The former Minister for Sea, Transport and Infrastructure in the Croatian government, Siniša Hajdaš Dončić, has said that a total of six companies had previously expressed interest in buying a stake in the national carrier and has urged the country' s newly elected Prime Minister to resume Croatia Airlines' privatisation process. "A total of six parties had expressed interest. Among them was Lufthansa, as well as a company from Cyprus and Greece each. We also held talks with an Indonesian (Garuda) and Chinese (Hainan) airline and there was initial interest from both. It was up to Croatia Airlines to decide which path they would take. Usually, the sale of a company and the search for a strategic partner lasts four to five years. This is not a priority for the new government", Mr Hajdaš Dončić said. He added that after the carrier sells its lucrative slots at London's Heathrow Airport, in line with its plans, the search for a partner will become more difficult.
Croatia Airlines' CEO, Krešimir Kučko, previously said that foreign carriers had shown no real intention in acquiring a stake in the company. "No one has given a firm offer. The state hired a consultant who was supposed to prepare the privatisation procedure. However, they only completed part of the job and tried gauge interest on the market", Mr Kučko said. He added, "The company should be recapitalised as soon as possible, so as to allow it to develop and grow. Unlike privatisation, it will safeguard national interests. We can expand at a respectable pace using our own resources, but the market can take on more". However, Mr Hajdaš Dončić argues, "Croatia Airlines should have been dealt with prior to the country's accession to the European Union together with the concession of Zagreb Airport. The two should have been linked. The Serbs made a wise move. If you sell slots to cover your costs that signals the end. Croatia Airlines has lost some 30% of its value in my opinion. What are you selling? You have no value on the open market".
The former minister has warned that the Croatian carrier now has to deal with falling revenues, as well as costs related to a settlement in the United States. "There is debt on tax which was accumulated in 2008 on behalf of the airline's sales agent in the US. In 2013/14 it was identified that Croatia Airlines did not pay tax for the sold tickets and an out-of-court settlement had to be reached amounting to ten million dollars. The entire case is odd but now dues must be made". He added, "Croatia Airlines did not complete its repositioning and did not divide the company into three profitable entities. Revenues are declining". The previous Croatian government had planned to sell a majority stake to an EU-based airline, retaining only a 25% share. Furthermore, local pension funds were interested in acquiring a 5 - 10% stake had the government found a serious strategic partner that would have treated the investment as a long-term commitment. However, since mid-2015, there has been little to no progress in Croatia Airlines' privatisation process.
Instead of starting the first year after restructuring ready with a new owner and fresh capital they just prologued the "business as usual" policy which I don't think they can afford anymore with so much competition. Time to get things moving and fast. I fear it is too late.
ReplyDeleteAgree. Too much incompetence, patronage, ineptitude, and old style thinking. And now they ruined a potentially descent regional airline.
Deletebice kao i uvek "tresla se gora rodio se mis!"
ReplyDeleteThere was talk that Aegean was interested and I assume that's the Greek company the minister is referring to. I think that would have been a great combo. Aegean + Croatia Airlines. Could have been a strong airline but alas
ReplyDeleteI would be very interested to see what thir plans would have been and how it would work.
DeleteWonder what the Cypriot company could have been. Hopefully not Cyprus Airways :D
DeleteBeing purchased by any carrier from the east, be it Greece, Middle East, Asia would have been a win because OU would no longer be a feeder for western European airlines. It would be fed passengers from the east and this would give it a much bigger chance to go long haul to the US.
DeleteMaybe some pension funds?
DeleteAegean would have been an excellent choice. They have Q400s and Airbuses in their fleet, are very well versed at opening new markets, battling low cost competition and know how to organise leisure and seasonal travel. Pity that nothing came of it.
DeleteI highly doubt Aegean was every truly interested in purchasing OU.
DeleteHad there been so much interest why didn't anyone apply for the tender when OU was being sold the first time around. Or why didn't the minister complete the sale if there was so much interest?
ReplyDeleteMaybe there was some interest at the beginning, but Kucko and the Ministry obviously didn't want to sell it so they gave up. What a shame, in my opinion they should have sold it to Lufthansa since Lufty controls them anyway.
DeleteHajdas Doncic had a chance to do something and he did nothing to save the company. As long as Kucko is a CEO, nothing will change for OU, except for worse. Btw, why does Hajdas Doncic say that the selling itself lasts for 4-5 years? Really?
Agree. Lufty should have been the way to go.
DeleteAmd do just the same as with Adria did
DeleteI didn't know that Lufthansa bought Adria?
DeleteAh preko 4K sklada...ocito je
DeleteWhy would LH buy JP? They can just wait for them to go bankrupt and take over the market.
DeleteCompletely agree with him that the company should have been sold prior to EU membership
ReplyDeleteAs long as the ceo stays the same nothing will change.
ReplyDeleteOU will eventually join Lufthansa. No doubt about it. But I bet LH will not pay a cent for it.
ReplyDeleteI don't get it. For years things were moving along at Croatia Airlines and there was some sense that things were improving and the company was just waiting for the restructuring to end so it can expand its fleet, network etc. Now it looks as if it is in a bigger mess than it was before restructuring.
ReplyDeleteI'm disappointed in the whole Croatia Airlines prioritization process. First of all I was hoping it would be much quicker, that there would be more interest because the airline certainly has potential.
ReplyDeleteIt all went so slowly with no will to sell OU. Our Ministry of transport has to think long term, if we lose OU now, it will be terrible!
DeleteI'm disappointed in the last 10 years of OU! Seems to me they lost their way around the time of the GFC.
DeleteSadly shown very little initiative since than!
This is really turning into a saga. They have to cut the cake and decide what to do with OU.
ReplyDeleteAgree, they have no time and should react ASAP, send someone who knows how to sell it and negotiate the terms!
DeleteWhat will happen with their Airbus order if they go bankrupt?
ReplyDeleteI think the orders are simply cancelled.
DeleteI don't understand that it is that hard to get interest for OU. Fleet is relatively modern, you have a nice domestic network which is supported by the government and huge market during the summer. The biggest issue to overcome is seasonality. But still, OU isn't a bad investment. I don't understand that they haven't managed to find anyone.
ReplyDeleteAgreed with that. The country has a great tourist potential and practically has Bosnia and Herzegovina market under its wing. Air Serbia has not come close to the size of Malev, so the competition from legacies is not that savage.
DeleteThe biggest competition at this moment are the "partners", Lufthansa for WEurope and Turkish for the east.
An ambitious investor could do wonders with Croatia Airlines.
I have mixed feelings about Lufthansa acquisition. With the acquisitions of Austrian, Swiss, Brussels, SAS and the introduction of Eurowings, Lufthansa became such a behemoth. It is difficult to imagine that there is enough place under sun for another small company there.
SK wasn't bought by LH, those were only rumours.
DeleteAir Serbia might not be such a threat but Ryanair and Wizz Air are becoming a bigger menace with each passing day. Add to this Austrian Airlines to the north and Alitalia to the west and OU is no longer that interesting.
Also, coastal airports are getting more and more foreign airlines so OU is losing its value there as well.
I am quite surprised that Turkish has not "expressed interest", just to be able to take a look into the paperwork of the competition.
ReplyDeleteHaha I think they did at one point
DeleteI am surprised to see how strong Croatia Airlines is. According to the comments, the company's CEO, the management, governments and everyone involved is very awful, feckless and incompetent. And for years everyone chanted the songs of bankruptcy, failure, collapse etc. Yet the company is still there, fully operational, and still belong to Croats. This is what I call strength.
ReplyDeleteThere is only so much family jewels you can sell...
DeleteYou have a point there, but thanks to EU rules, it is very difficult for a state-owned airline to move forward. If this does not change and if things move well for Croatia Airline business, the company can expect modest growth, while the competition is slowly but steadily taking over most new passengers, gradually taking over the market.
DeleteAgree, anonymous 10:12
DeleteIs there any indication that a new CEO will come?
ReplyDeleteDid Butkovic stay as transport minister in the new government?
ReplyDeleteUnfortunately he did
DeleteIf OU is bought by another airline it would definitely increase competition in the region and could reduce fares.
ReplyDeleteDoubt it, most airports in our region have a lot or at least a decent amount of competition. The only black hole is ZAG.
DeleteThe only black hole? So ZAG has no competition?
DeleteYes, there is very little competition and fares are very high! Or are you implying we have enough lowcost airlines?!
DeleteWell, Zagreb airport management should work on bringing LCC companies, it's not OU's fault! Hope this is not the end of OU, still waiting for a new (competent) management!
DeleteAnonymus 7:17, the management of ZAG is obviously protecting OU, so indirectly it's their fault.
DeleteI wonder if it has crossed Croatia Airlines' mind that an LCC could soon launch domestic flights within Croatia. This could really hurt them.
ReplyDeleteI don't understand why someone must buy Croatia airlines, if they go bankrupt then many others EU companies can easily fill the gap as they did with Cyprus market so there is no need for a company to buy another one with too many depths. They can just wait for OU to bankrupt!
ReplyDeleteI suppose it's because it's different to have a national carrier with domestic and international routes, not to mention tourists. No one can deny that there is an unused potential. But, I agree, someone else will step in, in case OU goes bankrupt!
DeleteOh, dear God, so the saga continues!
ReplyDeleteLet's not beat around the bush. If they had found someone interested they would have sold the airline by now.
ReplyDeleteI think there is one word that could effectively describe this whole story. Trying to remember it...
ReplyDeleteI think it's...
Ah, yes...
"Jatovanje".
Could a similar model that was used for Adria's sale be used for OU?
ReplyDeleteNot only it could be used, it will almost certainly *be* used eventually.
DeleteThe question is, whether the model is any good. Personally I see it as the second worst outcome - just slightly less bad than the shutdown.
Of course no one is interested into buying OU, especially now after they sold LHR slots. Also, their fleet is very poor and older than European average. The only good thing could be benefits they have from Croatian airports and cheap deals, but then again, Croatia is very seasonal market.
ReplyDeleteI have no hope for this company.
If 6 companies were interested in OU then it was such a missed opportunity not to start talks with at least one.
ReplyDeleteTo su samo gluposti sa kojima exYu zabavlja ovdasnji puk. Garuda how yes no.
Delete“The Indonesian market is developing rapidly and Indonesians are travelling more and more which is why we are looking to expand our business into Central Europe, in a country which has solid connections to the rest of the European Union. This is why Croatia and Croatia Airlines are a logical choice for us”, Garuda’s President and CEO Emirsyah Satar said.
DeleteMama LH ne bi to nikada dozvolila. Ko zna za koga su oni gledali?
DeleteOT - Condor to open 2 new routes next summer
ReplyDeleteFRASPUFRA ------7
FRADBVFRA -----6-
OT SPLIT AIRPORT
ReplyDeleteNOV 2015: 135163
NOV 2016: 167643 +24%
Great results, Split is really doing great job, difficult to predict how far it can go, but future seems to be bright, especially with infrastructure upgraded ...
DeleteWOW such phenomenal growth in November!
DeleteI think Zagreb will be around 190.000 in November so the gap is definitely closing.
Sorry, about 245.000 for ZAG.
DeletePretty sure all this refers to October?
DeleteYes, typo
Deletesorry ;) okt 2016 and okt 2016
DeleteThis former minster is right in everything he says, however I'm assuming there is a reason he's a FORMER minister. As far as I know, Kucko is his government's man, so basically he is blaming every government but his. And now this guy Kucko wants another recapitalization?? Seriously, guys...Croatia (and I mean the country), has to break free from that communist mentality, because your government-run economy is beyond absurd.
ReplyDeleteHajdas je kreten, lupeta gluposti. Ekspertiza 0, stav kaomda je CEO lh.
ReplyDeleteSlažem se, gdje je bio kad je trebalo nešto napraviti s OU? Lako je sad govoriti kad mu je istekao mandat!
Delete