Montenegro and Croatia Airlines to be sold by 2020


The two remaining fully state-owned national carriers in the former Yugoslavia, Montenegro Airlines and Croatia Airlines, are to be sold by 2020 at the latest, with their privatisation processes advancing. The Montenegrin government has set a deadline to sell off its shares in the flag carrier by May of next year, when it also intends on giving its two commercial airports up for concession. The Montenegrin Prime Minister, Duško Marković, held talks in early October with a "major European company" which has shown interest in buying a stake in the airline. Although the company's name is yet to be made public, it is strongly tipped to be the German investment fund 4K Invest, which also owns Slovenia's Adria Airways. "We are anticipating a letter of intent from a major company, which also owns a carrier, to purchase Montenegro Airlines. I don't know the details of the offer, but there is strong interest from this investor", the Montenegrin Minister for Transportation and Maritime Affairs, Osman Nurković, said recently.

The International Monetary Fund has urged Montenegro's government to sell its stake in the country's flag carrier, noting that its funding of the airline was unsustainable. In April it was reported that a European fund, with limited investments in the aviation sector, was considering producing a joint bid for both Croatia Airlines and Montenegro Airlines in return for shares. According to sources, the fund was pondering over the potential investments but made contacts in Croatia first, which it deemed as a higher priority market at the time due to its potential and size. Although the two airlines differ in various aspects, the investor recognised that both have a similar passenger structure due to the existing tourism industry in the two countries.

Croatia Airlines' CEO, Jasmin Bajić, has said the carrier's planned privatisation process is advancing. "In accordance with the 2018 National Reform Programme, adopted by the government, Croatia Airlines has prepared a tender call for the procurement of financial advisory services to seek out the appropriate module to recapitalise and find a strategic partner. The key goal is for this reputable partner to increase our share capital and future business operations. In other words, to find strategic partner(s) that will assist with the implementation of our fleet plans and provide synergies for the company, while also taking into consideration the wider impact of such a transaction". The government has conceded that a future partner is necessary in order to fund the airline's order for four Airbus A320neo aircraft. The airline is currently assessing ways to pay the European manufacturer for the new jets and is seeking lessors to finance part of the advanced payments necessary for the aircraft's delivery. “Negotiations are ongoing with potential lessors who will finance advanced payments from 2020 to delivery”, the airline said recently.

Comments

  1. Replies
    1. If they take over one or both there will be no more doubt in my mind that Lufthansa is behind it.

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    2. And why is that, is Lufthansa the only company in the world which can or would want to buy (other) airlines?

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  2. Interesting fun fact. Former Serbian finance Minister Mladjan Dinkic who was one of the main people who got Etihad to take over Jat, and Dane Kondic fromer Air Serbia CEO have been seen in Belgrade having coffee together and more recently seen in Podgorica. Dinkic has a company called MK consulting which was selected by Montenegro Airlines last year to advise them about various stuff. Interesting if there is some connection with this privatization.

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    1. Dream team :D

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    2. Air Serbia is much better company than Jat Airways was.

      If Dinkic with his team manage to do the same with YM it would be great for Montenegro, but this time the circumstances are different comparing to those in 2013...

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    3. Hey anonymous @ 09:15,
      Give me literary any airline in the world and >$100m and I personally guarantee you that I will make the company 'much better.'

      You're welcome.

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    4. Where were you to make Jat Airways much better with all that Government money that was poured one year after another?
      Ridiculous

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    5. It would be interesting if Etihad was actually still interested in Montenegro Airlines.

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    6. I doubt it's EY. EY is going through restructuring and you can see that they are actually making some wise decisions at the moment, shifting capacity, discontinuing some routes while increasing frequencies on others etc. Buying into YM would mean they are going back to the Hogan model and that would be a big no no.

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    7. Thumb up for Observer ! brgds

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    8. @Observer

      I'll give you Alotalia and personally guarantee you will not make the company much better with 100m. Making comments on the internet is much easier than turning airlines around.

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    9. Of course he couldn't. Empty phrases

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  3. "Croatia Airlines has prepared a tender call for the procurement of financial advisory services"

    the CEO and government have been singing this tune for almost a year. You would think they would have chosen that financial advisor by now.

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    1. They are doing this again so some consultancy firm can just get a few extra euros in their pockets. The same as last time.

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

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    3. Exactly. Farsa.

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    4. @10.18
      Someones pockets got full for sure

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    5. How much was paid to IFC?

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    6. Several million euros.

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    7. So much corruption. Crazy.

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    8. What about Garuda?

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    9. Can't believe anything Croatia Airlines management comes out with.

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  4. That CRJ-1000 looks nice :) would be good to see them in full OU livery :)

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    1. +1 good plane too

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    2. Flew this year with Austrians and also with Montenegros E-Jets. That would be a much nicer plane for OU.

      Mihael

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    3. Agreed, Embraer jets are a lot better, nicer, more comfy.

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  5. So LOT is out of the game to buy Croatia Airlines?

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    1. Seems like it

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    2. Like I said when it was announced that LOT was interested - "In the end nothing will happen as usual".

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    3. Does that say that in the text?

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    4. It doesn't but if it was still interested the company wouldn't be looking for a ptivatization adviser.

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

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    6. LOT may afford to buy OU and YM but it can absolutely not afford the running costs plus all investments necessary!

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  6. What will happen with the neos if Croatia Airlines doesn't find a partner?

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    Replies
    1. The government will pay for it and then OU would probably have to go through some kind of restructuring again.

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    2. Or OU would not take over the 4 jets at all.

      Or a third party instead of OU buys the 4 jets for OU and OU would lease the jets from the third party.

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  7. Oh no, again OU and privatisation...
    The fact is that nobody wishes to purchase that company.

    We heard here Garuda, Aegean, Turskish, Lufthansa, LOT are interested, but obviously all these information were nothing but lies.

    The only possibility is to try to find some political deal as JU did. Anything else is just wasting of time and money.

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    1. I'm disappointed in the whole Croatia Airlines prioritization process. First of all I was hoping it would be much quicker, that there would be more interest because the airline certainly has potential. I think Garuda which was really keen to buy it would have been an excellent solution because it is based far away from Croatia and would not turn the airline into a feeder. Instead, Garuda would probably have fed Croatia Airlines traffic.

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    2. Koji potencijal? Da bude LH fider? Uz otvoreno nebo bas ih briga za OU.

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    3. Garuda isn't a well run airline either and has it own huge problems. Recently the cut back their european ops, they lost a lot of money.

      https://asia.nikkei.com/Business/Transportation/Garuda-Indonesia-to-cut-more-routes-after-213m-loss-last-year2

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    4. OU has potential for let me guess about 6-8 A321 jets stationed along the coastal airports during the summer (April-Oct 7 months per year) for charter ops alone. During summer OU can operate 90/100-seaters from/to ZAG and several Star Alliance feeders at the coastal airports, another 10-12 jets needed for that (or 6 100-seater jets and 6 Dash8-400s).

      The thing is, and I think we all know that, is that OU cannot sustain the Airbusses during winter. Those planes aren't cheap and (usually) cannot be left unused for 5 months.

      Without these lucrative aforementioned charter operations I fear that OU cannot become sustainable in the long run, those 7 months of charters can bring a lot of money but can still not cover the whole 5 months of loss during winter. OU's potential is about making good use of that - by them - almost completely untapped SEASONAL potential along the coast!

      To me it seems best, that OU gets rid of all A319/20s and operates with E175/90 or similar as a unified fleet if possible and every summer leases the necessary Airbus jets. I only reckon that it is very hard and very expensive currently to take on these kind of A321 leases during summer season, so it may as well be that it is better to simply park most of the airbus planes during winter.
      Anyway, this is a topic for a long and comprehensive essay, one should go more into detail and needs a clearer understanding of actual income/costs.

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    5. Takve eseje ovde pise Purger bez da je procitao ijednu knjigu o upravljanju i finansiranju avio kompanija. Zaludni ga citaju. OU ne moze da vozi turiste na Jadran ne moze ni Alitalija u mnogo vecu turisticku meku. Ne umeju da rade aviobiznis i samo trose novac poreskih obaveznika kao i AS i YM i Adria. Kad budu hteli da plate dobrog CFO onda mozda neko i izadje iz crvenog to nije Sinisa Mali.

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    6. Naravno da ja nisam pisao gornji komentar. Ja se potpišem pod svoje.

      Ja nisam pročito ni jednu knjigu o upravljanju i financiranju avion kompanija? Nazdravlje. To ste sanjali ili ste pričali sa Vidovitim Milanom? Još jednom čestitke.

      U životu ćete stvarno puno postići kada izbacujete teze i argumente o ljudima koje ni najmanje ne poznajete, ne znate njima baš ništa, ali zato bez ikakvih spoznaja izbacujete informacije kao da su činjenice. Bez obzira što su čiste neistine.

      Moja biografija je poznata i javno objavljena. Ljudi mogu vidjeti moja postignuća i uspjehe. Dragi anonimče.

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  8. So we might have a little pan ex-Yu airline if 4K gets its hands on both OU and YM. Finally what was proposed around 6 years ago with the merging of JP, OU and YM will happen.

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    1. And all we needed was for the Germans to come...

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    2. I think such an airline would make sense. And it works with both JP and OU in star Alliance.

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    3. 4K cannot make JP profitable and it is still far from YM and OU

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    4. And then 4K sells the package to Lufthansa and all three are merged with Eurowings ;)

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    5. This idea has been going on for a few years. Obviously some foreigner had to come in to make it happen.

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    6. 4K has done a relatively poor job with Adria and they are such a liability as a company. I hope they are not involved with either airline.

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  9. I would prefer if a non European airline or company bought them. But then they would not be able to get over 49%.

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    1. Let's be honest. Big majority of Croatians would be the happiest if LH showed the interest to buy OU.
      But, it did not happen and probably won't happen at all.

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    2. Why exactly? Only because they are Germans? Not this time, mama.

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    3. Yes, because they are Germans, because they are powerful and rich.
      As it was the case in the past.

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    4. The majority of Croatians would be happy if those who ran the airline were held accountable for their actions, replaced when performance was not up to scratch and replaced by others who have an interesting in seeing the airline grow and show some initiative.

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    5. Q400, applause!

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  10. The current government cares very little about OU. Unless they are pressured to sell it, like Montenegrin government is with Montenegro Airlines, then I doubt we will see any changes in OU's ownership structure any time soon.

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    1. If they keep dragging their feet, potential investors will already invest in airlines around them. Time to get their act together.

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    2. Which airlines around them are getting privatised?

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    3. Alitalia for one.

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    4. Alitalia won't be privatised. This time the new populist government has a plan to make Alitalia a state company. Again.

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    5. There is a lot of interest in investing in Croatia in general and then they come to Croatia see how bad all the red tape is and quickly give up. Huge problem in Croatia in general. From ship building to the airline to other sectors. Sadly the people of Croatia as a result suffer the most.

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    6. Applause 2 Q400. All true. Na dnu EUa.

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  11. I don't see what a potential investor has to gain from buying either one of these airlines.

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    Replies
    1. Agree. Buying such a loss-making airlines, with a couple of planes is totally insane.

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    2. How many planes do each of them own?

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  12. LH/4K makes sense for Montenegro and Croatia.

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    Replies
    1. Makes sense maybe for OU and YM but not for LH and 4K

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    2. Some form of consolidation in the ex-Yu among airlines is necessary.

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  13. I hope both get privatized.

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    Replies
    1. If Milo and company get a good commission ;-)

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  14. If 4K is really interested, then those rumors that LH is behind it may be somewhat true. They'll use 4K to clean all of the airlines and then buy them/join them or something.

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  15. I wish the best of luck to Montenegro Airlines and Croatia Airlines and who knows maybe an exciting future is ahead of them.

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    Replies
    1. Both have tried to get privatized on numerous occasions and 4K could be a solution for them. Would make things interesting in the region.

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  16. Interestingly both airlines are the only ones in the region left operating more or less as legacy carriers.

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    Replies
    1. The lines between legacy and hybrid are very blurred in today's world.

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  17. So we could finally see Croatia Airlines privatization completed in 2019?

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  18. MGX could really use some of those Dashes and OU could really use some of those Embraers.

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    Replies
    1. OU desparately needs year round 100 seaters. The only way out of seasonality for them. During winter Airbuses are sitting on the apron and dashes are too small to earn profit with winter fares.

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  19. Ovo je proces koji traje decenijama bukvalno od osnivanja CTN. LH želi Balkan pod svojim krilom i dobiće ga, a sa druge strane nešto joj se previše i ne žuri jer ima tržišta na kojima se može mnogo više zaraditi nego u siromašnim (spram izvorne EU) ex yu državicama. ADR I CTN su im završavale posao dok nisu postale tipične rasklimatane ex yu kompanije zbog korupcije i ostalih ex yu boljki i sada je vreme sve to pokupiti pospremiti i napraviti neki Eurowings Adria. To će još potrajati jer LH ima i svojih problema ali koliko god ex yu bio siromašan LH ga želi pod kontrolom da im ovaj mali kolačić zvani ex yu ne bi pokupili drugi.

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    Replies
    1. Ono sto 4K/LH ne zele da priznaju je da je BEG/Air Serbia najbolje mesto i nacin za konsolidaciju avijacije na ex yu prostoru. Sporo kapiraju ali ce to biti jasno za 5-10 godina.

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  20. I think the Croatian government should organise an international tender and see who is interested in Croatia Airlines.

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    Replies
    1. Croatian government don't want to sell, they launder and steal a lot of money trough it

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  21. I can see the reaseoning a company would have to acquire both. I actually think that would be Montenegro Airlines's only chance

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    Replies
    1. As it stand now, YM is actually in a better position since talks betweent he government and potential future owner have already taken place. Also Montenegrin government is prepared to write off all debt.

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  22. Any real chance of OU getting sold?

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    Replies
    1. I onky see 4K as a potential buyer. Or some other investment fund at best.

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  23. Lufthansa would be the most logical partner for both.

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    Replies
    1. Haha but LH must first be interested.

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

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  24. How much do both governments plan to sell? 49% or 100%

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

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    2. And nobody seems to be accountable. Ever. Opozicija i novinari spavaju.

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  26. Same story from Croatian government each year. DO SOMETHING!!

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  27. I think the government as an owner is not a good thing. YM and OU definitely need a change so this is a good development.

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

    “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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  29. What about Turkish taking over either of the two?

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    Replies
    1. They said they were not interested in OU.

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  30. The only airline that makes sense is KE, the same they did with OK. This way ZAG can immediately be integrated with the rest of the Korean cities such as CJU and the second Seoul airport, GMP.
    Also red and blue national flag colours unite both Croatia and South Korea.

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    Replies
    1. Yes the colour of the flags is a decisive factor.

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    2. KE last year sold its share in OK to Travel Service. So, the similarity in colours between Czech and South Korean national flag din't help.

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  31. Latest news from Montenegro:Airports goes to Arabs :-(

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