LOT eyes airline consolidation after Croatia interest


LOT Polish Airlines has declined to comment on its potential takeover of Croatia Airlines but has said it is interested in further consolidation on the Central and East European aviation market. Speaking to the "SeeNews" portal, LOT spokesperson, Konrad Majszyk, said, "LOT is today the fastest growing airline in Europe and the only regular carrier from Central and Eastern Europe which has not only fallen or been taken over, but it is constantly profitable. After establishing a partnership with Nordica in Estonia, we are interested in further consolidation of the aviation market in Central and East Europe". He added, "We do not comment on speculation about the possible takeover of Croatia Airlines".

Polish media have recently reported that the Croatian government has invited LOT for talks following its interest in the purchase of a "significant stake" in the state-run company. Further reports suggest that although the government met with investment fund 4K Invest, which owns Adria Airways, to discuss Croatia Airlines' future, the talks ended unsuccessfully. Last week LOT said, "Were LOT to take over another carrier, it would have to result in a rapid boost to our expansion. It is too early to comment on talks which have not started yet". LOT carried over 6.8 million passengers in 2017, and by 2020 the company hopes to handle over ten million travellers per year.

The Polish carrier plans to grow its operations in Croatia and recently announced the upgrade of its Dubrovnik service which now becomes a year-round destination. In addition, it will maintain flights to Zagreb this coming winter at eight services per week, which are codeshared by Croatia Airlines. Elsewhere in the region, LOT will increase services to Belgrade to ten per week but has discontinued its codeshare partnership with Air Serbia on the route. The airline will also run services to Skopje past the summer months after upgrading the newly launched seasonal service to year-round operations. A total of four weekly flights will be maintained, while daily services will be operated to Ljubljana this winter and codeshared by Adria Airways.

Comments

  1. From all the statements they have given, it seems to me they are interested and that these talks are happening. They just don't want to officially confirm it but they are constantly giving hints.

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    1. I am more curious why talks with 4K fell through.

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    2. the 3 main points to agree are:
      * size of the stake (below or above 50%?)
      * price (including the question by how much they get recapitalized before the sale)
      * guarantee of number of employees for X years

      and it appears that LOT could be interested in a deal of about 50% and that they either recapitalize it themselves or pay a significant price for its stake; both concession do not look like they are from the 4k rule book

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    3. I think recapitalizatuon will be the likeliest option which would suit both sides.

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    4. "guarantee of number of employees for X years"

      LOL, just LOL....

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    5. Any airline serious into expansion is not going to sack pilots, cabin crew and mechanics.

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  2. I really hope something develops from this. It's the last chance for Croatia Airlines.

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  3. ' "LOT is today the fastest growing airline in Europe and the only regular carrier from Central and Eastern Europe which has not only fallen or been taken over...'

    Well, would be great to know what is his definition of Central and Eastern Europe because from what I remember airlines such as airBaltic, Aeroflot, S7, Travel Service, Belavia, Air Moldova, Wizz Air, Tarom, Montenegro Airlines... have neither fallen nor have been taken over.

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    1. Do you maybe know how many pax LOT had in Croatia last year?

      Agree with your comment. I love it when these aviation PR throw out these claims of being the best or most unique.

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    2. LO has not yet submitted their numbers for any month in 2018 so here is 2017.

      WAW-ZAG 49.044 passengers

      Q1 2017: 7.509
      Q2 2017: 10.532
      Q3 2017: 18.355
      Q4 2017: 12.648

      These are their numbers for LJU:

      2016: 35.415
      2017: 51.768

      Interestingly there are less passengers to WAW than to BEG despite JU recording a drop in passenger numbers.

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    3. Great about LJU! Will they also increase it in winter?

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    4. Hmmmm.... so which ex-YU destination will be the first to get their B737 on a regular basis?

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    5. They sent a B737 around 10 days ago to ZAG. But it was a one off.

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    6. Was it MAX? They also send the B734 to BEG about a month ago, it was full but it was probably some group.

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    7. It was MAX in Zagreb, brand new.

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  4. Reading the last paragraph, LOT's expansion in the region has been impressive lately. Not to forget they also fly to Podgorica, Split, Zadar and Pula seasonally. Wonder what we might see next from them.

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    1. Bankruptcy? jajajaja

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    2. Buying Croatia Airlines.

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    3. Hopefully Sarajevo. Like with Aegean, I don't understand why these airlines overlook SJJ. I'm sure they would get nice feed to US and Canada.

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    4. Pristina could also be a new potential destination.

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    5. don't think PRN will happen. Seems like only gasto routes make it there.

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    6. at anon 9:20:

      because SJJ is a tiny market.
      The growth is all inbound tourism.
      If Banja Luka and Mostar follow Tuzlas example to go after the gastarbeiter routes, it will be even harder for SJJ to keep the traffic of locals at the current level.

      there is neither enough demand for point to point travel to either Warszawa nor Athens. Competing against the LH and TK hubs is not that easy.

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    7. They should consider starting Ohrid seasonally. Small Planet is already flying from Warsaw and Katowice.

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    8. Or Nis :D

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    9. Or Brac ;)

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    10. Tivat in summer is also an option.

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    11. No chance. They already fly to Podgorica.

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    12. So? Others do too.

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    13. Actually other than Air Serbia and Montenegro Airlines there are no other airlines that serve both cities.

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    14. Actually, Flydubai does

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  5. LOT has been carrying out a new business strategy that involves launching new flights and boosting revenue while keeping an eye on every penny spent. And it has worked well for them. If they think they can do all of that by buying OU, then it will happen, if not they will back out.

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    1. It's quite amazing how LOT has restructured considering they were facing bankruptcy 3 years ago.

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    2. Because from 2015, Poland has a new government

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    3. yeh Orban-style one. no thanks and it has nothing to do with LOT's financials anyway

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    4. But what is the reason for this turnaround? What did they do? I remember when they were literally on the verge of collapse and it wasn't that long ago.

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  6. IMO being invited by the government to talk about OU is very very different from exprrssing an interest in OU.

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    1. I highly doubt the Croatian government just invited them randomly. They expressed interest and then they were invited for talks/negotiations.

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  7. So, this could really happen?

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    1. Fingers crossed.

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    2. For now it seems like there will be talks. What will be the outcome remains to be seen. As we saw the 4K talks collapsed.

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  8. LO has grown so well lately not just in ex-Yu but everywhere. Good work.

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    1. I do wonder how profitable all these new routes are for them.

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  9. Lot is a good airline and it would be fantastic for them to take over Croatia Airlines and bring them back onto the road of real profit.

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    1. I flew with them shorthaul recently and honestly they were nothing special. Not good but not bad, like most airlines in Europe.

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    2. I think anon 9:28 was talking about their network, new planes etc., not their on-board product.

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  10. I doubt they will buy Croatia, they will probably become Partners or do something like Etihad with Air Serbia.

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    1. Well officially Etihad did buy 49% in Air Serbia. It only later surfaced that it is in form of a loan.

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  11. Do they still use Dashes on most of their flights to ex-Yu? Or have they started using jet engine planes.

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    1. I think they use mostly Embraers now.

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    2. Don't know about other routes but BEG is mostly on E75 and E95.

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    3. LJU usualy E75.

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    4. This comment has been removed by the author.

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    5. Yesterday flight in LJU was done by Dash.

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  12. I doubt Lufthansa is happy with this development.

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    1. They are definitely being squeezed out of many transfer passengers from Eastern Europe.

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    2. LOT is also a Star Alliance airline and is close to LH.

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    3. Waiting for the "Lufthansa is behind this" comments.

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    4. It probably isn't behind this and it's probably quite unhappy.

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    5. TK is also in the Star Alliance and they are fierce competitors to LH,
      membership in the same alliance hardly plays a role

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  13. Great news. This shows they are actually interested in OU.

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    1. I'm very interested to see how this will work out for them. I don't understand the point of having a base in Zagreb and in Budapest which would compete against one another.

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    2. So? Wizz has a base in Belgrade and Budapest and I don't see an issue there.

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    3. Actually a mere take over of Zagreb could turn less challenging than a base set up from scratch in Budapest where they face fierce LCC competition. In Zagreb's case they can be almost certain no LCC carriers will be allowed to spoil their plans. Regarding to all of these bases being too close and competing, only WAW is a true connecting hub, in BUD they are O&D oriented and it's unlikely that they are after connecting pax there. A model for Croatia may include a decent coverage of Europe from Zagreb (more destinations, but less FRA MUC VIE), resolving the sensuality issue with smaller planes (EMB), couple of TATL flights (VFR) and transformation of OU into a charter company with significant LOT backup to focus on the coast from key markets. Seems to me that this acquisition could result in a more "rapid boost to LOT expansion" than a base with couple of planes in Budapest.

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    4. Do you think LOT would keep domestic routes as well?

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    5. Why would LOT kill domestic routes? Some are cash cows (ZAG DBV) and all can be subsidized through PSO.

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  14. Bravo Hrvatska!

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  15. LOT and Aegean now serve the most points in ex-Yu of the European legacies.

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    1. Actually Austrian has the most points still.

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    2. TK has the most flights

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    3. ^TK does not fly to any secondary city in ex-Yu except to Dubrovnik. Austrian does to quite a few in Croatia.

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  16. LOT is doing what ex-YU airlines should have done. JU should have purchased MGX and JP should have bough OU.

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    1. Just you wait, 4K may buy it in the end :)

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    2. And where would they find the money?

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    3. Politics and nationalistic pride wouldn't allow it either.

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    4. I would have to agree, biggest obstacle in 4K ever buying OU would be politics so I doubt very much that it will happen. In saying thay, 4K can set up camp in Croatia whenever they like and would probably do so using Adria soon.

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    5. To tell you the truth I don't see LO keeping the OU brand if they get them. I see them basing their own Embraer jets in ZAG or maybe the Q400s.

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    6. While political nationalism is an impediment to growth in all ex-YU countries, economic nationalism is more specific to Croatia and plays a big hurdle for neighbouring countries, as well as presenting a shortfall for Croatia itself.

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    7. That's actually true. JU could easily operate charter flights out of OSI like they do from BNX but ... politics. In the end it's BEG that gains the most as these holidaymakers come by bus to Belgrade.

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    8. True about Croatia's economic nationalism and therefore one of the main conditions any investor would face is to keep the OU brand, especially because of the word CROATIA in it.

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    9. 4K has JP and might buy YM for cheap. LO will get OU for almost free. 4K will then sell JP/YM at profit to LO. LOT will then have JP, OU and YM, everything in the region except Air Serbia. LO Dreamliners will fly from BUD, ZAG and DBV to the USA and everything else will feed WAW.

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    10. Sounds like a stretch but let's wait and see.

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    11. Or all trans-Atlantic network will be served via WAW once the new airport opens?

      As for charters, this is really interesting. I am curious why isn't OU flying charters from OSI if there is demand?! As always, ZAG ignores the east in favor of the coast.

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    12. Wait a new airport is being built in Warsaw?? How did I miss that

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    13. Yes it's a bit controversial because it's outside the city.

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    14. Interesting. Had no idea. When is it supposed to be finished?

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    15. If LOT wanted all transatlantic traffic to be served via WAW they wouldn't start those flights from BUD. Same will happen to ZAG and some other airports. All other traffic where direct long haul is not justfied, for example Tokyo, will be routed via WAW.

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    16. It is not even started. Not long ago there was a non-binding vote where residents rejected the proposal. I suppose it is still gonna be built although that'll take time.

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  17. I have only had good experiences with LOT. Nice to see them expanding in the region.

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  18. Something must be cooking here otherwise the OU strike would not have been cancelled.

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    1. Well I think the primary motive to stop the strike was the disaster that would have ensued in the middle of summer had they not cancelled it.

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    2. The only way to put pressure on the government to appoint the new management was through the strike. But the unions have probably been told about the talks with a possible strategic partner upon which such actions would cause irreparable damage.

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  19. They would be stupid to do this. Not because its OU but buying any airline, especially in the EU where they can just base a few planes of their own like they did in Budapest.

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    1. So then why are they so stupid?

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    2. Your question is as good as mine.

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    3. Its not stupid, when you buy an airline you buy access to the passengers who fly that airline especially the regular 'frequent flyer' passenger. There was an article recently about how Qantas was smart not to sell its frequent flyer program a few years back when the airline was in a lot of trouble. They were offered billions for it but it turns out that it is worth more than half the value of the airline which is valued at $12 billion today.

      If they can get OU for a decent price, they get the aircraft, the employers, property but more importantly they don't have to fight for passengers, not initially anyway. They get them for free and they get them straight away.

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  20. Go 4K!! :D Hope they resume talks. Fear that LOT would simply exploit Croatia Airlines.

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  21. They have Nordica in the Baltics, so they could have Croatia in the West Balkans. LOT is a Star Alliance member and a fellow partner of OU. Perfect choice of partner in my opinion.

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    1. Plot twist. 4K contacts LOT and sells them Adria before the Croatian government gets the chance to pitch Croatia Airlines.

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    2. An. 17:41
      Geographical and political determination of the Republic of Croatia is : part of the EU.
      West Balkans nations are: Bosnia - Hercegovina, Montenegro, Serbia, Northern Macedonia, Kosovo and Albania.

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    3. Ajme, da li je to uopce bitno? Hrvatska je i na Balkanu. Sto prije izljecis taj kompleks, to bolje za tebe.

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  22. I think these are still very exploratory talks. You don't just wake up one morning and decide to buy an airline. There will be several months of talks before any concrete decision is made.

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  23. I don't see the need to privatise Croatia Airlines or get a partner. Just find a smart management and a lot of problems will be solved.

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    1. Even with the new management, the issue is money.

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    2. Unfortunately, in Croatia, the government is the worst possible owner of a company!

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  24. If this ever happens, then DBV will be treated as their second most important destination in Croatia, something like KRK.
    I even see them flying from DBV to JFK or ORD just like it is the case with KRK.

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