Croatia Airlines is preparing to float a request for proposals (RFP) on the market to finance its order of four Airbus A320neo aircraft, the "Airfinance Journal" reports. Banks and other financial institutions are the most likely bidders. According to its 2015 agreement with the European plane manufacturer, Croatia Airlines is to begin advanced payments for the aircraft this year, while the remainder will be payed upon their delivery. The first two jets are scheduled to arrive in Zagreb in 2021, while the other two are due a year later. However, sources claim the carrier is considering an interim lift before the delivery of the A320neos, meaning it could lease aircraft from Airbus prior to 2021.
Croatia Airlines successfully converted a 2008 order for four A319s to the A320neos two years ago. Although the new aircraft were originally to be delivered by the end of 2013, their arrival was put on hold and the deal was renegotiated. The carrier put off the arrival of the jets due to the company's financial situation. Neither Airbus nor Croatia Airlines have disclosed the exact cost of the aircraft, however, the four jets were valued at $424.8 million at list price at the time. On the other hand, the carrier's CEO, Krešimir Kučko, said the deal is worth "almost the same" as the one agreed on in 2008. Croatia Airlines will become the second carrier in the former Yugoslavia to operate the NEO jets, with Air Serbia to take delivery of its first of ten aircraft of the same type in the second half of next year.
The A320neo aircraft are designed to operate quieter with lower operating costs. The single-aisle jet is fitted with engines which Airbus estimates will offer 15% fuel savings and emit 3.600 tonnes less carbon dioxide per aircraft each year. In addition to the NEOs, Croatia Airlines is also looking to add 100-seat regional aircraft to its fleet in order to bridge the gap between its Dash 8 turboprops and Airbuses. "We are considering the Bombardier CRJ, Superjet SSJ100 and Embraer E-Jet", Mr Kučko said recently. The company currently boasts a fleet of twelve aircraft. Five of them are owned by the carrier itself (four A319s and one A320), while the rest are on lease. Next year, the carrier will have to decide whether it will extend the financial lease agreement for its six Dash 8s.
A320neo is suited for Croatia Airlines and will really help during the summer in terms of capacity.
ReplyDeleteBut what will they do during the winter? Their average annual LF is currently in the mid 60s.
DeleteACMI leases. I'm surprised they haven't done it already during the winter time.
DeleteI agree with the idea of ACMI wetleases. This is something they could have been doing for years. A good idea in my opinion.
DeleteNo one needs aircraft in the winter.... where are they going to send them ?
DeleteThere are markets outside of Europe. Small Planet has 1 airplane in Cambodia and Travel Service in the Maldives.
DeleteDoes anyone know what will be the capacity of these neo jets?
DeleteCapacity in 1-class configuration is 160 seats.
Delete@AnonymousFebruary 3, 2017 at 11:52 AM
DeleteThey're configured for 164 seats in two classes, 32inch pitch.
That sound quite comfortable.
DeleteTo start off get ride of the current Management especially their Ceo which costs the company a lot of money flying up and down to the Netherlands. His not worth the salary gates paid look what he has achieved as Ceo.Just promises nothing else. SO START THERE.
ReplyDeleteGood luck Croatia Airlines you will need it
When is Kucko leaving?
DeleteI don't think he will be leaving any time soon.
DeleteInteresting that they are considering the SSJ100 for regional fleet expansion.
ReplyDeleteYeah taking an SSJ100 makes a lot of sense. LOL.
DeleteThey have been deciding on a 100-seater for 4 years. Why don't they just choose one? What have they been doing during restructuring?
Delete+1
DeleteWhatever they do I hope they don't choose those Russian tins. I can't believe they are even contemplating them.
DeleteCroatia won't be buying Russian planes, that's for sure.
DeleteWhy? Components of the SSJ are largely made in Europe.
DeleteWhy don't you have anything against Brazilian-made tins?
DeleteRussia namely OKB Sukhoi makes some of the world's state-of the art military aircraft and has a much longer tradition in aeroplane building.
Russian , canadian , brazilian or whatever , the bottom line is that they don't have MONEY period.
Delete"However, sources claim the carrier is considering an interim lift before the delivery of the A320neos, meaning it could lease aircraft from Airbus prior to 2021".
ReplyDeleteThis would be great. The neo deliveries are a long way away and by the time they do arrive the A319s will be over 20 years old.
I agree. I hope it materializes.
DeleteWhat about the additional aircraft this year? The management said they are talking to aircraft manufacturers.
ReplyDeleteThey can talk what they want but they don't have credit on market with the current Ceo in charge.
DeleteThey will just lease planes from Trade Air like last summer. The F100 is already in the system and scheduled on a number of routes. They could take Trade Air's A320 which was introduced to their fleet a couple of months ago.
DeleteThey should get rid of Dash 8 plane next year. Hasn't proved the best of performers.
ReplyDeleteIf I remember correctly Kucko said they were very happy with the plane in some interview and that they will stay part of the fleet.
DeleteWhy haven't they "proved the best of performers".
DeleteI think introducing more Bombardiers would make sense. Keep fleet at 2 aircraft manufacturers and don't increase costs.
Delete^
Delete"While you would think the CRJ would be a better fit for the fleet given our existing Bombardier operations, that isn’t the case. Manufacturer commonality isn’t such a huge advantage when you operate turboprops but want to introduce jets".
Kresimir Kucko
This makes no sense from a fleet efficiency standpoint.
DeleteI'm finding it difficult keeping up with the change of direction every few moments. There seems a need for leadership, innovation and a concrete business plan.
ReplyDeletePerhaps if the company invested in a successful and proven CEO. I have no likes or dislikes for the current CEO but reading all these hair brained ideas that look like grasping at straws.
I'm all for nation pride and a national airline to feed a countries ego but in all honesty Croatia is wasting its tax payer money in a business stratergy that doesn't seem to exist.
Perhaps the company is an empty vessel of greed, corruption and tax write offs. But hey, how would I know? I'm an anonymous blogger.
Kucko is from the old guard, the new educated well informed generation is just starting to take over few positions here and there.
DeleteThere's too much corruption in Croatia, we need to bring it down before we can see changes. Also OU is no longer financed by the state, it has to raise all its funds through operations...
Znaci prodaja postojecih aviona u najavi. Croatovanje.
ReplyDeleteLooks to me like they will be doing sale and leasebacks for these aircraft.
ReplyDeleteThat would actually be a smart thing to do if they can't find the cash for these planes.
Deleteif the contract with airbus would allow it. sometimes there is such a clause that they cannot do it for let say 5y after the aircraft was delivered
DeleteOT:
ReplyDeleteSplit airport in January
25.958 / 30.423
+17,2%
+4.465
Dubrovnik
15.666 / 19.239
+22,8%
+3.573
Wow that's an extra 144 passengers per day at SPU.
DeleteGood results.
DeleteRofl
DeleteWhat's funny exactly?
DeleteDubrovnik airport was closed for a few days in January due to snow and wind.
DeleteP.S. New terminal (building C) in DBV will be opened this Monday!
The two airports will easily grow at a rate of around 20% this year. SPU will reach 2,55 Mio while DBV will be around 2,2 this year.
DeleteDefinitely, this will be a record year for both SPU and DBV!
DeleteZagreb also had good result for January, 9% up I think.
DeleteGreat for ZAG!
DeleteZagreb:
DeleteJan 2016: 157 111
Jan 2017: 168 788
--------------------------
That's +7%, not 9 :)...with 9% would be 172 650
ZAG with 80 flights less than last year! Great result!
Delete@TimtamFebruary 3, 2017 at 4:05 PM
DeleteTypo, was suppose to say 7%, but couldn't go back and edit it. Actual number is 7.4% when things seemed it'll be only 1-2% growth due to several airlines reducing or not flying to Zagreb. Good result for Jan.
It will be fun to see EK, can't wait, and that's not even the biggest news for ZAG in 2017 ;)
DeletePlease a hint... ? a) something within Europe or b) not neccessarily
DeleteThnx
You'll just have to wait... soon...
DeleteHow soon, in few week(february) or..??
DeleteIn a few weeks, and stop bothering ;)
DeleteWhat can possibly be "bigger news" for 2017, after the announcement of EK, the world top #1 airline, coming to ZAG... ? :)
DeleteIf you want people to stop bothering you then you should stop writing about it on here.
DeleteUA arriving and connecting ZAG with JFK, Singapore Airlines? Koreans? None of that would be a bigger news than EK. Except Singapore Airlines maybe, which would also be insane.
DeleteAt some point you would hope they would get planes to expand their fleet and open new markets and not just to replace older aircraft.
ReplyDeleteRemember that they did start 4 new routes last summer and more will come this year. So they are opening new markets.
DeletePeople were expecting the airline to develop at a quicker rate after restructuring. Instead we got four seasonal routes with a wetleased F100.
DeleteNo matter what people say I'm glad OU is finally waking up and things are moving in the right direction :)
ReplyDeleteHow did you come to that conclusion from this article?
DeleteThey are getting new aircraft and planning fornthe future. That's good news in my booksm
DeleteDidn't someone comment here a few months ago how OU has completed talks with Bombardier to buy new planes and a public announcement of the order was imminent?
ReplyDeleteThey did
Delete"CS100s will be bought to add the fleet, however they won't join the fleet before 2018.
Talks with Bombardier have been going on for ages now, agreement is in hands. Q400s will remain on lease to own and CS100 will also be on lease to own, once the last A319 is retired, additional A320neos will be bought on lease to own and additional four CS100s will be bought. this is what I think it'll happen".
This is an order they wanted to get rid off for a while but there was no way out of it so they had to go along and managed to deffer delivery. It's not the best that they will be hit by payments for this aircraft this year since the company still hasn't recovered financially.
ReplyDeleteI like their fleet plans. I would LOVE if they actually happened for once
ReplyDeleteMe too but one cannot expect too much to come out from the process known as jatovanje.
DeleteAs far as I know, process known as "jatovanje" finished as Air Serbia, which today is the biggest in ex-yu; so better be careful with your "wishes" :)
DeleteThe process was inaugurated as jatovanje, people exactly know what does it imply, so when Croatia, Adria or Montenegro are doing the same, we can use jatovanje. No hard feelings :)
DeleteI'm also interested to see how their fleet will develop in the next few years. The neos will be a great addition.
ReplyDeleteCroatia preparing newly restored engines paid by LHR slots for sale in order to raise funds for phantom NEOs.
ReplyDeleteAre you so naive to believe every single word the media (or Reps) says and continue repeating it every single minute?
DeleteEmirates wont fly to EX-yu and OU uses the money to pay for engine repairs solely. Yeah right!
Has Croatia Airlines posted its 2016 financial and passenger results?
ReplyDeleteNot yet.
DeleteThey usually publish it in February.
DeleteI doubt the financial results are that impressive. They would have bragged about it by now. Same story with Air Serbia.
DeleteThey got a better deal then Air Serbia which will get 10 A320neo leased from Etihad. As with everything in the company Etihad will just rip them off.
ReplyDeletesuch a strange deal, especially with these advance payments
ReplyDeleteoriginal order was 4 a319 in 2013
new order is 4 a320neo in 2021
first of all it is hard to believe they were able to keep the same prices? i can explain this only with €/$ fluctations and that original contract was in $, so when $ jumped 30% compared to €, the value of the contract remained the same in $ and airbus expenses are mostly in €, so they don't care that much.
anyhow, if i was a banker, I wouldn't touch this with 40ft pole. such a doomed project
if the list price is 424mil$ and OU got a, let's say, 30% discount it means the value is around 300mil$ total or 75mil$ per a/c.
if they were to pay it in the period of 10y, that is additional cost of 30mil US$ per year for all four or 7.5 mil$ per a/c.
they can cancel only one leased a320 and replace it with one neo. so if they are paying lease of that a320 some 200k$/m, that means they can offset about 2.5mil$ of costs. that leaves us with 27.5mil US$ of additional cost they will create.
hopefully they didn't payoff yet 4x319 and 1xa320 so they can sell them and offset loan costs. but these birds are very old, so i doubt it.
----
so how in the world will OU create additional 27,5mil$ worth of profit each year for 10 year when they are struggling with profitability even now???
----
i see several options for them:
- government help partially
- sell 3xa319 and 1xa320 for whatever, sell remaining heathrow slots to get some additional cash
- sell some of those neos if the contract with airbus allows it
- drop down the pants, oil the buttocks, go to airbus and try to renegotiate something
if you want to work in this region you need to fly old, rented planes
the same goes for JU
This was my thought as well. Strange way to pay for something. I gues when these planes do come they'll see additional revenue stream. Hopefully that revenue and profit that comes from it is large enough to ofset the added cost. However, in this situation they'll make payments ahead of time. Knowing that they are barely in black (with all the asset sales) your question is very valid. One option they might revert to is special financing where the grace period is long enough to bridge the time from now until 2021 or 2022
Deletethe cost you will add with owned planes is several times over what you have owned/leased fleet in that period of time when you are paying of the new planes.
Deleteand i just don't see them creating the added value needed to repay those planes, or getting support for 10y while paying of these planes.
i don't have the idea where will they find the money, especially in this region.
for one, i would never lend them (if i had it, of course:) )
Considering their financial situation you know that any lander will assess the risk associated with the transaction is very high, which almost always means very unfavorable rates. Unless they can back the loan with some hard and valuable assets
DeleteAustrian increases frequencies to Skopje from 12 to 13
ReplyDeleteStarted from 23.06.2017 until 15.09.2017
Groundbreaking
Delete+1 Hahah
DeleteHappy that new aircraft are coming. Will be interesting to see what their fleet will look like in 5 years.
ReplyDeleteOT:
ReplyDeleteWizzair will fly the A321 to LJU starting 16SEP!
So LJU will finally have positive results in 2017 and might overtake SKP once again.
???
DeleteIt will fly existing Luton-Ljubljana flights with tge A321 instead of the A320.
DeleteSee, there is a big enough market for LJU-LON that a legacy carrier could make LJU-LHR work :)
DeleteOU is finally start to behave as a business. And they'll probably be successful, once this nepotism is flushed away.
ReplyDeleteSerbia didn't have enough money to purchase one new jet for Jat since the fall of Yugoslavia. The airlines was on it's last leg and Vucic made a deal with the middle east and all of a sudden Air Serbia has all the money in the world. It's not coming from Belgrade that's for sure.
ReplyDelete