Croatia Airlines posts record annual results


Croatia Airlines has posted record profits for 2017 on the back of selling its five weekly slot pairs at London's Heathrow Airport during the year for eighteen million euros. Overall, the Croatian carrier registered a consolidated net profit of 3.6 million euros in 2017, representing the company's fifth consecutive year in the black. Revenue grew 13% to 236 million, while expenditure was up 10% totalling 230 million euros. It spent most on flight operations, primarily due to the higher cost of fuel, followed by aircraft leasing, as a result of the wet-lease for two Air Nostrum Bombardier CRJ1000 aircraft, then maintenance, due to the overhaul of two jet engines and C checks on three aircraft, as well as passenger services.

The carrier handled a record 2.13 million passengers during the year, an increase of 9.6%. It marks the first time the airline welcomed over two million travellers on board its aircraft in a single year. The company operated 27.491 flights during 2017, which is up 2.4% compared to the year before. The average cabin load factor, a measure of seat capacity utilisation, stood at a record 74.4%, up 4.4%. Passenger carrying capacity, measured in Available Seat Kilometres (ASKs), amounted to 2.2 billion, up 4.8% year-on-year. The airline’s cargo operations recorded a decline of 12.3%, with 2.273 tonnes of mail and freight uplifted in 2017, compared to 2.591 the year before.

Croatia Airlines' market share in its home country averaged 38% during the year, although it grew up to 60% over the winter months (January). Its lowest market share was recorded in July when it averaged just 17%, marking its smallest monthly share on record and down 2% on the year before. "The high level of seasonality on the Croatian aviation market continues to pose a major problem for the company and its business. During the summer season, there are almost 100 airlines operating flights to Croatia, with more than a half of all passengers carried during the third quarter, while competition is minimal in winter. Croatia Airlines maintains flights throughout the entire year, providing Croatian airports with year-round connectivity", the carrier said.

The airline plans to launch three new seasonal routes this summer and one year-round destination for a third consecutive year. They include services from Zagreb to Dublin and Mostar, Dubrovnik to Munich, as well as from Split to Copenhagen. Furthermore, it will boost frequencies on several routes out of the Croatian capital. "This season, Croatia Airlines will operate scheduled flights to 39 destinations in 23 European countries, with the capital Zagreb connected with five Croatian airports", the airline said in a statement. It added, "Due to the expansion of the network, and an increase in the number of operated flights, Croatia Airlines is leasing two Air Nostrum Bombardier CRJ1000 aircraft for the upcoming tourist season with the capacity to seat 100 passengers. This will supplement the company’s existing fleet of six Airbus aircraft (four A319s and two A320s) and six Dash 8-Q400s". The carrier expects its passengers number to continue growing in 2018.

Comments

  1. So had they not sold the slots they would have recorded a loss.

    ReplyDelete
    Replies
    1. You can keep posting that on every comment buq it still doesn’t excuse that this airline is losing shedloads of cash. If you want to be an airline, you need airworthy planes. Engine overhauls/maintenance are costs of business that should be budgeted and projected for, not financed by selling off assets.

      Delete
    2. What they will sell in next year? Maybe transfer of successful manager Kucko to Manchester United :)

      Delete
  2. There should be a law in every country which prohibits calling this profit.

    ReplyDelete
    Replies
    1. Helped Kucko get a better job.

      Delete
    2. This comment has been removed by the author.

      Delete
    3. Its done this way the world over.

      Delete
  3. Good to see the load factor up.

    ReplyDelete
    Replies
    1. Agree. The load factor has grown nicely. That's a good result. I won't talk about the financial part since last year's results are completely unrealistic because of the sale of slots.

      Delete
    2. Yes, but still... They should sell it ASAP!

      Delete
  4. Revenue and expenses almost the same...

    ReplyDelete
  5. So what would the profit be without the slot sale?

    ReplyDelete
    Replies
    1. -14 million euros. Bravo indeed.

      It's their biggest loss in years.

      Delete
    2. The profit would be 20 million if there was no EasyJet and other Airlines.

      Delete
    3. lol, sad su EasyJet krivi za OU,JP and JU results. svasta

      Delete
    4. "No EasyJet and other airlines".

      Oh please. Cry me a river. OU should be the only global airline. NOT!

      Delete
    5. This comment has been removed by the author.

      Delete
  6. Bravo Hrvatska!

    ReplyDelete
    Replies
    1. procitaj tekst jos jednom

      Delete
  7. Dakle, -15 000 000

    ReplyDelete
  8. Creative accounting, just like other ex-Yu airlines.

    ReplyDelete
    Replies
    1. This comment has been removed by the author.

      Delete
  9. Without the slot sale their liquidity would be disastrous. The business still isn't managed well and the restructuring from a few years ago was a complete failure.

    ReplyDelete
    Replies
    1. So ??

      They would have known this was coming - C checks and engine overhauls don't just jump up unexpectedly.

      That's why they had to sell something - in this case slots - in order to ensure that the company was profitable in 2017.

      Unfortunately though, an accounting profit does not hide the fact that the airline is operationally loss making and unless there are radical and drastic changes made, it will need to continue with asset sales in order to return an accounting profit in the year's ahead.

      The business - as it stands - is not viable

      Delete
  10. Congratulation Croatia Airlines!

    ReplyDelete
    Replies
    1. Not sure what you are congratulating them for? Selling slots so they could show record profit while having a record loss of over 14 million euros? Revenue barely above expenses?

      Delete
    2. A hardcore nationalist "congratulations"! It's always good even when it's not.

      Delete
    3. Are you really reacting to those "bravo (insert whatever)" posts?

      Delete
  11. Can we expect the remaining LHR slots to be sold this year? If they really lost €15 million in 2017 then it means they will struggle this year as well.

    With mounting competition in ZAG things will get even worse for them.

    ReplyDelete
    Replies
    1. They will be eventually sold. It's just a question of if it will be this year or next.

      Delete
    2. Whenever next they wish to portray a "profit", they will sell the remaining ones. Since OU is such a loss making airline, they will sell these sooner than later.

      Delete
  12. Now it is no wonder why pilots and crew are complaining and mechanics leaving.

    ReplyDelete
    Replies
    1. Sure, but if they are such a loss making business, then there is no way that management can possibly entertain raising salaries. Moreover, it requires radical surgery to fix their problems. Because as things stand, they are not operationally viable.

      Delete
  13. Why is cargo down so much? Is there an explanation for this?

    ReplyDelete
    Replies
    1. And interestingly Zagreb Airport has never handled more cargo.

      Delete
    2. That's because of Emirates and firearm export runs to the Middle East. Not because of Croatia Airlines.

      Delete
    3. The more new airlines arrive the lower the cargo levels will be at OU unfortunately. Shame because it is a good resource for making money.

      Delete
    4. Wrong @An.10:29, firearm export to the Middle East doesn't run via ZAG, it's RJK. At least 3 747-400/MD11 every week.

      Delete
  14. OU needs a completely new management and to get rid of the current leaders who have been running the company into the ground for years. Hopefully they pick a new CEO with expertise and without political affiliation.

    ReplyDelete
    Replies
    1. You are asking for too much.

      Delete
  15. Selling assets and showing it as a profit is normal business practice. Whether it is good is a completely different thing but it's not like they are cheating the books.

    ReplyDelete
    Replies
    1. That is true but it doesn't change the fact that without the sale of assets they would be in deep red last year. The problem is that it is such a major loss.

      Delete
  16. They had 4,5 million loss (without slot sale calculated) at the end of third quarter and by the end of the fourth quarter they managed to loose another 10 million euros?! o.O

    ReplyDelete
    Replies
    1. Probably because they did C checks and other aircraft maintenance. It is very expensive.

      Delete
  17. Not commenting on the actual result, but it's nice to see detailed results from at least one airline in ex-Yu so we can draw our own conclusions.

    ReplyDelete
    Replies
    1. Everyone publishes detailed results through the country's business registry agency. But it is true that Croatia Airlines is the only one that publishes the results itself as well.

      Delete
  18. Disinvestment - fourth an final stage of a product/service life cycle.

    ReplyDelete
    Replies
    1. That's not what disinvestment means.

      Delete
  19. Croatia Airlines will be going hybrid as well this year. But they won't do it as drastically as JP and JU did overnight. They are going to roll out different things progressively this year. Wait and see.

    ReplyDelete
    Replies
    1. JP did it overnight but not JU. They dragged it out over a few months. Ultimately I think it is better to just do it all at once. It makes it look as if you are not constantly downgrading your product.

      Delete
  20. Oh boy, Balkan’s way of thinking. They could also sell some of their aircrafts and post profit again :). Are they publicly traded ? Of course not, otherwise they, and most of the other ex-yuairlines, would’ve been long gone.

    ReplyDelete
  21. Except for the load factor and the actual passenger numbers, those results are not looking too good.

    ReplyDelete
  22. The sad thing is absolutely every single ex-Yu airline is operating at a loss and presenting their numbers as record profit. I just don't know who for?

    ReplyDelete
    Replies
    1. I'm just waiting for
      "Montenegro Airlines posts record annual results:
      :)

      Delete
    2. Well of course the management of each company wants to present excellent results and that it has been doing an excellent job.

      Delete
  23. "Croatia Airlines' market share in its home country averaged 38% during the year.."

    Quite good they managed those results. What is the market share of JP or JU? probably around 80% on a yearly basis.

    ReplyDelete
    Replies
    1. JU is 50%
      JP is 75%

      Croatia Airlines has bigger market share than JU during the winter because of lower competition especially from the coast.

      Delete
    2. JU is 50% at BEG but it's around 46% if you factor in passengers at INI.

      Delete
    3. You are right. I forgot about INI.

      Delete
  24. In my opinion the government should look to sell Croatia Airlines soon. The financial results are not great but they can sell the fact that the Croatian tourism industry is constantly growing and has a lot of potential. If they sell all the assets it will become more difficult to sell.

    ReplyDelete
    Replies
    1. They tried, no one wanted them.

      Delete
    2. They didn't try, that's the problem. The government simply doesn't care for OU, unfortunately.

      Delete
    3. Before someone decides buying a company they look into its books so you can't scam them with flowery made up numbers.

      Delete
    4. So, JAT, Alitalia were all bought based on what?

      Delete
    5. Jat was bought based on pure politics and was thrown into a mix of many other things the Arabs got.

      Alitalia was obviously a bad investment which resulted in Etihad not taking a good enough look at Alitalia's books.

      Delete
    6. I don't think it was about the books at all - they knew full well what they were going into. The problem is that all political support vanished and Etihad was left to face unreasonable unions on their own.

      Delete
  25. are you joking me people???

    they had engines overhaul! that's the reason why they sold slots, and why the expenses are so big!

    ReplyDelete
    Replies
    1. Which means their regular revenue wasn't even enough to cover the engine overhaul.

      Delete
    2. i agree, but to me it seems that everybody was disregarding that.

      it would be great also to know what is their policy on reserve maintenance, do they accumulate it, or are paying everything at once?

      how much did they spent on engines in 2017?

      will there be any major upcoming overhauls of engines?

      Delete
    3. C check = Operating activities
      Slot sale = Investing Activities

      Easy

      Nobody disregards it. All point to the fact that OU cannot sustain itself from operating activites, which is the measure of health.

      Same goes for all other ex-YU airlines

      Delete
    4. but their OPEX was on similar levels as 2016, that's why i cannot figured it out where they put c checks.

      in others they increased line "adjustment of LT assests", but that looks more like they had some impairment / writeoff...

      čelik

      Delete
  26. Nice to see their pax numbers improved. I expect around 2.3 or even 2.4 million this year.

    ReplyDelete
  27. Apart of remaining 4 slots they have at Heathrow and planes they own, what could be sold during the next couple of years?

    ReplyDelete
    Replies
    1. That's about it. I guess property is what is left. They also have ownership of Amadeus Croatia (I don't think you can actually sell that. Adria owns Amadeus Slovenia and Air Serbia owns Amadeus Serbia [even though they transferred to Sabre lol]). The only other thing OU owns is the travel agency Obzor putovanja.

      Delete
    2. Croatian Airlines has around 1.1 billion kuna worth of assets, beyond planes that is, all in Croatian Airlines has assets of around 1.77 billion kuna.

      Majority of additional costs is loan repayments for 4 new aircraft that are to join OU in 2021/2. 85 million kuna goes towards that each year.

      Total repayable is 1.1 billion kuna, so far OU paid around 170 million kuna for 4 brand new aircraft. The carrier cargo segment is suffering cause they're not promoting the idea, transporting 2500 tons of cargo per year is nothing. OU has around 15000 flight operations per year, that should have yield at least 20 000 tons of cargo for the carrier.

      Good Cargo parcels alone are worth more than business class on a plane. OU should be working on these.

      Delete
  28. I still don't understand how Croatia Airlines is financing the arrival of the NEO planes? Did they take out a loan or what? Anyone know?

    ReplyDelete
    Replies
    1. Good question.

      Delete
    2. Yes, 1.l billion kuna for 4 NEOs. the're repaying them @85 million kuna per year. Look at Croatian Airlines financial statement. it is there.

      Originally airline took a loan for these aircraft in 2012, and EU ordered it to return the money asp. OU went in to restructure as a result, repaying the loan took 4 years.

      In 2016 & 2017 they paid 85 million kuna towards new planes on top of 350 million kuna deposit (the loan that almost brought the airline down) was fully repaid. Airline has so far paid towards the new aircraft 170 million kuna + deposit. Total of 520 million.

      Total repayable: 1.26 billion kuna. From 2020, they'll reduce repayments down to 75 million kuna, which will take them remaining 8 years to repay for the brand new aircraft.

      Lease to own is best way for airlines. When aircraft are bought outright, there's room for corruption.

      Delete
  29. Financial results are so and so but the passenger numbers are quite good.

    ReplyDelete
  30. At the end of the day. They recorded a profit and growth in passengers, which is a good thing.

    ReplyDelete
  31. Good luck OU. Wish them all the best.

    ReplyDelete
  32. EX-YU, it seems you made a typo. Overall annual revenue could be 233,6 million euros, while expenditure 230 million. Thus, net profit could stay at 3,6 million euros.

    ReplyDelete
    Replies
    1. There is no typo. You don't get net profit/loss by just subtracting expenses from revenue. From there on you have to subtract taxes, interest, but also add other financial revenue which is not included in their overall revenue, which is what OU did and is visible in their report, although no one knows what the "other financial revenue" exactly is.

      Delete
  33. This is useless without going into specifics. What was the operating profit (without one time sales)?

    ReplyDelete
  34. I was hoping BA would step in with more flights to Zagreb to make up for Croatia Airlines' reduction to London because of the slot sale. Maybe next year then.

    ReplyDelete
    Replies
    1. Or better yet an LCC like easy jet.

      Delete
  35. How come the number of flight operations didn't increase much even with all the new routes launched during the summer and some were extended into winter too?

    ReplyDelete
  36. Drop in charters.

    ReplyDelete
  37. More like "Croatia Airlines posts record annual results by selling assets to cover losses"

    ReplyDelete
  38. for anyone interested here is the preliminary financial report for 2017

    http://www.croatiaairlines.com/ResourceManager/FileDownload.aspx?rId=3537&rType=2

    ReplyDelete
    Replies
    1. additional income increase, compared to previous year is 18.5mil€, so that is most likely heathrow slots effect

      also, in "others" they have "adjustment of long term assets" in the value of 8mil€

      so either is that engine repair cost or they used this opportunity to write off something. cannot tell for sure.

      Delete
    2. Quite a detailed financial report. Wish any of the other Ex-Yu airlines would be so professional in publishing their numbers.

      Delete
    3. Pretraži izveštaje na APR-a, imaš bar 3 godine unazad sve finansijske izveštaje.

      Delete
  39. Only positive here is the increase in load factor.

    Ok, they were hit by what could be described as a perfect storm of expenses which they needed money to cover, hence the slot sale but better planning should have at least alleviated this so we have what can be best described as mediocre management here.

    No excuses given the environment they are operating in and its not acceptable that they can have losses this big with the financial advantages they have.

    ReplyDelete
  40. Ex-Yu,
    This is one of the rules of this forum:

    - Quote

    "Posts may be deleted or edited as determined in EX-YU Aviation News' absolute discretion if they contain:

    -Repetitive posts copied and pasted or duplicated by a single or multiple readers"

    -Unquote

    We have seen same sentence repeated by the same person at least 5 times today trying to justify huge OU loss.

    I would kindly like to ask you to keep the dignity of this forum by following the rule(s) above mentioned.

    Thank you

    ReplyDelete
  41. According to OU Preliminary Financial Report for to 2017 :

    Prihodi iz poslovanja 1759 miliona HRK tj. 236 miliona EUR
    Troškovi iz poslovanja 1715 miliona HRK tj. 230 miliona EUR
    Dobit iz poslovanja 43,47 miliona HRK tj. 5,8 miliona EUR
    Neto dobit 26,97 miliona HRK tj. 3,6 miliona EUR

    ReplyDelete
  42. Are there any long term plans/visions? This all seems they are just thinking for the current and max next year

    ReplyDelete
    Replies
    1. Well they do plan to get A320neos in 2021 I think.

      Delete
  43. The real test will be this year. I don't think they have anything planned for sale in 2018. More competition coming as well. So the health of the business will be tested this year.

    ReplyDelete
  44. Odlicno sto CTN popravlja LF ali finansije moraju da se poprave posto ce biti jos teze naci kupca tako.
    INN-NS

    ReplyDelete
    Replies
    1. Ej, pa gdje si bio svo ovo vrijeme?

      Delete
    2. Odraso je. Pa mu je neugodno radi gluposti koje je napiso

      Delete
    3. Imao sam neke obaveze pa nisam stizao da komentarisem .
      Vi mislite da su gluposti ali su i dalje istinite za razliku od onog sto ste vi pisali.
      INN-NS

      Delete
  45. sorry but that is a pathetic business model...

    ReplyDelete
  46. @Admin

    On losinj-Hotels website, scheduled flights from Pula, Split, Zagreb and Lugano to Losinj are announced. could you please do some research if it comes to a realization. Which company etc...? Thanks

    ReplyDelete
  47. This results actually do not look bad. Without LHR slots sale they would be around 10 mil EUR in red with quite a substantive investments in the fleet maintenance. And passenger numbers are quite good, over 2.1 mil with LF up.
    Being from Serbia, I have to say that I would really be happy if AS managed to fly 2.5 mil with similar loss and not in 40-50 mil (without various state aid received).

    ReplyDelete
    Replies
    1. So apply to work with JU and turn your wishes into reality.

      Delete
  48. So... is Adria buying Croatia or not? :D

    ReplyDelete
  49. Mmmkay...we'll see this year. Considering they must not sell any more substantial assets if they want to remain viable long term, they had better covered all the major maintenance and additional operating costs this year. Now comes the real test. If there are no additional "unexpected" costs, they should be in the minimal red at worst. Minimal black at best.

    ReplyDelete
  50. Load factor 74.4% is not so bad result, so to target 76% in 2018 should be realistic. 27 thousand flights are not nice to see. Strategy to be side kick for LHA group was pretty bad decision and now it will bite even more. What airBaltics is doing could be path to follow.

    ReplyDelete

Post a Comment

EX-YU Aviation News does not tolerate insults, excessive swearing, racist, homophobic or any other chauvinist remarks or provocative posts with the intention of creating further arguments. A full list of comment guidelines can be found here. Thank you for your cooperation.