Croatia Airlines begins privatisation drive


Croatia Airlines will seek a privatisation consultant in the coming weeks after the government decided to sell the company. The Croatian Minister for Sea, Transport and Infrastructure, Oleg Butković, said, "Croatia Airlines needs to find a strategic partner and we will commence this process. We have held talks with the company's management several times. As far as I am aware, a tender for the selection of a privatisation consultant will begin soon. They will give us answers to questions such as how, when and in what way the procedure should take place". He added, "This year is crucial in our search of a strategic partner".

The previous government, which unsuccessfully attempted to sell the carrier once, selected the International Finance Corporation (IFC), the World Bank’s investment arm, to act as a consultant and seek out potential investors by October 2015. However, its search failed to provide any satisfactory results. "I am not too familiar with previous attempts. However, Croatia Airlines is not in such a bad state as is being presented. After increasing its passenger numbers and launching new routes, a partner should now be found", Mr Butković said. The minister previously noted that after stabilising its operations and boosting both its competitiveness and market position, a new equity partner would be found with "extensive experience in the commercial aviation sector, which would ensure network expansion and market share growth".

Croatia Airlines anticipates recording a net profit of one million euros by year's end. The carrier has seen passenger growth of some 6% this year and welcomed over 200.000 travellers on board its aircraft in May alone, representing a new record. However, its management has also been locked in a dispute with labour unions over a new collective agreement and the company faces a shortage of staff, particularly in its maintenance division, which has resulted in numerous flight cancellations this year. Furthermore, the state has been delaying a decision over the selection of the company's new management team, although Minister Butković is adamant an announcement concerning this matter will be made soon.

Comments

  1. So much money wasted on IFC.

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    1. Someones pockets got full for sure

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    2. How much was paid to IFC?

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    3. Several million euros.

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    4. So what happened with the money that was given to IFC to find a strategic partner for OU?

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  2. ...and last week they said they wouldn't because it's of strategic importance.

    Have they fixed the fleet issues?

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    1. no, they did not say so. They said it is because of strategic importance and that is why they try to find strategic partner.

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  3. Any real chance of OU getting sold?

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    1. I see 4K as a potential buyer. Or some other invetsment fund.

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    2. I think, for now, OU is still too expensive for 4K. They buy Adria for 1milion Euro, I hope OU still worth litle more.

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    3. It's worth much more I think

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    4. Yes for now.

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    5. I see no chance 4K to buy Croatia.

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    6. Maybe they are selling assets to decrease their value so as to be more attractive to 4K?

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    7. I doubt very much they will sell to 4K for a number of reasons.

      Political situation between Croatia and Slovenia is not the best and with a more conservative new Slovenian government the problems between the two countries will drag on and not get solved anytime soon so an airline partnership at this time in unlikely.

      4K have shown to be a touch incompetent when it comes to running an airline and I doubt they will be willing buyers unless they get OU at a next to nothing price.

      Despite OU having its problems, it is not a burden on the Croatian tax payer (unlike Adria which is why Ljubljana was happy/forced to give it away) so I would assume the Croatian government would be asking for a respectable price (one which would at least cover OU's assets) so again something 4K would be unwilling or even unable to pay.

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    8. O cemu pricas o kompaniji koja je prodala slotove u Londonu i nije remontovala motore sa tim novcem.

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    9. First, I'm not OU fanboy, on the contrary, I think it should have been much better managed, bigger, and more succesful. But please, stop trolling with slot sales for thousandth time, because OU still flies to both LHR and LGW. And at least engine overhaul is paid by their own money, not the taxpayers money. Cheers!

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    10. Actually, they paid it with credit.

      Now we can discuss if it is OU or bank's money, but it is for sure it was not paid from the income planned to be used for engine overhaul

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    11. Croatia flies to LHR 4 times per week. That is more than stupid. And yeas 5 slots were sold.

      And yeas they take huge credit with interest of 12%. As no one want to give them money.

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  4. I think fleet its ok. But crew is problem now.

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    1. What is the problem with the crew?

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    2. They have crew shortage.

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    3. Entire world has crew shortage

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    4. Anyone knows approximately the salary of Croatia airlines crew ? (Pilots , flight attendants , engineers , etc..)

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    5. Captians have around 26.000 kn
      Firt Officers around 19.000 kn

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  5. Wasting more money on consultant's without any action taking place!

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  6. Lufthansa would be the most logical partner.

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    1. exactly....with no need for a consultant in between

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    2. I would say Eurowings is more likely. Simmilar to the way they purchased Brussels Airlines.

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    3. If OU were to be taken over by LH I think we would see it develop its eastern network, especially the region. To the west I don't think we would see any major development except maybe in Germany.

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    4. Don't think they will be making simmilar takeover moves as the one with Brussels anytime soon. They are not happy with Brussels Airlines.

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    5. Speaking of Eurowings, they lost 206 million euros in the first quarter of 2018.

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  7. How much do they plan to sell?

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    1. 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%

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    2. They don't know. That's what the privatisation advisor decides on.

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  8. maybe Etihad

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    Replies
    1. Even Etihad is bliss, as compared to being run 100% by a Balkan government.

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  9. OU had +9% in pax in May 2018

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  10. Privatisation consultant? Tender for a privatisation consultant? Is this me or this seems to be an elegant way to pay somebody AGAIN and postpone everything?

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  11. CA official press release:

    "Rast putničkog prometa zabilježen je i u razdoblju siječanj - svibanj 2018.g. u kojem je ukupno prevezeno više od 719.200 putnika, što je 6 posto više u odnosu na isto razdoblje lani. U navedenom je razdoblju zabilježen i porast prosječne popunjenosti putničke kabine za 2,6 postotna boda."

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    1. From this we can deduce OU could be looking at 2250 000 passengers in 2018 and even 2.5 million in 2019.

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  12. I imagine the passenger growth would have been bigger had thet not cancelled so many flights.

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  13. In the end nothing will happen. They will waste money on privatization advisors and will stay state owned.

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    1. EU ordered the government to sell up remaining state owned companies so they will sell it.

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    2. @AnonymousJune 5, 2018 at 9:58 AM

      utter nonsense,

      EU can't order anyone anything, you don't know how EU works, clearly.

      EU imposes standards and regulations, imagine it as a standards agency, and if you flaunt these standards you need to pay back any money earned due to braking any laws.

      That is all, EU creates a level playing field for all.

      Yes there are people or companies and even governments that flaunt these agreed rules by all 28 member states, but there are sanction regime in place which pushes members to agree and play according to agreed rules.

      This is a nutshell is what EU is all about.

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  14. Purger do you think there is a chance for OU to be sold?

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    1. Alen Šćuric Purger5 June 2018 at 23:04

      No. Only if it will be given to Lufthansa for peanuts.

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  15. Same story from government each year. DO SOMETHING!!

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    1. I think the government as an owner is not a good thing. OU definitely needs a change so this is a good development.

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    2. Yes! Same old story from the government. They are repeating the same thing and nothing comes out of it.

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  16. In the long run I do think OU needs a partner.

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  17. I don't necessarily think they need to be privatised. They just need a smart management in place.

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  18. So we could finally see Croatia Airlines privatization completed in 2018.

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    1. No chance. Half the year has gone already. Maybe in 2019.

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    2. 2018? Are you kidding? There will be a TENDER for consultants. Which could take months and months. After that, maybe they will figure out WHEN and HOW to privatise it. Again, this the perfect way to PAY some guys and POSTPONE everything. I would like to remember you that they have already had a consultant firm. Do we now the outcome?

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  19. Best would be to get some Asian airline to invest in OU.

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  20. Finally Eurowings will take over and sisači državne sise will fall off!

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  21. Mazenje ociju. Uzas.

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  22. Sve dok se ne isisa i zadnja para iz OU kompanija se nece prodavati a onda za par Eura prodati nekome i bye bye....klasicna Balkanska posla,sve ono sto smo imali unistili smo ili smo na dobrom putu !

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  23. Evo ja nudim 1 kunu... Taman je ostalo nešto malo zemljišta za prodati, a ove leteće krntije nek si uzme tko hoće.

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  24. but who in the world would buy an eu airline with significant "political risk"?

    1) eu airline: if they were interested in croatian market, it would be probably better to set up a new operation there

    2) private equity company: they come only if the price is right and there is at least some realistic potential. there is not much in liquidation value in OU, and the "political risk" severely limits the upside as well as the chance to get the costs right.

    3) non-eu buyer: they always have to stay below 50%. their decision making power will always be limited no matter how much they spend. it is only worthwhile as long as OU may enriches their network in any significant way. (or if they are order by their owners for to buy OU for political reasons...)

    it does not appear very likely that we can expect a huge sum for OU at the moment.

    would it be better to strive for a different objective: find some owner with expertise and commitment to ensure that OU will serve us for the next years as part of larger company, even if we have to give it away for a single kuna?

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  25. I wonder if they continue doing this just to demonstrate to the EU that they are at least trying to sell the airline with no real intention of ever selling it.

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    1. Very possible.

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    2. What OU has to do with the EU???

      Who in the EU is saying anything about the way Croatian Government runs its airline?

      EU has no authority to order anyone anything guys, don't confuse the EU with Jugo-federation.

      Croatia can keep OU as is, what Croatian Government isn't allowed to do, is without any reason, consultation and agreed in principle with other EO bodies finance Croatian airlines endlessly.

      In that case, EU would demand Croatian Airlines pays back every penny they received from the state.

      EU imposes rules of the community agreed by all member states, does not implement the policy. Hope you all understand that!!!

      EU has nothing to do the way Croatian airlines is run, Croatian Government does.

      And I know what I am talking about, as I studies EU law,. The issue here isn't article 102, as Croatian market is already saturated by so many EU carriers, OU plays small part of the market. Air France, LOT, Czech, Alitalia, KLM, and number of other carriers still are/were largely state owned.


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  26. Hoping for Aegean as possible partner.

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    1. What would they have to gain from that?

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    2. Aegean I mean

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    3. They could both gain a lot!

      I think OU and Aegean would be a good match but I don't think this would happen either.

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    4. But what would Aegean get from it? I certainly see the benefits for OU but I don't the other way around.

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    5. Money.... they could make more money.

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    6. Aegean kind of failed in Cyprus, I don't see them embarking on a Croatian adventure.

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  27. Good luck OU! They are doing well on their own. No need to bring in foreigners.

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    1. Doing well on their own??? Seriously?

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  28. As long as the Ceo stays the same nothing will change .

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    1. They will change the CEO.

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  29. For those advocating closer ties with LH Group, this is their philosophy. This is what Lufthansa CEO said in an interview published today:

    “The Lufthansa Group has 15 airlines. Whoever brings down costs and generates more income can fully count on our support. A good example is SWISS, which will soon have new and additional aircraft. At Austrian Airlines and Brussels Airlines, less good results were achieved, these companies do not have to expect additional investments, let me put it this way: their fate is in their own hands.”

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    1. U cetvrtom Rajhu si dobara samo ako im donosis pare da se oni ne muce. Ostrijan zaista treba ukinuti.

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    2. Slazem se, samo sto bi cetvrti Rajh prosirio i na robovlasnike sa Srednjeg Istoka, a tek Ameri, ohohoho, pa onda ja bi radije rekao "New World Order" , ne bi se ogranicio na Svabe, ne samo na LH. A OS bi ukinuo jucer, the worst ever

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    3. Najneprijatnija i najneljubaznija posada sa kojom sa leteo je bila OS. I to redovno

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  30. At the same time, the airline is heading for a strike. Talks between management and unions have collapsed again.

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    1. It would be interesting to know if management counted possible OU strike and 180 flight cancellations when they planned 1 million net profit

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  31. anyone knows what was croatia crj 1000 doing in LJU today? I saw it on the apron, far from tehnika so i guessit was not maintenance..

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  32. What about Turkish taking over OU?

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    1. They said they were not interested.

      Turkish 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

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