Croatia Airlines has posted mixed results for the first half of the year by recording a 10.7 million euro net loss, while passenger numbers improved to reach record levels. The carrier's consolidated net loss slumped from a profit of 5.8 million euros last year. However, the airline noted that 2017's half yearly results were impacted by the sale of its five weekly slot pairs at London's Heathrow Airport for eighteen million euros. The company said that if the slot sale were to be excluded from last year's results, the carrier's financial performance would have improved 17% in 2018. Croatia Airlines increased its expenditure by 2.3%, while revenue grew 4.2% on last year. It spent most on flight operations, in part due to the higher cost of fuel, followed by passenger services, as a result of increased compensation claims due to a surge in the number of cancelled or delayed flights, then maintenance and promotion and sales. The airline took out a long-term loan valued at 8.5 million euros in June, as well as an additional revolving loan amounting to 3.2 million euros. At the end of the first half of the year, Croatia Airlines had 1.035 employees and fourteen aircraft, two of which are on wet-lease from Air Nostrum until the end of the summer season.
The national carrier handled 949.007 passengers on board its aircraft during the January - June period, an increase of 5.1%. Of those, 235.040 travellers were carried on domestic flights, up 5.4%, while 690.709 passengers flew on international services, an improvement of 4.3%. The remaining 23.258 passengers were carried on charter flights, up 30.7% year-on-year. However, charters accounted for only 2% of overall traffic. The airline operated 12.802 flights during the first half of the year, which is up 0.9% compared to the same period in 2017. The average cabin load factor stood at 70.9%, up 1.3 points. Loads improved on international flights by 1.3 points for an average of 71.2%, while on domestic services they were up half a point to 67.9%. Passenger carrying capacity, measured in Available Seat Kilometres (ASKs), stood 992 million, up 2.5% year-on-year. The airline’s cargo operations recorded an improvement of 1.6%, with 1.081 tonnes of mail and freight uplifted in the first half of 2018, compared to 1.064 the year before.
Croatia Airlines anticipates handling over two million passengers this year, making it its busiest on record. The national carrier cancelled over 200 flights so far in 2018 due to a lack of operational aircraft, caused by a shortage of staff within its maintenance division. The airline narrowly avoided a strike by its staff last month, who are unhappy with the terms of their collective agreement. The Croatian government recently commenced its search for a strategic partner for the carrier with LOT Polish Airlines showing the most interest so far. LOT itself 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.
Loans worth over 10 million euros in 6 months is not good news.
ReplyDeleteThe big loan of 8,5 million is the one the government gave guarantees for.
DeleteWhich means that when OU can't pay it will be up to the Croatian taxpayers to do so.
DeleteHope LOT buys them. Or someone else!
DeleteIf LOT buys them, hope they will refresh the OU livery, this one is nice, but a bit boring!
Delete@Anonymous1 August 2018 at 19:54
DeleteLOT isn't that rich!!!
LOT itself has financial issues to resolve.
OU's 49% steak most likely will sell for €155 million.
As a Pole I hope LOT will not buy Croatia Air. It will only result in LOT collapse. LOT has enough own issues (possible strikes, Ryanair moving to Poland and taking over LOT's pilots).
DeleteBy the way - valuation of loss making (for years) airlines at over EUR 300 milions is crazy. El-Al has stock value of around 150-200 mln.
I doubt if Croatia Air is worth more than 30 mln. Its biggest value (Heathrow slots) were already sold :-) if I remember correctly mondays and fridays are still for sale. So this is the value of OU :-)
This is bad. There were a lot of cancellations in Q2 which was supposed to be the time when their finances start improving. Unfortunately I fear the summer won't be enough to fix 2018.
ReplyDeleteWhat are they planning for the winter season?
So basically, the Heathrow sales were used to cover up a much bigger loss (which we all knew anyway); but now they're trying to say "actually forget that, if you take the slot sale out this loss isn't so bad as what it would have been before"?! :D Ingenious.
ReplyDeleteThis was my thought exactly. I was about to write it. Now that the slot sale does not suit them they make a point about it.
DeleteIn most media here in Croatia they even headlined that there results are 17% better. When you read that actually they just excluded the slot sale.
It's called creative accounting.
DeleteAnd Kucko took all the praise for the amazing results last year and then left to be CEO of Gulf Air!
DeleteHe is laughing all the way to the bank ;)
DeletePassenger numbers are ok given the cancellations. Financial figures are very poor
ReplyDeletethanks for the summary Einstein
DeleteCalm down anon 9.34
Delete5,1 % more passengers and 200 flights cancelled. with those 200 flights growth would have been 5,2%
ReplyDelete@ Admin: How many flight did OU operate in the first quarter?
It says in the article "The airline operated 12.802 flights during the first half of the year"
DeleteThey actually managed to have a few more flights despite cancellations but this was becase of a lot of charters, many of them to Russia.
DeleteMost of the Russia charters were in July I think.
DeleteBravo Hrvatska!
ReplyDeleteWhat were the results for the firts HALF YEAR???
ReplyDelete"".....first quarter of the year by recording a 10.7..." Is this serious? The totle reads "Croatia Airlines posts half-yearly loss" So what are the results and what is being conveyed?
It is a typo, it refers to the first half of the year. Corrected.
DeleteThanks for correcting!
DeleteWell let's see how they go in third quarter. That's when they make the most money.
ReplyDeleteGiven the results, 2018 will be a disaster for them. Let's hope LO takes over as that's the only way they can become a regional leader.
ReplyDeleteEnough already with "regional leader" titles.
DeleteWe got as many regional leaders as we got carriers hahahhahh balkan mania goes on.
DeleteThe metric that constantly seems to improve is load factor. Still low but I remember when it was in the 60s a couple of years ago.
ReplyDeleteAgree. Very good.
DeleteAnd what happened with the government's promise that they will replace current management? Promise given 2 months ago, still nothing.
ReplyDeleteAn empty promise like many others from Plenkovic & co.
DeleteNice to see their pax numbers improved even with all the labour troubles at the airline.
ReplyDeletePax numbers mean little if you have double digit loss.
DeleteDoes anyone know what Croatia Airlines' best performing routes are money wise?
ReplyDeleteEither FRA or DBV.
DeleteProbably ZAG-DBV as they get subventions for it.
DeleteI doubt that they make real money on ZAG-DBV; my personal experience that most passengers that fly DBV - ZAG transfer in ZAG, and more often than not, OU tickets from DBV via ZAG are not much more expensive than tickets to the same destination directly from ZAG...
DeleteLosses should shorten during Q3.
ReplyDeleteThere has to be a plus after quarters 2 and 3 but especially after number 3. If result after third quarter is negative then better shut down the airline.
DeleteBut there was no plus after Q2
DeleteOU has always had large losses in first 6 months, or should I say first 4 months. as May and June are profitable months as is the rest of the year. Problem is OU's very poor management and lack of fleet planing. In first half airline makes 200 million kuna loss, only to crawl up for the rest of the year and make profits, if it weren't for the first 4 months of operations, airline would make profits.
Deletethe largest share of expenses is aircraft maintenance in first 4 months as most aircraft undergo B and some C and D checks. Cost of C checks is between $1.4 and $1.6 million per A320/A319 aircraft and D checks cost between $2.5 and $3.2 million.
Brand new pair of engines is around €11 million for A320 type aircraft.
Maintenance division must complete all 12 checks on its fleet in first 3 months, to free the fleet for operations during the rest of the year. total cost of maintenance on all 12 aircraft per year costs around 150 million kuna, or €20.5 million. A and b checks must be completed at least twice a year, with A checks done monthly and B checks done once every 5-6 months. C checks must be done every 18 moths on older aircraft. D checks every 3-5 years, 3 years for older aircraft, every 5 years first and 2nd check.
I am Anon 10h42. Most airlines in the Northern hemisphere make a plus already in Q2. Only yesterday the LH Group reported earnings of 980 million EUR(!) for Q1 and Q2.
DeleteEvery airline with a chance to be break even or not to be loss making at the end of the year then MUST have a large plus after Q3 in order to cover the Q4 losses. Let's see how much the plus of OU will be after Q3.
Most airlines in northern hemisphere have very high load factor, much higher incomes and better business products. OU needs to catch up.
DeleteAdria Airways Croatia coming soon.
ReplyDeleteSure...
DeleteI'm tipping LOT Croatia
DeleteAdria should not go in this investment. I am really not sure what Adria could get with Croatia. Probalby Croatia will go bankrupt (while state of Croatia is not in chanche to pump extra money, because of EU rules) and Adria can just open a base in Zagreb.
DeleteJP takes all the transfers to croatian coast, ZAG becomes a LCC paradise :)
DeleteWhen will they start the talks with LOT?
DeleteAny particular reason for this loss?
ReplyDeleteShould keep in mind the enormous costs they had in April/May for last minute wet leasing of the aircraft
DeleteNo more assets left to sell that are not of imminent importance, extraordinarily poor management, excessively high costs, devastating demand from more efficient competitors, especially at the coast.
Deleteeveryone is surprised they made losses now, then everyone critizises them for selling their slots
ReplyDeleteI don't think anyone is surprised at all.
DeleteThis company is a national embarrassment. This disaster has been years in the making. Even when the company was fairly profitable no one wanted to buy it, who is going to want it now? We in Croatia desperately need this loss-making, market-saturating, over-priced, constantly-late airline to free up the space in the market.
ReplyDelete+1
Deletethey may be an embarrassment to some,
Deletebut they do not block much space in about any market.
SPU is restricted at times, and OU wastes its slots with tiny dashs in the middle of high season, but overall, anyone who wants to compete can compete
Covek je verovatno "platisa" poreza u Kroejshi jedan slican fenomen u Srbiji. Pare koje se trose na avio kompanije su beznacajne na druge gubitke u exYU.
Delete"Pare koje se trose na avio kompanije su beznacajne na druge gubitke u exYU."
DeleteKako je lako trošiti tuđe pare :) Što ne uložite svoj novac u besmislene i propale investicije pa da vidimo da li ćete pričati da je beznačajan?
Lako s tuđ k.... u koprive
DeleteWill they be able to make up for this loss in the third quarter which is usually strong?
ReplyDeleteThey will make it up... but then comes the 4th quarter which is generally weak.
DeleteMy prediction is a small profit in 2018 under 1 million.
DeleteI'd say they will sell something for 4 millions and reach +200.000 profit or -3,8 million without the asset sale :)
DeleteI'm quite interested to see whether all this new competition in Zagreb will help them add more passengers or take away passengers from them. I guess we will only see this when stats for the third quarter are published.
ReplyDeleteI'm guessing take more passengers.
DeleteI am sorry to say this but with only 12 aircrafts (with own staff) more than 1,000 employees seems excessive. That is what drives their costs up unnecessarily - they'd better let go 200 people and amongst them the top management.
ReplyDeleteNow all OU staff and labour unionists start attacking me.
They seem to have hired new people. There was less than 950 staff for the last 2 years
DeleteWonder why. Friends and family getting jobs?
DeleteCan't be mechanics I suppose.
DeleteProbably Anon. 15:22 is right.
At the end of the day, these results are better than last year if the slot sale is not included. These results should be ok for Croatia Airlines to be interesting to some potential investors.
ReplyDeleteWhat pills r u on? I want some for friday night
DeleteReality is they were better by double digits - BUT from a very bad/low base last year. They are still far away from where they should be!
DeleteAlmost 4 million EUR more for Kerosene in the firts half year........
ReplyDeleteWill they be adding any new destinations this winter?
ReplyDeleteJust Mostar which started in summer.
DeleteWhy not extend some of the 10 new routes they launched in the last 3 years?
DeleteObviously they think there would not be enough demand. They certainly have enough aircraft.
DeleteLosses are quite normal amongst airlines. They will adapt to the market similar to JU and will find a quick solution.
ReplyDeleteEither way, OU remains one of the best legacy carriers in Eastern Europe and Balkans.
They said they will probably go hybrid , like JU. They already kind of are.
DeleteFood and water are still free.
DeleteJU offers free water already which is kind of an upgrade.
It´s too early to become hybrid.
The 8,5 million euro loan is for engines. So I have to ask again where are they getting the money for those neos.
ReplyDeleteNo one knows.
DeleteNo, €8.5 million was for A320 NEOs, €3.2 million was for paid of engines, OU paid for one outright and loan for 2nd.
DeleteOU is setting aside around 80 million kuna per year for aircraft, eventually OU will get €150 million loan from Croatian government, of this 300 million kuna will be used to re-capitalize government share and value of the company, and remaining 800 million kuna will be used to pay for remaining 3 A320 NEO aircraft and additional pair of engines, with first paid for by OU outright. OU will need to pay back 800 million kuna loan with in 10 years under EU rules.
Funny how they remind us now that last year's profit was actually a big loss.
ReplyDeleteOf course you mention it when you need it
DeleteIt can, as long as airline has busy summer and operates with in projected figures. OU is quite profitable between May 1st and December 31st. As airline is quite busy in that period, especially now with the Advent in Zagreb becoming very important growth area.
DeleteIf Zagreb continues to grow its tourism at present rate, in 2020, city will have around 2 million visitors, 1.75 million of these will be foreign visitors, some 40% will use airport to arrive or visit the city. Mostly visitors from Asia, North America and Northern Europe use the airport, regionally most visitors use either car, train or bus.
If OU can reduce seasonality and in this respect Zagreb during holiday season could reduce that seasonality, airline could make decent revenue.
Really? I would say that November is dead. As dead as February.
Delete@Anonymous1 August 2018 at 17:45
DeleteSurprisingly not, OU quite busy in November and December, November and December were slow months in the past, up to 2012, these were just as bad as first 4 months of the year, but now the season in Zagreb is from April 1st to January 12th. With February and March very dull.
November was always busier than December for some reason, always 20 000 more pax than December. This margin is now getting smaller as Zagreb becomes ever more popular during Advent. Problem is, a lot of people come to Zagreb during Advent from the region, so airport doesn't get that busy.
Perhaps in 2020, things will finally even out in December with November, as more tourists arrive. Korean Air should also help things as well, only if OU can plan things such way so the passengers can transfer to other Croatian destinations fast.
OU management said a few months ago that they expect 1 million euro profit. Can it be achieved?
ReplyDeleteNot likely.
DeleteIt's a good thing cargo is up. I remember the results were catastrophic during Q1. How come they turned it around?
ReplyDeleteI'm still surprised they haven't handled their millionth passenger since they did it last year at the end of July, yet it says in the article they had passenger growth.
ReplyDeleteSorry my bad. I just realised that the article is about the first six months of the year, and July is the seventh.
DeleteI read somewhere that the minister of tourism said there were less tourists in Croatia in the first half of the year. Could this have an impact on OU's passenger numbers?
ReplyDeleteNot true. The numbers are well up, only June and July are more or less on the last years level, which means the low season had really good numbers.
Deletehttps://mint.gov.hr/UserDocsImages/AA_2018_c-dokumenti/180718_mint-stat_V.pdf
No there were less visitors in June, in first 6 months overall numbers are up by 10% I think, need to look at figures again.
DeleteProblem was the weather which hit Europe really bad this year, with flooding in Germany and Central Europe and northern Europe baking in heatwave not seen since record begun. Now we have wildfires in Greece and parts of Iberia, these will always affect overall numbers. we'll see how July did, but no it won't affect OU as most shortcomings are from local region, i.e Germany, Austria, Italy, Czech R, Hungary and Slovenia. These use cars or trains to get to Croatia.
Number of Scandinavian, Northern European visitors is up, as is the number of North American and Asian visitors. Projections are, this year 20 million visitors will visit Croatia, 18 million of that will be foreign visitors. Airports this year should handle around 11 million pax, with Zagreb handling 3.4 million, Split 3.2 million and Dubrovnik 2.7 million respectively.
Again, not true. In June there was 3,6% more visitors and 0,5% more overnight stays.
Deletehttps://www.htz.hr/hr-HR/informacije-o-trzistima/informacije-o-tijeku-sezone
@frishki1 August 2018 at 16:26
DeleteDidn't see your reply,
https://www.htz.hr/sites/default/files/2018-07/Turisti%C4%8Dka%20statistika%20-%20lipanj%202018.pdf
Yes I had a look, 10% more nights and 12% more arrivals for first 6 months.
Didn't see, 5,5 million foreign visitors in first 6 months, 22 million nights, overall positive result for first 6 months, despite the climate effect.
If these numbers reflect for the rest of the year, we could be looking at 114 million nights and 20.7 million visitors, of whom 2 million domestic.
Generally, it is very good that there are positive effects and more visitors in the off-season!
DeleteExactly. I'd rather like to see a single digit growth in the peak months and double digit in the off-season.
DeleteThis year will be important year for Croatian Tourism, a milestone, benchmark of 20 million tourist will be passed for the first time in the country's history. also, OU is very likely to have best year ever with 2.25 million passengers carried, hopefully this is the year of proper profit for the airline as load factor with projected result 75% should start making good returns.
DeleteMost European profitable airlines maintain 85% load factor, this is where OU needs to be going, maintaining 80%+ load factor. perhaps aiming for 85% by 2022 would be one thing the management should be working on.
Very few airlines can be profitable with 70% load factor. 80% LF can be achieved in 2020 I think. 2.4 million pax, should generate around €5 million in after-tax profits. 85% would double that.
If OU can lease 4 A200-300 before A320 NEOs arrive, say in 2020, instead of wet leasing Air nostrum two CRJ-1000s, it would help OU with keeping good network throughout the year.
Ideally OU needs a fleet of 20 aircraft, and fly to 40+ year round destinations in Europe and at least 50 destinations in summer months.
They should do more with their maintenance division. They could get a license to to maintain other aircraft types seeing as they have several hangars. Could be a good source of income.
ReplyDeleteThey're stretch as is, they're working two full shifts maintaining aircraft for quite a few carriers, they simply don't have enough staff to maintain the aircraft cause many leave to work in the EU for better pays. OU pats for first year mechanic only 6000 kuna, after few years their pays go up to 7500 kuna, but most never earn more than 8500 kuna. In Croatia if you live on your own 8500 kuna is ok, in Zagreb monthly rent is 1500-2000 kuna for a small apartment, and food is cheap, but someone with 10 years experience should be making a lot more than 8500-9000 kuna, they should be making 12-15000 kuna per month by this point.
DeleteIn Germany or Benelux, someone with same experience can make €50-60 000, why stay @OU when you can make loads more in Germany or Benelux.
If OU increased mechanic's pays by 25%, that would reduce number of mechanic leaving, but OU is run by very bad management and chances of any increase are 0.
Ja mogu samo nadodati - ove godine sam dvaput letio (ne s OU hvala bogu) i oba puta kad sam bio na aerodromu negativna informacija vezana za let OU. U PRG je avion kasnio +3 sati, u WAW let bio otkazan
ReplyDeleteDobro sto govoris istinu komsija. Kroacija ne leti za Varsavu, gde bas nju "ubode" LOL
DeleteHahahaha! OU sigurno nije jedina kompanija koja kasni (što ih ne opravdava)!
Delete