maintenance Department they are the ones that are hard working maybe Croatia Airlines should look there for new CEO .Because the one they have now has to big EGO and has no good background as manager .
ReplyDeleteKucko is not the best CEO, in fact he's not even a good one, and he wants this company to remain in state hands only so he can remain CEO, but about one thing he is right.
ReplyDeleteOur friend from Air Serbia adopted the model which I still don't understand.
1. You give your company to Etihad, in exchange for 100 (200) $ investment.
2. 100 million dollars will be payed by Serbian government, covering pensions and stuff. Other 100 million will be invested by Etihad.
3. Etihad doesn't invest more than a couple of millions in real money, but instead gives them old aircrafts and that's considered investment.
4. Etihad orders new Airbuses for Air Serbia, but from where the money will come is yet to be seen.
5. Former JAT, much like OU, has really valuable slots. When you take everything into account it turns out that Etihad got JAT for, maybe, 10 million € of real money, and got a company with more than 150 million € in slots only, plus real estates and everything I have not taken into account.
Unfortunately, I would say that exact faith awaits for OU, selling company with excellent slots, rather new fleet, and excellent Technical Services, and that's not good 'cause with a little effort OU can be profitable as we have all seen (and trust me, those profit, altough really really small, is true and valid. OU has saved millions on catering only, Zagreb Airport has been selling awful sandwiches for sky high prices, and OU had to buy them from them 'cause it's in the law! New agreement between OU and Catering stoped that.). There are numerous examples, but I will tell them some other time.
To conclude,
I don't think that Air Serbia model is good for any airline, 'cause in the end you pay to someone to take your own company, but on the other hand the situation in this region is bad and you have to agree to these term or simple delete the company...
Pozdrav svim ljudima dobre volje!
I'm a Croat, but I think you're totally wrong about this, OU would be lucky if they sold the company to anyone who wants it! Unfortunately, nobody wants it, and, what's worse, I don't think they'll ever sell it! Good luck to Air Serbia, they managed to do something OU missed, wish them all the best!
DeleteI am Serbian, but I thing to spend
Delete- 280 million to pay the debts,
- 20 million to pay for workers to leave and transition
- 100 million investment in Air Serbia
- 80 million investment in other companies like Suport, Catering etc. what we saw several days ago in exYU
= 480 million USD and not to have even control of company and use that money to lease old planes from/throw Etihad.
In same time Air Serbia is not even near to profitability. LF is 53%, most of passengers in that modest LF travel with action tickets (1 pay + 1 free) or huge discount (tickets for 99 EUR), huge expenses (compensations for delays in starting routes where they sell tickets, use of old 737 and ATR and those will be used all summer at least, renting foreign crew for A319, Airbuses which does not fly 100% because of administration problems...). So, who will pay for loosing money after 2, 3, 4 years whan this business model shows that is not working?
Ok, me again, 9:52 AM, and where is Croatia Airlines now, we all know how much Croatia spent on their crap over the last 20 years or more...
DeleteP.S. Anonymous 10:17 AM- Purger, is that you? It's "think" instead of "thing", only Purger writes like that
$280m debt payment is a sunk cost, it is not an investment. It would have to be payed regardless of Etihad's involvement or not,
DeleteBut not a State, it should be paid by Jat. EU rules do not allowed State to pay for debts. But as bottom-line, State will pay for that and that is a spend of tax payers money just becouse of deal with Etihad. If Serbia really sold Jat they can use that money for pay for debts, and even if Jat get to bankruptcy those debts could be paid out of selling planes, slots, real estates...
DeleteNo, it was not me. I think! :-)
DeleteBut I do agree with that comm.
So, Purger, what are your predictions for Croatia Airlines, you're a smart guy so that's why I'm asking you... When will the government try to sell it for the 2nd time?
Delete@AnonymousApril 1, 2014 at 9:52 AM
DeleteU're not a Croat, you're a Serb, stop bullshitting !
I was born and live in Dubrovnik, you stupid idiot, face the facts!
DeleteWhat facts? You are posting as an anonymous, that's the only fact we have here. For all I know you could be a parrot.
DeleteEven if I'm a parrot, that's not your problem! The fact is that we have a weak national carrier (unfortunately), we tried to sell it, but it doesn't work!
DeleteWhy should we? It's the only profitable airline in the wider region!!!!!!
DeleteAir Serbia could be profitable tomorrow too. It is easy. Just do what OU did. First get rid of all competition in BEG, so kick out Wizz and all other low cost carriers. Then when there is no other options for people, then double the prices. Air Serbia then must cancel all unprofitable routes and fly mostly turboprops. Last of all, the airline must make their planes into sardine cans, introduce advertisements in the cabins, and remove all in flight food/services. It wouldn't take longer than two months to implement, and then Air Serbia could be profitable too!
DeleteThe little profit that Croatia Airlines makes is such a shame because they should be be making much more. They have such few expenses, but their ticket prices are robbery.
Of course anonymous at 10:17 was Purger, I thought so as well, he always writes balanced comments as Purger and the trashy ones as anonymous, thats what I thing. :)
DeleteI don't mind Purger's comments, though I don't always agree with them. He knows something about aviation, that's for sure!
DeleteWell it is hard to say, really. Croatia airlines had huge chance in 1997-2000:
Delete- Serbia was on sanctions,
- War in Croatia was over for 2 years,
- tourism in Croatia blossomed,
- Austrian, Malev and Lufthansa was present just symbolically,
- Jat was blocked by sanctions,
- LCC was not strong in Europe and especially not in exYU.
If than Croatia Airlines starts huge expansion to exYU (SJJ, OMO, SKP, OHR, TIA, SPU, DBV, ZAD, PUY, OSI, and latter PRN, TGD, TIV, BEG and INI) with Croatians-Bosnians-Macedonians-Albanians-Slovenians and latter Serbians migrant routes to Germany (MUC, FRA, TXL, DUS, STR, HAM, HAJ), France (CDG, NCE), UK (LHR, MAN), Denmark (CPH), Finland (HEL), Sweden (ARN, GOT), Norway (OSL), Austria (VIE) and Switzerland (ZRH, GVA) + routes to North America (JFK, ORD, YYZ), and regular routes to biggest airports in Euromediteranean (DME, KBP, IST, ATH, SOF, OTP, PRG, WAW, MAD, BCN, LIS, DUB, AMS, BRU, FCO, MPX, CAI, TLV, DAM, DXB) + charters to Adriatic and from Croatia to Greece, Turkey and Tunisia, there would be no Air Serbia today and Croatia Airlines could be powerful as Austrian.
Unfortunately that did not happen. What more today Croatia Airlines face:
- Huge number of routes and more than 100 airlines flying to Adriatic airports
- LCC invasion, especially Wizzair, Germanwings, Norwegian, Ryanair, easyJet and Pegasus
- Strong Air Serbia
- Local companies (Adria, Montenegro, B&H)
- Lot of routes and frequencies especially by Turkish, Austrian, Lufthansa, Aeroflot and Alitalia
So Croatia has three options:
Scenario 1 – selling to strategic partner
Unfortunately there are not a lot of buyers. The best option for Croatia would be Singapore Airlines. Good option would be some Chinese companies, Thai, Malaysian, EVA or ANA. Unfortunately that is not likely. In Europe good option would be Turkish, flybe, Air France, British or Lufthansa. Of course even better would be some North American companies. But they don't buy any more. Also Qatar or Emirates are not buying and for sure that would be perfect answer to Etihad expansion.
Scenario 2 – self development
DeleteFor that Government must change CEO and all management immediately. Than they have to open all resources to Croatian airlines (like railway connections, bus lines to BiH, Slovenia, infrastructure, school for pilots and crew on state account, obligation for civil servant to fly on CTN, political influence etc.).
Croatia Airlines must open 4 real waves (22.30 – 07.30 / 08.00 – 13.00 / 13.30 – 16.30 / 17.00 – 22.00) and at least 4 flights per day to SPU and DBV, 3 flights per day to SJJ, 2 flights per day to SKP, PRN, OMO, PUY-LSZ, ZAD-BWK, OSI, and one flight per day to OHR, TIA, TGD and TIV. For that they must immediately open code-share with Montenegro and B&H Airlines. Any collaboration and synergy with Adria is welcome. I would make collaboration with Trade air, take their Fokker 100 in franchise and give them BWK-ZAD-ZAG, LSZ-PUY-ZAG, OHR-OMO-ZAG, TIV-ZAG and OSI-ZAG routes (to fly with smaller planes)
Also there must be at least 4 flights per day to FRA, MUC, VIE, 2 flights per day to ZRH, CDG, AMS, BRU, LHR, CPH, IST, FCO one per day flight to TXL, DUS, CPH, ARN, DME, PRG, WAW, MPX, and 3-5 flights per week to SOF, OTP, MAD, BCN, LIS, DUB, TLV, DAM, CAI, DXB, ATH. Of course that means they should have very good code-share and connections with Lufthansa, Austrian, Swiss, SAS, Brussels, Turkish, LOT, Bulgarian, TAP, Aegean. In same time there must be lot of code-share with out of Europe Star Alliance members especially to North America and Asia.
Croatia airlines fleet should be:
- 8x Q400
- 8x Embraer E190
- 4x Airbus A319
- 2x Airbus A320
Personally I would coquet between Turkish and Lufthansa because that is the only ways to benefit from situation (big players will give you something just and only if they see some collaboration with their nearest and biggest enemy).
Unfortunately today management cannot understand this and for sure will not act like this. And there is no more time, this can be done only if they react immediately.
Scenario 3 – become LH feeder as part of LH CityLine
Same scenario happened with Dolomiti. Unfortunately we testify how Dolomiti is smaller and smaller every day. On that scenario there would be:
ZAG-FRA LH
ZAG-MUC OU
ZAG-BRU OU
ZAG-VIE OS/OU
ZAG-ZRH LX/OU
ZAG-TXL OU
ZAG-SPU OU not more than 2 flights per day
ZAG-DBV OU not more than 2 flights per day
PUY-MUC OU
RJK-MUC OU
ZAD-MUC OU
SPU-FRA LH
SPU-MUC OU
SPU-VIE OS/OU
SPU-ZRH LX/OU
SPU-BRU OU
DBV-FRA LH
DBV-MUC OU
DBV-VIE OS/OU
DBV-ZRH LX/OU
OSI-MUC OU
OMO-MUC OU
SJJ-FRA LH
SJJ-MUC OU
SKP-FRA LH
SKP-MUC OU
And JP to: LJU (FRA, MUC, VIE, ZRH, BRU), PRN (FRA, MUC, ZRH, BRU), TGD (FRA, MUC), TIA (FRA, MUC, ZRH)
But no more flights to other destinations.
Wow, thanks for the analysis, great job, as always! What do you think will happen with OU, I'm surprised that no one has some inside infos, is the privatisation going on, considering the deadline they got from Zagreb Airport management. There is not much time left, do you think it will be more difficult for Lufthansa on Croatian market if OU goes bust?
DeleteWhy insist on BWK and LSZ, especially on Fokker 100 aircraft? Do you really think that there is such a huge demand? Would it better to use a B120 on some routes...
DeleteYou did not understand about LSZ and BWK. You cannot serve LSZ and BWK with F100, runway is too short. I said: “I would make collaboration with Trade air, take their Fokker 100 in franchise (to SKP, PRN, SPU, CDG, AMS, IST, WAW) and give them BWK-ZAD-ZAG, LSZ-PUY-ZAG, OHR-OMO-ZAG, TIV-ZAG and OSI-ZAG routes (to fly with smaller planes)“
Delete- so F100 to SKP, PRN, SPU, CDG, AMS, IST, WAW;
- smaller plane like Embraer 120 to BWK-ZAD, LSZ-PU, OHR-OMO, TIV, OSI.
Why LSZ and BWK? At least 1,5 hour with boat (waiting including, in top season even more) to mainland and then bus, train or plane to ZAG. You have huge funds that can be used to subvent routes for revitalization of islands, no competition, and airports/local tourist office which will kill themselves for any flights. Those are not small islands and number of tourists is big (more than 400.000 tourists and 2,7 million overnights), for sure some of those will use planes. If you have regular line there is possibility for civil servants, teachers, doctors etc. to come to islands ones per week, s less pupil on dormitories, less patients to go on shore (it is cheaper that doctor travel to islands but lot of patients to shore) etc. And in same time you make bigger LF on ZAG-ZAG and PUY-ZAG legs. PUY-ZAD-ZAG and ZAD-PUY-ZAG option is disaster because no one will use flight for 2 hours with 1 stop if you can do it by car in same time.
If CTN go bankrupt it will not be harder for LH. In same second they will put LH CityLine on most of the routes. And they don’t care for ZAG-AMS, ZAG-LHR, ZAG-CDG routes, even more, they will be very happy if those routes will not exist.
Inside information worth nothing, because CEO Kučko change his mind every few days and goes our with different strategy. No one even find his ideas serious. Only one thing is for sure, he does not want investors out of Croatia.
@Aleksandar StojanovicApril 1, 2014 at 5:35 PM
DeleteU're a moron!!! That is a fact!
Air Serbia has almost absolute monopoly at Belgrade, as to low cost operators, GermanWings, EasyJet, Veluing, NorvegianAirShuttle, are all low cost you idiot!
BA on London route, AF on Paris route, KLM on Amsterdam route, Lutfhansa on Munich and Frankfurt route, Austrian on Vienna, OU faces stiff competition on all routes it flies to, with little manoeuvring in terms of prices which are always lowest compared to other legacy carriers on almost all routes OU flies to.
Iberia, Czech air, Alitalia starting their full on service this year cutting in to other routes OU flies to. with great likelihood many other EU based carriers setting up in Zagreb over coming years things don't look for any would be domestic carrier based at Zagreb.
Zagreb is a tough place for OU and only reason why OU is making profits is cause they're cutting on things other airlines won't.
Turkish has already taken OU's Istanbul flights and now with 2 daily flights Zagreb is never closer to Middle East and Far East destinations. Qatar has literally taken over Budapest route which OU has abandoned, OU is in deep shit cause of poor planning and bad management, but to say OU has no competition at Zagreb is most idiotic thing you could have said, indicating really nationalistic and narrow-minded views you've got of Croatia and Zagreb.
"Air Serbia has almost absolute monopoly at Belgrade"
Delete108,545 out of 232.065 in Feb is now absolute monopoly?
I counted eight routes for ZAG low cost. In comparison, BEG I counted 22.
The only reason why OU faces stiff competition is because it is poor value and all other carriers beat it out on routes. Air Serbia faces competition with Aeroflot, Lufthansa, Turkish, etc too, but JU is actually competitive and they don't run in fright. JU even booted Adria out and got codeshare agreement.
@Aleksandar StojanovicApril 1, 2014 at 9:59 PM
DeleteAren't you a silly billy, JU is heavily subsided by Serbian Government, JU is hands down worst carrier in history in the entire region, ffs you had to sell it to Arabs in some doggy under the table deal for agricultural lands in vojvodina, and we won't know full deal until Serbia starts final membership talks with the EU around 2023 or 2026 depending on how Serbian talks with the EU on membership progress, what ever the case Serbia will need to disclose all the intricacies of this deal with Arabs before it joins the EU either in 2026 at the earliest or 2029 more likely date now that start of talks have been delayed for mid to late 2015 after the screening is completed.
If it comes out that it was agriculture lands, the EU will stall any talks before this issue is resolved, there are EU laws which pretends under CAP. Air Serbia what ever the case if it remains an airline beyond 2018 (highly doubt it will) will need to be looked at by the EU before Serbia joins the EU, I've already read that the EU commission is looking at Air Berlin deal with the Ethiad and have asked the Swiss authorities too look at their deal for Darwin, I can only imagine as soon as Serbia starts talks with the EU in 2016 the EU will demand to know what the deal with the Ethiad was all about.
Zagreb on the other hand is a tough market for OU cause its heavily contested by major EU airlines, AF, BA, Luft, Austr, KLM... and with Croatia in the EU things will only get tougher for OU.
"silly billy", "moron", "idiot",
DeleteObviously your mother never raised you well if you call other people that.
According to OU's financial reports (on their website) they lost 63.673.789,00 Eur in 2012. According to JAT's financial reports, they lost 28.922.990,15 Eur in that same year. So what airline is the one that is subsidized now?
Lol yeah OU gets a lot of competition at ZAG. 12 airlines operate their year round. In comparison, BEG has 24 year round carriers.
Honestly, your trolling is very interesting to me, but for the sake of this site, I will no longer feed you. Feel free to write whatever else you want about "cheep agricultural land" and "Serbia isn't in EU".
@Aleksandar StojanovicApril 2, 2014 at 1:53 AM
DeleteYou seem to have forgotten JU's $270 million debt, and now Air Serbia is also receiving massive subsidies to stay afloat, give me a fucking brake will ya!
And yes Zagreb has only 12 regular operators, in fact it had 12 regular operators until recently, now there are 14 operators.
Aeroflot
Air France
Austrian Airlines
British Airways
Croatia Airlines
Croatia Airlines
Trade Air
EasyJet
Germanwings
Lufthansa
Norwegian Air Shuttle
Qatar Airways
TAP Portugal
Turkish Airlines
Seasonal:
Air Croatia
Iberia (regular year round service from 2015)
KLM (regular year round service from 2015)
El Al
Onur Air
Syphax Airlines
Vueling (regular year round service from 2015)
Air Canada (seasonal starting twice weekly in 2015)
Korean Air (16 charters per year)
JAL (8 charters per year)
With Czech Air, LOT, Allitalia coming back to Zagreb in 2014.
With potential for Finnair, SAS, Swiss and Brussels Air, WizzAir all starting service to Zagreb in 2015.
So by year's end there'll be 17 operators, and in 2015 potentially 25 operators + 8 seasonal, not bad for a small regional airport ;)
@Anon 2:42 AM
Delete"2015 potentially 25 operators + 8 seasonal - "prvo skoci pa reci hop' if you know what I mean.I wouldn't be so sure of anything these days. I know you say potentially but you keep talking about a lot of things like they are done deal.Shit happens in Russia and oil prices go up-whole another ball game-aviation industry VERY sensitive.
Second, stop calling other people names just because they don't agree with you. That's not nice, you should've picked that up long time ago. You are the one who live in civilized EU now after all.
Anonymous @2:42
DeleteAre you stupid or you really didn't notice that you counted and wrote down Croatia Airlines twice?
What an irony for a person calling others "an idiot".
Can you please share with us where it is stated that Jat Airways was given to the Arabs in compensation for cheap agricultural lands?
DeleteAlso, I will not even bother commenting on your statement that Zagreb is more competitive than Belgrade. Seems like someone forgot to take his pills this morning.
Zašto se vi Hrvati toliko ljutite i žestite, kada se povede priča o Air Serbia? Pola komentara ste ispucali pričajući o njoj iako je članak o vašoj avio-kompaniji! Svojom mržnjom joj nećete nauditi, James Hogan zna šta radi! Vraćajte se u svoje rupe i sanjajte snove o propasti Air Serbia!
DeleteWhat OU needs is management who know what they are doing. This is an easy statement to make but the reality is is that the worlds airlines are full of competent people running struggling airlines, especially the traditional based ones.
ReplyDeleteThe CEO here did nothing special, he cut costs and as a result the airlines has less expenditure but did nothing to increase revenue, if anything revenue has been decreased. What the plans for the future are, we will see but the core problems for OU still exist because of the way the airlines has been managed throughout its history.
He did not cut costs. He was just lucky enough to have price of petrol very low. Most of companies in Europe were very profitable last year because of price of petrol. Basically, CTN costs were bigger when you include savings on low patrol price.
DeleteOT: Kosovo airspace is opening up in a couple days to commercial aircraft. Apparently Macedonia stands to benefit as they expect over 20% increase in overflights and an extra 2-2.5 million euros from fees.
ReplyDeleteReferring to this so called Ceo , I know from inside Croatia Airlines they do have somebody capable to save company and that isn't Kucko the Minister of Transport has his own man inside the company .Everybody in Croatia Airlines know who I mean .Wake up people and stand up if you don't stand up you all won't have jobs in the future .You live in EU and that's democracy not in Dictatorship where Mr Kucko is living in .Best of luck for all of you because Croatia Airlines deserves better
ReplyDeleteTo respond about Lufthansa worried about Air Serbia, I said that German airports have more passengers per week than Belgrade per year. I did not say airport, but airports.
ReplyDeleteSo, just 10 the biggest German airports (out of 26 international airports) had 187.525.363 passengers in 2013. what is more than 3.600.000 passengers per week. Those are FRA, MUC, TXL, HAM, STR, CGN, SXF, EAP, HAJ.
Though I think these kind of statements are stupid and I tend to ignore them, I will just say that Lufthansa is not worried that Air Serbia will cause its downfall but that it will cause serious problem for its Austrian branch which considers the Balkans an important market.
DeleteThey are definitely annoyed by Etihad/Air Serbia launching a great deal of flights throughout the region which will no doubt considerably lower the yields. It is no secret that Austrian Airlines has been bleeding money for a long time and the last thing it needs at this point is a price war with an Etihad backed airline.
Let us not forget that Aegean Air has also signed a codeshare agreement with Etihad, not to mention that they have also launched Abu Dhabi flights. Aegean was initially backed by Lufthansa in an attempt to catalyse the demise of Olympic Airways. In other words, an airline Lufthansa created went to bed with the enemy.
There are three things that are annoying Lufthansa in the Balkans: Air Serbia. Turkish Airlines and Aegean.
Unfortunately for Croatia Airlines and Adria, Lufthansa will use Austrian Airlines to fight its Balkan battles. Both of these airlines need a larger partner to protect them and to help them survive; the same way Jat Airways was saved from its eventual bankruptcy by Etihad.
p.s just for the record, yesterday's flight to Sofia was not around 75% full because it was a VIP flight but because it had a great deal of connecting passengers. From what I remember there were maybe 10 VIP passengers on board.
Regards
Beautiful analysis (though it lacks comparison of German and Serbian GDP backed by some clever comments on the poorest-country-in-Europe-with-200-euro-salaries-and-3rd-world-everything factor).
DeleteYou could have saved yourself time by simply figuring out that no one said LH was frightened of the size/importance of JU, but it simply cost them NOTHING to give JU a bit of political headache. And why would the giant LH care at all about small pathetic JU? Well, because Germans are punctual and swift - they understand that in this industry no matter how big you are you must fight for each and every single passenger. And when they see an opprtunity to fight, they don't lay back and to it the Balkan way: 'ho-ho-ho, my airportS make more in a day than your airport in a year, you are insignificant so I will not take any opportunity to hamper you'. Germans do it differently.
But if Air Serbia/Etihad squeeze Austrian Airlines as you predict (and I hope they will), then LH will have to pump more money into its Austrian subsidiary that is not really profitable anyway...
DeleteWell, it's not profitable now, however, I am sure it will eventually reach profitability. Vienna is a rich city with a lot of travel demand, not to mention that its geographical location is not bad. Vienna was and always will be an important transit point between east and west.
DeleteLufthansa bullied Austrian Airlines employees to switch to Tyrolean contracts since like that they could reduce their costs by roughly 20%.
That said, it doesn't mean their Balkan flights will not record more modest profit margins, especially when compared to a few years ago. There will be a true fight for passengers in the Balkans and anyone who disagrees is either disillusioned or misinformed. Simple as that.
The biggest losers will be Croatia Airlines and Adria because they are just too close to Zurich and Vienna. Unfortunately (for them) they are not as important to Lufthansa as LX and OS are.
I guess time will tell.
In order to survive long term every business MUST continually improve and address threat of each and every competitor, no matter how big or small. The moment it stops innovating, adjusting etc. it is one step closer to its ultimate demise. Fields are littered with so many examples (just a recent history in Canada: Nortel, Blackberry etc.). I think LH learned this lesson the hard way with TK (where was it 10-15 years ago and where it is now). So, even though JU is small now I’m sure somebody at LH is tracking its every move.
Delete@NemjeeApril 1, 2014 at 1:13 PM
DeleteAir Serbia is a minor company for Lufthansa and even Austrian, they barely register on radar, Ethiad could be a threat, as could any Arab Airline that gets free petrol and massive state subsidies to fly half empty.
Air Serbia's network in Balkans a threat to Lufthansa, lol, seriously! Lufthansa has what 30 daily flights in to Ex-YU with Austrian another 20, Swiss another 3-4, why would they worry about Air Serbia which has barely a dozen daily flights in the entire region, 53% load factor on all its flights and business model that bleeds money.
For one simple reason: Etihad.
DeleteDo you really think Etihad is in town because they want to keep Air Serbia as it is? Wake up and smell the roses.
Just look at what they have done with the airline since they took over. Not only have they fundamentally transformed the airline but they have also brought back Jat Catering under their own wing and have started their own maintenance line. Passenger growth in the first two months of the year has been phenomenal and it will keep on being so as new routes are being added. Not to mention that this summer there will be, on average, five daily charter flights.
Once again, I never said that Air Serbia will force either Lufthansa or Austrian Airlines out of business, all I said is that they will further complicated the already messy situation in the Balkans.
At this point the airline wants to add three more Atrs to its fleet but they can't find any decent ones (Atr 72-500).
Nemjee is right. Look at the decline Austrian has had on its flights to BEG. 23% is big for a route which was regularly their star performer. LH already cancelled one of its daily flights to BEG from yesterday.
DeleteJust for the record, this summer Air Serbia will have a bit more than 20 daily departures to the Balkans.
DeleteThis came one day after JU ended its codeshare with Austrian. Think about it.
DeleteAnonymous @3:56 - you're a moron.
Delete@Aэrologic
DeleteCancelling the codeshare with OS was not the smartest thing to do. I think JU was making quite some money out of it. Wonder who initiated the cancellation.
Well for a couple of years OU can go with it's present business model of being LH far southeastern edge feeder poodle. It will take a while until the EU will work it's way throug a balkanic creative book keeping etc. It's a pity since I believe that OU has the best potential of all EX-YU carriers. To be speaking about Air Serbia, someones very "special relations" with somebody from an Emirate will be made public one day and we will learn what Air Serbia was used for. Time will tell, just wait!
ReplyDeleteYU-APH deliveried yesterday....
ReplyDeleteOut of my professional experience ( Profiler ) if you look at his facial expression you see he is not telling the truth and he is worried ,I wouldn't like to be in his shoes , because he knows sooner or later he cannot lie his way out. It's a question of time and he knows .It's the end of story for him , he is now on survival mode purely for himself.
ReplyDeleteRegardless of OU, Adria of BH situation, bottom line is, Air Srbija model sucks endlessly.
ReplyDeleteWith such model, Srbija is partner that always pays, even if company would be profitable. The worst is that it will be paying until the end of this partnership. On the other hand Srbija had no other option than to accept absolutely everything Etihad asked for. In short, the most expensive advertising of its own name in aviation history.
What do you mean by “Serbia always pays”?
DeleteIs it expensive deal, it is for sure. But I guess they had to bend over backwards for someone to take it. It’s basically like greenfield partnership with existing JAT assets valued at 0 (of course this appears to be the case, not really known until the contract is made public). But I would take such deal any day over letting JAT and all the jobs with it go to our Western “friends”.
I am still amazed by how unrealistic some Serbs are. It seems a lot of my compatriots have already forgot what kind of airline Jat Airways was and to what degree our politicians had ruined it. We are lucky to have Etihad come in and save what could be saved.
Delete@nemjee +1
DeleteHow many companies in Serbia, BIH, Croatia were ruined only to be bought by some western company who closed it immediately. After a long time government stood up and didn't just give up. IT costs to run a business and in this case it costs quite a bit. But if they didn't do it there would be 800 less well paying jobs in Serbia now and that's all that matters.
Exactly, not to mention that some people on here expect Air Serbia to become a profitable multi-billion enterprise after only four months.
DeleteI guess that some of them are more bothered that Jat Airways is no longer around for them to bash it and make fun of it.
@SM:
Delete'Serbia always pays' may, for example, refer to 50% subsidies for into-plane fuel. According to the draft agreement that has been leaked, Serbia agreed to subsidize 50% of fuel unless NIS agrees to do it. We are talking about some 30 million euro on annual basis here.
@lx
DeleteIt actually says "use their influence to obtain 50% for the into-plane DIFERENTIAL charged by NIS to JAT" and if they manage to get that it goes against their obligation for reduction in operating costs. Maybe somebody can tell us what this DIFFERENTIAL actually is.
Considering the fact that you are expecting AS to be a major customer of NIS, BEG, food providers etc. I don‘t think it’s unreasonable to expect volume discounts from suppliers.
Generally speaking you are probably correct that different state run organization will see less income from AS, but maybe that income should not be there to begin with. For example, AS is supposed to pay less in BEG fees. You could say it’s a loss to BEG but in reality they shouldn’t have been charging them so much to begin with. For the longest time government used JAT and other state run companies as a part of their social policy and not as a business. I think Etihad understood this clearly and wonted to start on at least equal footing with everyone with optimal workforce.
@nemjee
Profitable multi-billion enterprise with 16 A380 flying to the moon LOL. In all honesty JAT was supposed to be bankrupt long time ago and the only reason why it was still around is because different governments were afraid to lay off so many people at once. So what they did is provide them with some budget money to cover wages etc. or in other words die a slow death. Realistically speaking what they are doing is almost like starting new company. Not entirely but new planes, training for pilots, crew, brand identity etc. etc. Heck, they even changed the name. So, with all of this if anybody expects quick profit they are in for a ride. There is a reason why part of the investment includes $14M form GoS in 2014-2016 period.
U svim avio prevoziocima bivših YU republika pošlo se od pogrešne premise, a to je neko redukovanje troškova (sekretarice, spremačice, pravna služba, poslovnice, kalendari itd itd), pa onda kreće smanjivanje broja zaposlenih (opet spremačice, kafe kuvarice, pravna služba, sekretarice, sortirnica, i sl), a sa druge strane sve državne vlade VRIŠTE o novim radnim mestima... totalno kontradiktorna priča! Ne bi bila zanimljiva korelacija da iste te vlade nisu i jedini osnivači avio kompanija (osim Er Srbije)... nešto tu ne ide! Ni jedan menadžment avio kompanije ne može da shvati da TREBA OBEZBEDITI POSAO ZA KOMPANIJU a ne baviti se PRESIPANJEM IZ ŠUPLJEG U PRAZNO! Kompaniji kao živom privrednom organizmu treba dati da DIŠE, da se bavi vazdušnim saobraćajem, a ne da robuje odredbama Zakona o javnim nabavkama i sličnim administrativnim glupostima... Ne znači da su svi evropski propisi dobri, pogotovo oni o zabrani državne intervencije u državnom avio prevoziocu, to je čista bezobrazna glupost, jer takav propis može eventualno jedino da podrži LH, BA i AF... ostali su u totalnoj buli! Da je neko malo više čitao istoriju civilnog vazduhoplovstva u Evropi ,a posebno u Jugoslaviji, ukapirao bi da je država uvek bila ta koja je odredjenim podsticajima, subvencijama i direktnim uplatama sufinansirala i pomagala civilni vazdušni saobraćaj... Sve je to duga priča, a gospoda koja se sada bave ovom problematikom o vazduhoplovstvu i korporativnom pravu zaista pojma nemaju, na žalost!
ReplyDeleteI wanted to post this yesterday, but comments were closed so here it is today as discussion continues:
ReplyDeleteGreat day for trolls! They posted so much crap here that I wanted to systematically debunk every single one of their lies, but then I remembered “Please don’t feed the trolls” motto and decided it would be better to let them enjoy their hallucinations for a day.
When dust settles, EC will find no major issues with Air Serbia deal but it will take some time (and unnecessary consultant’s fees). Insiders already know Air Serbia is effectively controlled by industry best practices through professional management team including some consultants for hire, not by government or foreign investors. If it happens that Lufthansa aligns its interests with its major alliance partners and are also following same industry best practices as for example alliance partner United, does that imply Lufthansa is effectively controlled by United?
We live in a very litigious world and Lufthansa is just going with the flow. However when it’s all over they will have to realize protectionist bureaucracy and lawsuits (and even cost cutting measures alone) don’t create profits, creative and agile management that produces world class product does (ask Airbus if you don’t believe me). Even if there was no Etihad at all, Lufthansa management is currently impotent in response to Emirates, Qatar and especially Turkish, and EC is no Viagra to solve this problem. Mark my words.
I really don't know why so many people have a good opinion of Etihad. I can tell you from my inside perspective of the German market, that Emirates is by far the more well organized, commercial and professional airline in Germany. While EK is hiring local professionals with very good CVs and high reputation (therefore also paying rather good salaries) and is very solidly located and organized now for 2 decades with very motivated staff and little to none fluctuation, EY used to open and close offices several times thus swapping competencies between MUC and FRA offices several times, also airport staff / management and concept changed various times and staff with dubious background/low profile background is hired and was hired and fired several times. Here in Germany EK is Bundesliga and EY 3rd class.....sorry!
DeleteLufthansa had the baddest flight attendants.
Delete@Anonymous 10:59
DeleteFlight attendants are one part of the equation. LH flight attendants are not the most welcoming ones, but they are professionals - they are there for your safety. What is good about LH (and which even airlines with great service miss is the organization which works even when things go wrong. I can't tell people enough that this is what makes an airline good: how they behave when things don't go as intended: delays due to weather, planes going mechanic, luggage being mishandled, etc. Noone can beat LH on those.
Are you from Germany ?
DeleteAgree, Lufthansa FA's are always solid, and in most cases very good.
DeleteI personally think Lufthansa has some of the best cabin crew out there. They are professional and pleasant.
DeleteI have found Austrian Airlines to have the worst ones... alongside Turkish Airlines.
Ta velika Lufthansa je i unistila Austrian.Svaki put kad idem na planespotting na Aerodrom Innsbruck Zgrada od Tyroleana prazna.I niko ih nevoli ovde u Innsbrucku.I ako imam samo 16.5 god razumem se dobro zato sto znam nekolkiko Pilota iz Austriana /Tyroleana.Pozdrav iz Novog Sada.
Deletehttp://www.lufthansa.com/online/portal/lh/de/flight_services/cancelled_flights?nodeid=1410039030&l=en&cid=18002
DeleteEvo moj Izvor da nekazete da sam Izmislio.Teraju Pilote da predju u Tyrolean na Kolektivneugovore da rade.Ko razume Nemacki nek Procita.http://wirtschaftsblatt.at/home/nachrichten/oesterreich/1214192/print.do
DeleteEvo jos ali je na Nemackom nazalost.Pozdrav.
Deletehttp://oe1.orf.at/artikel/306208
@nemjee
Deletecouple of family members took SJJ-IST-YYZ recently and I got the same feedback.bad service with TK crew,bad food, horrible connection at IST. my brother even said that next time he is not doing it unless they are 30% cheaper, and he usually goes for the cheapest option in everything.
Turkish Aircrap.
DeleteMight be but 48M pax in 2013 don't agree. They grew at an enormous rate, something must give
DeleteBEG preliminary pax March 2014: 282.000
ReplyDeleteup 28% YoY. It is very likely that the millionth pax will be recorded in April.
This can't be! With Air Serbia's abysmal load factor passenger numbers should be going down. :/
DeleteThe best Airport in Ex-Yu: International Airport Nikola Tesla Beograd.
Delete@Anonymous 11:08
DeleteBased on what? It is one thing to have most pax, another thing to be the best. I am not saying BEG is not good, just asking what criteria did you use to make someone "best"?
i actually heard that Air Serbia loads are so poor that even pilot seats are empty while planes are airborne! Muka mi je od nezrele hrvatske i albanske dece i od domacih botova Dragana Djilasa.
DeleteDobro im kazes svaka cast.Pozdrav z Novog Sada za sve Ljubomorne na Air Srbiju.Nek vide prvo svoje propale Aviokompanije.Nasi su barem prefarbani, i imaju porucenih 10 A320 Neo.
DeleteИ у тек какву су боју префарбани!
DeleteI heard the LF is so poor because they're using the empty seats to ship out our aggricultural land to UAE.
Deleteahhahahahaahhahaah Pozgrav iz Novog Sada.
Deletedirty arabs and their dirty money, they sneaked in to get Serbia's major wealth: the famous Slots at JFK, ORD, BKK and SYD. Ah sorry i forgot theres also PEK
DeletePrevoze Krompire u Biznis Klasi.
DeleteDa se ne sramotimo na engleski:
DeleteMod mislim da morate isključiti svu ovu dijecu sa foruma, ako želimo zadržati barem minimum civilizirane, zrele i odrasle komunikacije na ovom forumu. Ako ovo i dalje bude dječji vrtić onda stvarno ovdje nemamo što tražiti.
Upravo tako. Rasprave na temu: ko ima vise pax od koga, ko sa druge strane ima vise aerodroma, ko ima a ko nema more, ko je sa kim u alijansi, koga je kupio Etihad a koga pokopala Lufthansa, ciji terminal se gradi a ciji propada su iste kao rasprave na temu ciji tata ima veci i skuplji auto. Treba da se radujemo uspeho jedni drugih a ne da kao nasi politicari i NGO aktivisti poturamo klinove jedni drugima. Treba se usredsrediti na konstruktivnu raspravu, iznosenje pravih cinjenica i podsticanje pozitivnog razmisljanja. Politikantstvo ostavite za seoski bife.
DeleteAnonimni at 1:23, veoma ste me obradovali sa vasom observaciom na ovom Ex-yu forumu. Verujem da mnogi
Deletedele Vas stav. Ocigledno blog je podlozan raznim "niskim udarcima" slicno zutoj stampi. Ljudi imaju pravo izrazavanja, mada mnogim na ovim stranicama etika nije jaca strana. Etika odnosa ljudi medju sobom nije mnogo rasprostranjena po sirini Balkana, nazalost. Potpuno je prirodno da se voli, zeli napredak svakom. Ko tako nece , izgorece u sopstvenom paklu ega i mrznje. Svak treba da bira po svojoj volji sa kime ce da leti, koji je favoritan aerodrom. Da publikuje licna iskustva i obzervacije, ali je nekorektno prepricavati, ogovarati i nedaj Boze, mrzeti. Sapozdravom NAMA DOBRO A NIKOME ZLO, iskreno pozdravlja sve ljude dobre volje na ovom blogu. Naravno i vas koji ne mislite i ne postupate pravedno.
Rod. Marinkovic, AME Kraljevo /Sydney
Kucko??? HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA
ReplyDeleteGet serious, he should be sent to jail!!