Croatia Airlines makes $8.5 million in Airbus payments


Croatia Airlines has made 8.5 million dollars in advanced payments on its order for four Airbus A320neo aircraft, the company's CEO, Jasmin Bajić, has said. According to Mr Bajić, the aircraft will be delivered in 2022 and 2023, despite their arrival being initially slated a year earlier (2021 and 2022). The CEO noted, "These A320neos are part of a package that has to be resolved with a future strategic partner". He dismissed claims the airline is facing bankruptcy following a loss of over eleven million euros last year. "From time to time this story about bankruptcy reapers. Croatia Airlines is not on the verge of bankruptcy but the company has to create conditions for its future based on new foundations. We are undercapitalised and that is our main problem. But we continue to operate, even in winter when we run fifty to sixty flights per day and 110 daily flights in summer".

The CEO blamed 2018's poor results on threats of industrial action and noted that the company did not sell any of its assets, which wasn't the case in previous years when Croatia Airlines posted an annual profit. Speaking at the European Regions Airline Association conference in Prague, Mr Bajić said the Croatian government resumed the company's privatisation process last month. "The emphasis is on finding a partner that will invest in fleet and network development. The government wants an investor that will help grow the airline. After more than two years of negotiations, Croatia Airlines has signed a five-year labour agreement with its workforce earlier this year. This should give stability in the medium term as previous labour agreements lasted for two years. Such an agreement may make the airline more attractive to investors".

The Croatian carrier successfully converted a 2008 order for four A319s to the A320neos four years ago. Although the new aircraft were originally to be delivered by the end of 2013, their arrival was put on hold and the deal was renegotiated. The carrier put off the delivery of the jets due to the company's financial situation. Neither Airbus nor Croatia Airlines have disclosed the exact cost of the aircraft, however, the four jets were valued at 424.8 million US dollars at list price at the time. On the other hand, the carrier's former CEO, Krešimir Kučko, said the deal is worth "almost the same" as the one agreed on in 2008. Mr Bajić noted that the company is need of some 33 million euros in order for it to launch a new investment cycle and expand its operations.




Comments

  1. A320neo is suited for Croatia Airlines and will really help during the summer in terms of capacity.

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    Replies
    1. But what will they do during the winter? Their average annual LF is currently 70%.

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    2. They need more 100 seater jets not A320neos.

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    3. The neos have to replace current A319/A320s which are getting quite old.

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    4. But these 4 neos can't replace the entire Airbus fleet. Croatia Airlines has 6 Airbuses.

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    5. Ideally they should get these 4 neos and 2 100-seaters.

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    6. 2 A220s would be perfect.

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    7. They should place two in both Split and Dubrovnik and operate flights with full capacity from March to October.

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    8. OU needs a A330 for winter, exotic charters and deploying in the summer on busy routes.

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    9. Completely agree. It was a mistake for OU not to get a long haul plane and fly to to several markets which sees a lot of tourists to Croatia like US, Canada, Asian countries. They could have done really well and feed their domestic flights as well.

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    10. There were plans in the 90s to get DC10s from Lufthansa but it never materialized.

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    11. fleet complexity is what small airlines just spent the last 10 years moving away from.

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    12. Several markets with one long haul aircraft? Single aircraft LH operations are a money black hole, especially when you have a bigger tech issue with the aircraft that takes a week to be sorted out.

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    13. Many people around here would claim that lh operations with one plain are sustainable. Like in JU case :)

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  2. What does this mean? Is there some issue with this order?

    "These A320neos are part of a package that has to be resolved with a future strategic partner"

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    Replies
    1. A future partner will have to finance the deal. OU has enough for the deposit payment which they have made but not to finance the whole thing.

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    2. Let's just hope they find someone this time around.

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    3. Unless its some business consortium, turnaround "experts" or financial fund I don't see a viable partner.

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    4. @9.06 they could always do sale and leasebacks for these aircraft.

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    5. That would actually be a smart thing to do if they can't find the cash for these planes.

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    6. if the contract with airbus would allow it. sometimes there is such a clause that they cannot do it for let say 5y after the aircraft was delivered

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    7. Btw, any news about privatization of OU?

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  3. Why arrival delayed by a year?

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    Replies
    1. Because they don't have money to pay them, so they hope that in between they will find a partner. Komedija.

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    2. Planes were initially supposed to be delivered in 2012 so I think the delay is a touch more than a year.

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    3. Yes that is true Q400 but when they renegotiated the deal they said delivery of first two planes would be in 2021 and other two in 2022. Now it has been moved to 2022 and 2023.

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  4. You people are really out of your mind !!! What a fuck next payment for Neos ?!?
    Just look at the list of bankcrupted in second half of 2018 and first quarter of 2019:

    Wow Airlines (Island)
    Primera Air (Denmark)
    Germania (Germany)
    Flybmi (UK)
    Small Planet Airlines (Lithuania)
    Saratov Airlines (Russia)
    Skywork Airlines (Switzerland)
    VLM Airlines
    FlyViking (Norway)
    Nextjet (Sweden)
    Wataniya Airways (Kuwait)
    OneJet (US)

    It says all !

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    Replies
    1. What does it say? What does it have to do with OU?

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    2. That list says to me not to trust on low costers. For economy and country's infrastructure it is important to rely on carriers like OU and JP. Not the low costers that come and go leaving a damage to the airports, though it would satisfy some peanut hunters that want to save few euros on a small part of their total flights.

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    3. +1 last anon

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    4. Well, LCCs and a majority of the airlines in the West operate on market economy principles.

      "Legacy carriers" in the Balkans operate from one goverment subsidy to the next government bailout. Very easy to be loyal to the home airports, when you don't have to worry making ends meet, let alone making profits and paying dividends to shareholders, like a proper company.

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    5. Language please! Ali hvala za informaciju o WOW. Nisam znao da su propali

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    6. @anon 09.49: a kako misliš da posluju LO, AZ, Air Baltic i još neki. Koliko je njemačka vlada upumpala u AB?

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  5. I'm interested to see how their fleet will develop in the next few years. The neos will be a great addition.

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    1. Would be nice if they made the CRJ1000s a permanent fixture.

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    2. Perhaps they will
      https://www.exyuaviation.com/2019/03/croatia-airlines-schedules-crj1000-in.html

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    3. And if they do it will be a one off because of EU presidency.

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  6. Happy that new aircraft are coming.

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  7. Bravo Hrvatska!

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  8. I was always wondering how they would finance these planes. Now I understand why the government has suddenly decided to sell them after they said they wouldn't.

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  9. This order is a financial burden for OU

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    Replies
    1. +1 and a big one. Also a burden for any potential partner/investor.

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  10. Hope they will be able to find a strategic partner. I don't know how else they will finance these planes otherwise. Banks don't want to issue OU loans that easily anymore.

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  11. OU will be the first airline from the Balkans to operate the NEOs.

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    Replies
    1. When does Aegean get its neos?

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    2. Next year.

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    3. So Aegean will be the first Balkan airline to operate neos. Not to mention that Turkish Airlines already operates them.

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    4. Well if you consider Greece not part of the Balkans in a cultural or traditional way and Turkey as an Asian country then yes, OU will be the first Balkan Airline to operate the NEO!

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    5. If Greece is not on the Balkan Peninsula, then who is??? :D

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  12. Anyone know which engines they chose?

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  13. What about regional jets? They can't wet lease CRJ1000s forever.

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    Replies
    1. They can if they want. One CRJ1000 will probably be leased during 2019/2020 winter too.

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  14. You have to be crazy to buy new aircraft knowing the financial status of the company. Better to lease out older planes.

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    Replies
    1. Exactly. New aircraft are the least necessary thing that OU needs at the moment. These planes are too expensive.

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    2. And fly with what, by that time 25 year old planes?

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    3. That's why they won't be buying them but instead leasing them.

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  15. Does anyone actually know what will be the capacity of these neo jets?

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    Replies
    1. Their layout is all economy so I assume 189.

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  16. Is that included in las year's 11mil loss, or this is a new debt?

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  17. They seem so certain that OU will find a partner. I don't know what they are basing their optimism on?

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    Replies
    1. Me neither considering two past attempts have failed and the airline was in a better position back then.

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    2. They just do it to keep the EU regulators happy.

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  18. For all the people saying they don't need these neos, I will just remind you that the current Airbuses are getting old and will need to be replaced.

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    Replies
    1. Agree. Happy that new aircraft are coming.

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    2. When your 30-year old car gets old, it doesn't mean you have to buy a brand new Mercedes. If you were driving today with a 30-year old car, you could probably do couple of years with a 10-year old one as well.

      For a fraction of a cost.

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    3. Generally true. But there is "slightly" higher financial expense in maintenance of the planes compared to the cars. And for the delays and irregularities as well.

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    4. There is almost negligible deference between a brand new and 10 years old aircraft in terms of dispatch reliability, if properly maintained. But the lease is probably 30% less.

      20 years and older is where it usually starts falling apart.

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  19. Best of luck OU

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  20. They need is more CRJ planes if you ask me. Lower capacity plus cheaper.

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    Replies
    1. Again with what money? As you can see they don't have the cash for these Airbuses let alone extra planes.

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    2. Some of them will soon be parked just a quick hop to the west of Zagreb.

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  21. It will be interesting to see their Q1 financial report and how they started the year off.

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    Replies
    1. I doubt it's better than last year.

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  22. Congrats OU and kudos for the hard efforts.

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  23. OU definitely needs a change so this is a good development.

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  24. Croatia Airlines should focus their business on the coast (Split and Dubrovnik) and not Zagreb. Zagreb is currently in the process of stagnation and that's because Zagreb is not a really good place for transit. They are focusing their flights to big western airports that already have connection to other big western cities.

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    Replies
    1. The problem is that there is no market on the coast in the winter time.

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    2. I agree ZAG is not good place for transit, but it's only because of Croatia Airlines which still haven't used the opportunity to make it its real hub. To grow and earn money, instead shrinking or stagnating and looking for governments support. Let's hope they find new investor and make ZAG a place which will be desirable transit point


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  25. How many planes does Croatia Airlines own?

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    Replies
    1. 5 airbuses. 4 A319s and 1 A320.

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    2. And also 7 engines. 6 for Airbuses and 1 for Q400.

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  26. They must act on doing something with their fleet. It is becoming older and older. The Airbus fleet is now 20 yrs old. 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.

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  27. This Airbus order which probably costs over 300 million euros is the worst for attracting any sort of potential investor.

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  28. Now that airbus has taken over the CS project i hope CA will re-edit their order in more economical and efficient cs planes

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  29. If they are unable to find a privatization partner, I wouldn't be surprised if Croatia Airlines goes down Adria's path and gets Sukhois which are cheap at the moment.

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    Replies
    1. And you think Adria is getting these Sukhois for real?

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    2. The package currently being offered by Sukhoi to all airlines are too hard to refuse., especially our cash strapped ones in ex-Yu. We will see what happens here.

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    3. Too hard to refuse, that's why everybody is taking them, right?

      And Interjet has grounded 15 out of 22 of SSJ100 aircraft and are desperately trying to get out of contract with Sukhoi.

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  30. I think OU will have the Airbuses even before A3!

    https://www.airbus.com/newsroom/press-releases/en/2018/06/aegean-airlines-firms-up-order-for-30-a320neo-family-aircraft-.html

    That said, OU will be the second airline in Eastern Europe, after W6 to receive the Neo's.
    With no doubt, the airline's image to the world will be much better.
    Bravo Hrvatska!

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    Replies
    1. From the article, the CEO of Croatia Airlines seems to say that this neo order depends on on a future strategic partner.

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    2. A3 is getting theirs next year.
      Somehow I fail to see how 2022 is before 2020 ;)

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  31. Instead of neos they should have picked the CRJ1000. Good plane, good economics and passenger friendly.

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    Replies
    1. It is also expensive.

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    2. And this neo deal is not?

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    3. Everything is expensive! Keep thinking like this you will get nowhere. Key is trying to make it work. Very hard to do but if others can...., problem with airlines like OU is that they are badly mismanaged and don’t seem to know how to for example reduce the cost of fuel like other airlines do.

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  32. And what happens with this order if they don't find a strategic partner. I doubt they would be able to cancel it.

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    Replies
    1. Government will probably cover the cost.

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    2. Well they have another five slots they can sell :)

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    3. The previous slot money hasn't gone into some major investments but covering the everyday business. Unfortunately.

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    4. Well like JU they will get the money back from Airbus.

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    5. That's not how it works at all. You pay penalties if you cancel an order. JU got its money back because Etihad negotiated it somehow and because the deposit is from 21 years ago.

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  33. No matter what people say I'm glad OU is finally waking up and things are moving in the right direction :)

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  34. OU should look at changing the order to 6 A220’s.

    Operate high capacity (older) A320’s in the summer and either lease out or park them in the winter.

    The right fleet and they could do wonders!

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  35. I could not resist commenting. Well written!

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  36. I can imagine Kucko and Dane sitting together, having a drink and laughing at the messes they left behind. Both of them are safe now, one is CEO at Gulf Air while the other is CCO in Saudia.

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    Replies
    1. Očitno nešto znaju i mogu, da su se tamo održali. Ili misliš da šejkovi samo ovako dijele lovu Hrvatima?

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