The Croatian government plans to privatise its national carrier after adopting a National Reform Program for 2018 yesterday aimed at boosting economic growth. It marks a u-turn in policy after the government listed the company as being of strategic importance to the state in January and not for sale. At the time the Minister for State Property, Goran Marić, noted that the carrier is of vital importance to the country's infrastructure network and that "the Republic of Croatia must continue to be its owner". However, a government official has now said that following the successful completion of Croatia Airlines' restructuring process, the carrier's future would be more secure with a strategic partner.
The move comes just days after unions warned that the airline was in an "alarming state". In a public letter last year, unions alleged that the recent sale of Croatia Airlines' slots and assets was part of the government's plan to reduce the carrier's value in order for its shares to be sold at a reduced price. Croatia Airlines was put up for sale in 2014, however, no interest was expressed during an international tender. Last year, the carrier's CEO noted that an investor would be required in order for the company to grow faster. By mid-2017, a proposal was drafted for the privatisation process and several airlines across the world had been contacted. However, there has been no progress on the matter since.
Following the completion of its restructuring process in 2015, Croatia Airlines has seen its passenger numbers and profit margins grow. It has also expanded its destination network, with more routes being added this summer for a third consecutive year. On January 1, the airline completed the two-year monitoring of the implemented restructuring plan. The former Minister for Sea, Transport and Infrastructure in the Croatian government, Siniša Hajdaš Dončić, previously said that a total of six companies had expressed interest in buying a stake in the national carrier. "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", Mr Hajdaš Dončić said.
Croatia Airlines and Air Serbia might be fighting for a new partner soon ...
ReplyDeleteWill they manage to find someone this time around?
ReplyDeleteodlično.. i jat je prodat emiraćanima, pa je sad sve u redu. i er serbija je sada jedna od najpopularnijih avio-kompanija u istočnoj evropi..
ReplyDeleteWell, Wizz Air has 10 times the amount of pax of Air Serbia, if you look at the entire Eastern Europe...
DeleteAnon 9:03 AA
Delete������
Maybe 4K is interested
ReplyDeleteproslavili su se u LJU inace
Delete"In a public letter last year, unions alleged that the recent sale of Croatia Airlines' slots and assets was part of the government's plan to reduce the carrier's value in order for its shares to be sold at a reduced price. "
ReplyDeleteTend to agree
da, nema veze što su bili prekratki sa kešom da finansiraju popravke motora, koje da nisu uradili mogli su slobodno da zatvore butigu.
DeleteLufthansa is the logical partner. They virtually do everything together from Technics, sales, flightbags, ID Travel etc... LH will buy OU and integrate it into the system Eurowings. EW operated by OU.
ReplyDeleteI agree.
DeleteI see Lufthansa Group buying Croatia Airlines and integrating it into Eurowings but retaining its own brand.
lufthansa is slowly becoming new etihad, buying all these airlines with questionable business models.
Deletefirst it was swiss (still a money loser), and austrian, then brussels. now it seems they will try to swallow alitalia.
i think they have too much on their plate to take in croatia at the moment
I agree with Petar's assessment of Lufthansa.
Deletewell he is compeltely wrong. Swiss only loses money in Q1, Austrian is the money loser. Swiss is their star performer
DeleteEurowings is in deep black
@ Petar Čelik
DeleteSwiss is no more a money looser! It has become the most profitable airline of Lufthansa Group! Last year Swiss had 561M CHF profit.
561M CHF profit, are you sure???
Deletehahahahahahahah the best comment I have ever read. The LH Group posted a record profit of 3 billion Euros last year. It is highly profitable, and Swiss being the most profitable company in the group.
Deletehttps://investor-relations.lufthansagroup.com/en/meldungen/financial-news/investor-relations-financial-news/datum/2018/03/15/lufthansa-group-erzielt-bestes-ergebnis-der-unternehmensgeschichte.html
https://investor-relations.lufthansagroup.com/en/meldungen/financial-news/investor-relations-financial-news/datum/2018/03/15/lufthansa-group-erzielt-bestes-ergebnis-der-unternehmensgeschichte.html
DeleteThis comment has been removed by the author.
Deletecould be, then my bad. didn't check the figures, but bought it from one swiss employee to whom i talked to last week.
Delete@ Petar Celik: unlike EY LH will never buy AZ in its current state but as an restructured company- unlike EY LH has a deep understanding the aviation business.
DeleteAZ's 12 unions is the nut that no one was able to crack so far.
Deleteanyhow, LH corporate structure must be crazy with all of these airlines. so i made a mistake on swiss, but i doubt they will allow themselves to do something in balkans with everything else going on.
@10:02 LH je toliko unistila malih kompanija da ocito nemaju dobar uvid u aviosaobracaj vec duboke dzepove nemackih kompanija koje im placaju biznis karte.
DeleteSure, Volkswagen for exapmle made a profit of 14 billion EUR last year- although paying the expensive tickets at LH - and this is just one of a houndred thousend German companies making record profits. So they can allow themselves to buy expensive LH tickets, which of course helps LH..
DeleteAll LH Network carriers are pure money makers. Also OS last year made a 94 mill EUR positive EBIT result (56 mill EUR the year before that) - they are nowhere near the reds except in Q1 of course.
DeleteOU as a full LH network carrier group member would surely also be making positive results in the mid and long-term.
Regarding financial expertise in aviation business LH is the biggest genius worldwide
samo nemojte Lufti.
ReplyDeleteIAG ... they could close their Balkan black hole in their network
Vueling operated by OU?
DeleteAir Lingus is not Vueling
DeleteVueling is not Aer Lingus but both are IAG ;)
DeleteHow much do they plan to sell?
ReplyDeleteIt depends, if it's someone from outside EU they can sell 49% if it's inside EU they can sell up to 100% but I think they would sell around 50%
DeleteBogu hvala da se napokon riješimo barem jednog sisača državne sise. To ne treba prodati nego pokloniti Lufthansi i još im platiti da ih uzmu.
ReplyDeleteSame scenario as Adria's.
DeleteCroatia Airlines is now in a much better position than a couple of years ago and with a little effort I think they could find a strategic partner.
ReplyDeleteNetwork wise they are doing well. But financially the profit has been generated through asset sales. Anyone who wants to buy Croatia Airlines will look at their books are realize that immediately.
Deleteagain, 2016 was a "clear year" (no asset sales) and they showed profit
Deletehowever OU definetly doesn't have money to pay for some extra items, like engine repairs as we saw, not to mention they will most likely be short of money to pay for neos
Net loss for OU in 2018 (Q1):
Deletehttps://www.tportal.hr/biznis/clanak/croatia-airlines-u-prvom-tromjesecju-s-gubitkom-od-84-5-milijuna-kuna-foto-20180427
Lufthansa/Eurowings will eventually take over OU.
ReplyDeleteWell, if it's indeed Lufthansa that is behind 4K and Adria, as some claim, then Adria is going buy Croatia.
DeleteJP and OU together would be a stronger and more competitive company.
Delete4k could do another darwin scenario with OU :)
DeleteLol. In that case LJU can almost close as that airline would build a hub in ZAG and LJU had only a few P2P routes left.
DeleteI think the government as an owner is not a good thing. OU definitely needs a change so this is a good development.
ReplyDeleteSo now they probably won't name a new CEO because they plan to sell the company anyway.
ReplyDeleteIn the long run I do think OU needs a partner.
ReplyDeletePerhaps they can pitch OU to Hainan. It was interested in them after all.
ReplyDeleteHainan has paused foreign acquisitions at the moment.
Deletei was thinking the same, because of their own crisis at the moment, but in march they were awarded to run some airport in bulgaria
DeleteAsian carrier would be best for OU. The government should do more to secure a sale to them.
DeleteAnything other than a European airline would be good for OU because it eliminates the possibility of them being a feeder.
DeleteIf they are bought by another, huger airline, then of course primarily as a feeder. What else?
DeleteMihael
Wasn't TK interested?
ReplyDeleteThey denied this just last week:
DeleteTurkish Airlines has previously been linked to a potential takeover of its fellow Star Alliance member Croatia Airlines, however, the carrier has denied such claims. "Such speculation is incorrect. We have a very professional partnership with Croatia Airlines which we will continue to nurture in the future", Mr Cantimur said.
http://www.exyuaviation.com/2018/04/turkish-airlines-plans-third-croatia.html
Ma nema tu kruha.
ReplyDeleteMikro P2P kompanije ne mogu opstat.
I do believe the company "from Greece" Doncic is referring to is in fact Aegean.
ReplyDeleteAegean+Croatia Airlines would have been a strong company.
DeleteRecept kako da od dobre napravis losu aviokompaniju.
DeleteI'd like Aegean too. As OU serves 90% routes towards the North, no risk to become a feeder.
DeleteThe real test for Croatia Airlines is 2018 in terms of profitability. There are no more assets other than planes which I doubt they will sell. So it will be interesting to see the real financial performance this year. That said, I don't necessarily think they need to be privatised. They just need a smart management in place.
ReplyDeleteWhat did happen with Garuda? They went publicly on record to say that they wanted to buy OU. They even outlined some plans for the company... and then nothing.
ReplyDeleteGaruda isn't a well run airline either.
DeleteMihael
Za mjesec, dva, opet ce izjaviti da nema prodaje jer je to strateska firma. I to je sve maslo vlade koja nema nikakvu strategiju ni za sto.
ReplyDeleteThe government really has to cut the cake and decide what to do with OU and not flip flop every other year as the administration changes.
DeleteDa, ali to ce biti samo izgovor. Pravi razlog je lezi u tome sto niko nije zainteresovan za OU.
DeleteZato što Vlada RH ne zna kako prodati kompaniju. Trebali bi doslovno moliti kompanije po svijetu da kupe OU ako je već žele prodati.
DeleteI don't understand why it is that hard to get interest for OU.
ReplyDeleteGovernment red tape in general... this is not unique to OU but is the biggest hurdle in companies looking to invest in Croatia
DeleteThe OU privatisaion saga continues.
ReplyDeleteColloquially known as Jatovanje.
DeleteAlso known as Croatovanje.
DeleteAlso known as ukrao si mi bombone, e sad cu ja tebi autic. Grow up, kids.
DeleteA never ending story. And a sad one.
DeleteMihael
So could we finally see Croatia Airlines privatization completed in 2018?
ReplyDeleteHopefully.
DeleteCompleted in 2018 and they did not even start with actual steps? It will be good if they start by the end of the year.
DeleteThey must act on doing something with their fleet. It is becoming older and older. The Airbus fleet is now almost 20 yrs. Yes, the neos are coming but that's only 4 of them. A strategic partner would definitely help here. They don't have the funds to finance a fleet modernization on their own.
ReplyDelete+1
DeleteIf 6 companies were interested in OU like the ex-minister says, then it was such a missed opportunity not to start talks with at least one.
ReplyDeleteSame old story, same old story. They are repeating the same thing and nothing comes out of it.
ReplyDeleteI’m all for privatisation but I’ll think things would get worse before they get better for OU especially for the employers it it does get privatised.
ReplyDeleteA right investor with a vision could do wonders with the company. I think OU has a lot of potential.
ReplyDeleteGoing for them is that market in Zagreb and at the coast is very strong. Croatian tourism is booming. Something Aegean capitalized on big time and OU didn't. Their market share is not what it should be and it's very seasonal in nature (which can also be said for Greece as well but Aegean seem to have solved it).
DeleteGood luck OU!
ReplyDeleteI think the Croatian government should organise an international tender and see who is interested in Croatia Airlines.
ReplyDeleteThey already did that 3 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.
DeleteThree years ago OU had assets, the list is much shorter now.
DeleteWith unions threatening to strike every 6 months... I think it pits off any possible investors.
DeleteLike Serbian, Croatian government failed to failed to sell OU 5-10 years ago by asking for too much money. Small airline business are often worth less then their asset base. Now they probably have to pay some one to take it of their hands, like JU, like JP
DeleteThey should have started the first year after restructuring ready with a new owner and fresh capital.
ReplyDeleteAnonymousAugust 15, 2017 at 10:43 AM
DeleteKind 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.
OU will eventually join Lufthansa. But I bet LH will not pay a cent for it just like Etihad didn't for Air Serbia or 4K for Adria.
ReplyDeleteOfficially Etihad did pay 40 mil$ for 49 percent stake. Loan conversation.
DeleteIf OU is bought by another airline it would definitely increase competition in the region and could reduce fares.
ReplyDeleteHad 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?
ReplyDeleteWho in their right mind will want to buy 49% (!!!!) of stakes in anything... If I invest money into something I want to have a right to vote for decision making in that project... What do they think, someone will give money and step aside?!
ReplyDeleteTo se resava ugovorom u kome se tacno odredjuje ko sa cime upravlja, ali ne vredi sad da ti objasnjavam detalje nepoznate celom Balkanu gde se ne postuju manjinska prava vlasnika deonica. Zasto npr ni jedna lokalna berza ne funkcionise?
DeleteEtihad has 49 percent stake but still runs JU and makes huge profit out of it.
Delete4k will purchase OU in 2019 and incorporate almost whole company into new entity (do not know name for the time, but IATA code should be JP). First clue should be opening base for JP in Pula, and then in Rijeka most probably in November this year. There are possibility to keep the name and call sign of Adria.
ReplyDeleteATCO
Bolt on YM and it's truly Adriatic
DeleteAgain with this Pula base nonsense, stop spreading fake news, please.
DeleteWhat a load of BS
DeleteIt would be good for both Slovenia and Croatia (but, doubt it). Montenegro is not an EU member and won't become one for a long time.
DeleteEurowings Adria is being born as we speak. Just watch and enjoy.
ReplyDeleteZnaci onda LH nista zaista ne zna o aviosabracaju. To je samo pravljenje jos jedne gubitaske kompanije pored Eurowingsa. Ne dolazi ti u glavu da nisu uspeli sa Germanwingsom pa presli na Eurowings pa ce sad jos od tri male kompanije da prave vecu kompaniju. Svi prave gubitke vise od deset godina.
DeleteYou’re right, Lufthansa will never buy Adria nor Croatia, despite what majority think. Market is irrelevant, yields are low and LH unions will hardly allow OU and JP integration into Eurowings. There’s only two options for OU, JP and alike - turn into successful niche carrier (with or without strategic partner) or struggle and bust.
DeleteLH will eventually establish Eurowings bases in lower cost countries and operate all poor to/from poor/rich country routes that way. They won't be able to do much about rich-rich routes.
Deleteagain another example of convergence, in this case with Wizz, which i believe has only few bases outside East Europe (Luton is one).
Just get western based management and IPO it somewhere in Europe. Then you’ll see growth as well as increasing value for shareholders as a priority.
ReplyDeleteBe a completely different ball game.
Meanwhile Croatia Airlines bought 50 books recently wrote by guess who? Jasmin Bajic, Croatia Airlines CEO.
ReplyDeleteHow many LHR slots remain?
ReplyDelete