Croatia Airlines is on the lookout for a strategic partner after the carrier continued to show improved operational and financial performance in 2017, which should result in a fifth consecutive year of profit, making the company more appealing to potential investors. Croatia Airlines' CEO, Krešimir Kučko, said, "We have worked together with consultancy firms and drafted a proposal for the privatisation process. Several airlines across the world have been contacted and we will see how the process advances. One thing is for sure, we want to find a strategic partner". He added, "We are not interested in someone taking over the management. We have shown that we can respond to both past and future challenges, but now we need a strategic partner to grow faster". Mr Kučko noted that following its restructuring, Croatia Airlines is now a "stable and prospective company with a clear direction for future development".
Croatia Airlines' CEO previously said that the carrier could be of interest to financial institutions, which are not linked to the aviation sector. "We are a regional company that does business globally and a large amount of our revenue is made on offline markets. This could make it appealing to investors that are outside of the aviation industry. That would include any financial institution that wants to generate profits on investment". The Croatian Minister for Sea, Transport and Infrastructure, Oleg Butković, said a strategic partner should be found for Croatia Airlines with "extensive experience in the commercial aviation sector, which would ensure network expansion and market share growth".
The former Croatian Transport Minister, Siniša Hajdaš Dončić, recently 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 Prime Minister to resume Croatia Airlines' privatisation process. "A total of six parties had expressed interest. Among them were Lufthansa, as well as a company from Cyprus and from Greece. We also held talks with an Indonesian (Garuda) and Chinese (Hainan) airline and there was initial interest from both. Usually, the sale of a company and the search for a strategic partner lasts four to five years". The government is expected to resume Croatia Airlines' privatisation process at the end of 2017 or in early 2018 in a bid to complete the sale of a number of state-owned companies by 2020. However, it will first decide on the future leadership of the airline and whether it will endorse the incumbent management for another term or bring in a new executive team. A decision is expected soon.
They are in a much better position to be sold now then 3 years ago.
ReplyDeleteAgree. Network wise they are but in the end it's all about the finances.
DeleteI disagree. If anything, their sale of assets left and right makes them less attractive to investors.
DeleteYes they are in profit but they are not making money. That's why they should sell.
Delete@9.03 Are they?
DeleteYes they are. Just compare their financial reports and you will see.
DeleteIf the only way to make your company profitable is by selling assets then it is not a healthy company. Same way if you get the government to cover all your losses like Air Serbia.
Deleteby the european law, Croatia (unlike Serbia) is not allowed to cover losses of it's national carrier - it would be considered a messing with an open market regulation of EU.
DeleteAm I right in saying that they are looking for someone to pour in cash while the same people continue to make the decisions in the company?
ReplyDeletePretty much
DeleteThat part is pretty clear - and quite laughable. "I want someone to give me money, but let me stay and manage the company."
DeleteIt will be Lufthansa/Eurowings
ReplyDeleteWho it will be? Adria 4K or Eurowings?
ReplyDeleteEurowings through 4K
DeleteAnd after OU they will go for YM.
DeleteUnlike Adria, OU is a company of strategic importance for Croatia. It won't be sold, part of it might be sold, but what OU most likely is looking for someone like Korean air or Singapore to invest in to the airline.
DeleteCroatia brand is very valuable and highly sought these days, it is one of the most popular countries in the world, and Croatia brand ranks really high up.
Question is, can Croatian Airlines utilize this popularity to benefit its future and present operations.
Wow talk about dreamers.
DeleteCroatia one of the most popular countries in the world? It's doesn't even make the top 20 when it comes to tourists!
DeleteBy UNWTO (UN World Tourist Organization) in 2015 Croatia was
Delete5th by number of tourists in Mediterranean Europe (1. Spain, 2. Italy, 3. Turky, 4. Greece, 5. Croatia, 6. Portugal) and 13th in all Europe.
And Croatia was 24th in World (including huge countries like China, USA, Russia, Brasil, India, Australia...). In 196 countries in World that is more than good result. Especially that Croatia is tinny country with just 4 million inhabitants.
In 2005 Lonely Planes made Croatia no. 1 pick destination
In 2006 National Geographic named Croatia Destination of the Year in World
There was 15,6 million tourists in Croatia last year and 78,1 million tourist nights.
Really poor result, isn't it?
^^
DeleteAdd Cruise ship visitors, and nautical travelers, which aren't recorded as they come with their yachts, you come to 16.3 million, https://www.croatiaweek.com/record-2016-16-3-million-visitors-to-croatia/
This year, 17.5 million visions expected, 18.7 million if you include nautical/cruise visitors. 17.5 million visitors, 92 million nights expected this year, or overall 18.7 million and 105 million nights, and €12.5 billion revenue.
2018, Croatia might brake 20 million mark in visitors and 110 million nights. Revenue in excess of €14 billion.
I'd say these figures speak for themselves.
By 2020 or in 2020, Croatia will be in top 20 top destinations in the world, top 10 in Europe, behind France, Spain, Italy, Germany, UK, Austria, Greece, Turkey, Russia and Netherlands.
Although Russia, Ukraine visitor figures are most likely made up, or Ukraine and Russia count every border crossing as a visitor, I base my assumption on low overnight stays. Ukraine has only 22.5 million overnights. Russia, 29 million.
Poland also had good numbers but again they have very low overnight stays, around 21 million, supposedly based on 13.5 million visitors.
Example, Croatia had 15.6 million visitors and 78.6 million nights, (excluding nautical/cruise ship tourists). France for example had 87.5 million visitors, and 592 million nights, which generated around €72 billion in revenue.
Bravo Hrvatska!
ReplyDeleteIn the long run I do think OU needs a partner. The management is pushing for investment companies because they just want capital while the decision making will stay as is.
ReplyDeleteThat's difficult to find.
DeleteNot really. LH didn't even buy OU and for years the CEO of OU sat on the Board of Directors at Lufthansa. And no one even knew!
Delete@ 9.10 Qatar Airways is actually looking for that kind of acquisition.
DeleteAnd OU paid for the above by being turned into a feeder airline.
DeleteWhy would OU be a feeder to Qatar Airways? It's not like Air Serbia became a feeder to Etihad.
DeleteI was referring to the 9:12 comment.
DeleteMišetić was not in Lufthansa board, but Lufthansa CityLine board. That is "little" difference.
DeleteHope OU is going to be sold, just so we don't have to listen to Kucko anymore haha but seriously, without partner company will progress much slower than it should
ReplyDeleteJatovanje all the way.
ReplyDelete*Croatovanje
DeleteI see Lufthansa Group eventually buying Croatia Airlines and integrating it into Eurowings but retaining its own brand. Same as they did with Brussels Airlines
ReplyDeleteBrussels Airlines brand will be shut down and turned into Eurowings.
DeleteOh I missed that. Wow that's a bit of a shame.
DeleteSN brand is staying, at least for know.
DeleteYes, it is staying for now but judging by the CEO's words, I think they will change it eventually.
Deletehttp://atwonline.com/airlines/ceo-brussels-airlines-brand-stay-now
Da li iko veruje da ne znaju poslovni ljudi za pomoc drzave AS, rasprodaju slotova OU sve pored propale Adrie sa Darvinom na grbaci i sinjih sokolova Montenegro A. Balkanska kaljuga.
ReplyDeleteJedina razlika je što Air Serbia već ima strateškog investitora.
Delete... koji se bori za goli život. Nikom u exYU ne cveta cveće ovih dana niti će u skorije vreme početi da cveta.
DeleteSamo za razliku od svih nabrojanih OU jedina ima trziste. Sto ze tice JU da postuju EU propise (zajedno sa MZLZ) ne bi imali ovo malo putnika iz HR sto imaju (transfer iz EU u EU kroz non EU).
DeleteKoja je korist od tržišta ako ne umeš da ga iskoristiš? Činjenica da JU ima više putnika godišnje od OU je užasno poražavajuća u zemlji koja ima 15 miliona turista godišnje.
DeletePa sada, gore je netko napisao da je MIsetic usao u nadzorni odbor LH City Line-a. Negdje upravo u to vrijeme je OU sve njemacke destinacije prepustila 4U. Do tada sve letove iz SPU za HAJ, HAM, DRS, LEJ, TXL, SXF, DUS... je letila OU. Subotom iz SPU, nedjeljom iz DBV. Letio se MAN, LHR, LGW iz DBV. Letio se LHR, LGW, MAN cak i STN iz SPU. MAN i LGW iz PUY. Dakle, trziste postoji, ali se vise nema kapaciteta. Dodatno za razliku od JU, drzava je naredila downsizing kompanije, a ne da je pumpala novce u nju. Cijena ulaska HR u EU je skupa... Jako skupa.
DeleteThis comment has been removed by the author.
DeleteAnon@8:36AM
DeleteA s čim da lete i nadoknade manjak? Ionako moraju iznajmljivati letjelice da bi koliko-toliko popunili sezonsku potražnju. A i da Srbija ima ovoliku navalu turista, misliš da bi bio ovoliki omjer JU - strane kompanije. Vraga bi.
Pa poanta je da sa strateskim partnerom bi se dogodilo i prosirenje flote. Zar to nije smisao cijelog clanka? Nije mi jasno zasto svaki puta kada se spomene OU, krene komparacija sa JU. Srbija ima duplo vise stanovnika, ima vecu dijesporu i Air Serbia ima vecu flotu, manje troskove jer ne mora servisirati 7 domacih aerodroma. Zalosno je da to nije znala kapitalizirati bolje. Naravno da ne bi bilo zabune, sva ova trzista su vrlo mala u usporedbi sa jednim talijanskim, spanjolskim, turskim...
DeleteI think it the right time (and probably the last minute) to sell Croatia Airlines now before OU sells all its valuable assets. They sold some LHR slots and all will be sold probably by the end of the year. A lot of mechanics have left OU and I just hope they don't get the idea to sell this segment of their business as it is profitable. The competition in ZAG is also becoming bigger.
ReplyDelete+1
DeleteA right investor with a vision could do wonders with the company. I think OU has a lot of potential.
ReplyDelete"That would include any financial institution that wants to generate profits on investment."....
ReplyDeleteAny sane financial or investment house would never invest in the aviation sector - period.
As much as I love this industry, if you wanna make money, stay way clear of the airline sector, or as Sir R Branson put it "to become a millionaire in the airline business, start off as a billionaire ".
But 4K invested in Adria and they seem to be doing ok.
DeleteLove the quote though.
I'm not big on investment funds and institutions buying airlines. It hasn't worked for most. But then again airlines aren't all that interested in purchasing other airlines at the moment.
DeleteTrust me 4K will sell Adria or launch an over inflated IPO in which they will quickly sell all their stock sooner than later. This is what investment funds do and they are nortorious for creating accounting to make something look investable. What happens after is not their concern but it's unfortunately common for companies to eventually fail and collapse.
DeleteBTW, for the first time Warren Buffett has started to buy US airline shares.
DeleteThe smartest thing that could have been done was to merge Adria and Croatia Airlines. Both could have kept separate brands and similar networks to the one they have now.
ReplyDeleteSome form of consolidation in the ex-Yu among airlines would be an interesting concept and new angle. Let's wait and see.
DeleteAdria and Croatia Airlines seem like a natural fit since both are Star *, both under Lufthansa's influence, both countries part of the EU.
DeleteIt would be a stronger and more competitive company.
DeleteEx-YU consolidation already happened when JA and MAT went bankrtupt, next one should be YM and then three local airlines should be enough.
Delete^ haha true :D
DeleteThis idea was already suggested by the management of both companies five years ago. It was blocked by Croatian politicians.
DeleteAsian carrier would be best for OU. The government should do more to secure a sale to them.
ReplyDeleteAnything other than a European airline would be good for OU because it eliminates the possibility of them being a feeder.
DeleteWhat is happening with the regional fleet expansion? They said they would look for a permanent solution rather than wetlease planes every summer.
ReplyDeleteSame as what happened with OU opening bases across the Balkans.
DeleteSo what happened with the money that was given to IFC to find a strategic partner for OU?
ReplyDeleteIt ended up in IFC's pockets.
DeleteThey did only part of the job but got paid in full. Con job.
DeleteHow much money did the IFC get for their services?
DeleteGood luck OU!
ReplyDeleteWho knows what will happen with a change in management at OU.
ReplyDeleteDo you know who is the other candidate for the CEO position?
DeleteI think it's between Matkovic, ex Zagreb CEO and Kucko.
DeleteTo me it seems like the current management will be selected again.
DeleteI think the Croatian government should organise an international tender and see who is interested in Croatia Airlines.
ReplyDeleteThey already did that two years ago and no one applied.
DeleteCircumstances have changed. Back then OU was still in restructuring.
DeleteActually I think it is much smarter to go into direct talks with companies. Especially in Asia where many don't take part in tenders but try to make a deal through direct talks.
DeleteWith unions announcing strike every 6 months... I think the the possible investors are waiting in the qeue.
DeleteThey should have started the first year after restructuring ready with a new owner and fresh capital. Instead 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.
ReplyDeleteKind of difficult to find an interested investor while you are restructuring and trying to avoid bankruptcy. You can do it after you have successfully restructured, which is what they are doing now.
DeleteThere was talk that Aegean was interested. I think that would have been a great combo. Aegean + Croatia Airlines. Could have been a strong airline.
ReplyDeleteI assume that's the Greek company the ex minister is referring to?
DeleteI would be very interested to see what their plans would have been and how it would work.
DeleteAegean would have been an excellent choice. They have Q400s and Airbuses in their fleet. They are also good at entering new markets. Pity that nothing came of it.
DeleteCompany should have been sold prior to EU membership.
ReplyDeleteOU will eventually join Lufthansa. No doubt about it. But I bet LH will not pay a cent for it just like Etihad didn't for Air Serbia. But unlike Etihad, Lufthansa has proved to be a good manager and Cro government won't have to throw money at it.
ReplyDeleteEtihad invested millions in Air Serbia, don't spread lies. Also, since you're already drawing comparisons with JU, if you think Lufthansa will help OU go up to 40 or so routes from Zagreb, you are delusional.
DeleteIsnt that investment from Etihad a loan wich Air Serbia recieved from Etihad? And if its a loan, you have to pay it back. Dont you?
DeleteNo, it is not. Etihad invested around 40 mil EUR directly.
DeleteI don't understand that it is that hard to get interest for OU. Fleet is relatively modern, new ordered jets coming in the next decade, you have a nice domestic network which is partially supported by the government and a 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.
ReplyDelete+1
DeleteThat would suggest that something is not ok with their finances.
DeleteI would assume that any businessman with half a brain sees that the OU management - both current and the one before was no better, is chaotic, without vision, or long term strategy and that nepotism abounds. Investing in such a corporation, which is still bound by political influence, is not a particularly smart move, to say the least, if you don't want to lose money.
DeleteI highly doubt this will happen. The only solution, imo, is to sell at least 51%. Full privatization. Then the new owner can choose management on their own terms, work out strategies...etc. I know I would not invest my money in a company run by Kucko and owned by the state. In fact they should give OU away if nothing else works, sell it for 1 euro. Because the potential is amazing and the returns could be amazing! As well as benefits for everyone. Few national carriers and countries in Europe have such incredible potential as Croatia.
Wonders could be done if you finally choose free market.
Just an example - Venice, a small city, not much bigger than Dubrovnik - population: 55,000, had 28 million tourist visitors last year. That's 12 million more than entire Croatia. Now, Croatia (the country) is a totally hot destination, getting hotter and more popular every year, with rapid growth of the tourism sector and with enormous, as of yet untapped potential. That means that there's more than enough opportunity for every mode of transport to grow immensely for a long time to come. There's such diversity between different regions, island hopping opportunities, clear water, beautiful nature, culture, history, adventure tourism...People are flocking to Croatia, roads are constantly congested during the peak season, which btw, lasts longer and longer each year. Air traffic comes in here as the alternative, since I am sorry, but your railway network is quite pitiful. And there's plenty of opportunities for OU in the right, PRIVATE hands, despite the competition. Matter of fact, bring on the competition. More LCCs should be attracted, as many young Europeans,who tend to ttavel a lot, mostly fly low cost.
"stable and prospective company with a clear direction for future development".
ReplyDeleteif so why sell at all?
So they can fund their future plans.
DeleteThe saga continues.
ReplyDeleteWhat they are looking for - capital without any decision making imput - is highly unrealistic
ReplyDeleteAn investment fund maybe?
DeleteWhen 4k bought Adria they took over the entire managment.
DeleteLast year Kucko was saying how the company should not be sold. Now he is for a strategic partner?
ReplyDeleteIf OU is bought by another airline it would definitely increase competition in the region and could reduce fares.
ReplyDeleteCould a similar model that was used for Adria's sale be used for OU?
ReplyDeleteOf course, and I think it is most likely.
Delete4K might buy it, especially since LH is most likely behind it all.
DeleteBreaking news!: AIR BERLIN files for insolvency!
ReplyDeleteEtihad's empire is collapsing...
DeleteAll the better for Air Serbia!
Deletei thought that those partnership approach will collapse sometime in the future, but not this fast.
Deletethis is how EY partnership stand so far:
Alitalia - bankruptcy, to be sold
AirBerlin - Insolvent, falling apart
Nikki - failed to merge with TUI, god knows what happens next
Darwin - sold to 4K
Virgin Australia - posted 180+mil$ loss
AirSeychells - doing ok, i guess
Jet airways - apparently the only one making money
AirSerbia - showing 1mil€ profit with 41mil subsidies, meaning it is 40mil in red, or losing about 15€ for every ticket it sells
unbelievable.
@AnonymousAugust 15, 2017 at 1:56 PM
DeleteWhat does that mean, insolvency, I mean I know what it means, what I am asking, what does that mean for Air Berlin, are they kaput ?
Didn't Lufthansa try to do some sort of a deal for Air Berlin to stay afloat ?
I know it is owned partially by Etihad, but, without money can they operate for much longer?
BTW this is general question to all here.
It means that they do not have any equity to finance their operations. The German Government will provide them with 150 Million Euros to stay afloat over the next few weeks whereafter the company will be taken over by Lufthansa. Air Berlin Technik etc will go bust and fire all people.
DeleteLufthansa will take part of it. Rest will R.I.P.
Delete.... and Easyjet will take the rest that LH doesn't
Deletemaybe hogan will get hired again and buy some of the mentioned companies?
Delete75,464% chance of happening
Had 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?
ReplyDelete+1
Deletegdje je bio kad je trebalo nešto napraviti.
This is reminding me more and more of Jat's 5 year privatization.
ReplyDeleteI hope the outcome won't be the same!
DeleteAll ex-yu airlines are a mess. It's just that they learned that they should hire PR companies to make it look as if they are booming while in actual fact they are selling slots, engines, leasing out planes, getting massive government subsidies and even selling their brand names.
ReplyDeletePotpisujem
DeleteI absolutley agree with you.
DeleteSo we could finally see Croatia Airlines privatization completed in 2018?
ReplyDeleteWhat a sad story of illusion.
ReplyDeleteIf anybody in this forum or any politician could read financial statements (available free online), they would find out that Croatia Airlines didn't make a penny of profit from its core business - passenger and cargo air transport - in the last decade.
It's just "other profits" (being sale/leaseback of assets in the last years) that simulate earnings.
While Croatia is full of tourist...
A textbook example of illusion and incompetence.
And the Croatian taxpayer will pay for it.