Croatia Airlines posts €11 million loss


Croatia Airlines registered a net loss of eleven million euros in 2018, ending its run of five consecutive years in the black. It marks the carrier's worst financial performance since 2012. The company blamed its results on higher fuel prices, which were up 29% year-on-year, as well as the announced industrial action by its staff over the summer, which did not materialise following a court injunction. Revenue amounted to 229 million euros, while expenditure was up 2.9%, totalling 239 million euros. It spent most on flight operations, primarily due to the higher cost of fuel, followed by aircraft leasing, as a result of the wet-lease for two Air Nostrum Bombardier CRJ1000 jets, as well as a number of short-term leases due to the protracted time it took to service the airline's aircraft. The carrier also increased its expenditure on maintenance by 5.2%, while revenue from cargo declined.

Croatia Airlines handled a record 2.168.863 passengers during the year, an increase of 2%. Of those, 1.642.285 travellers were handled on international flights, up 3% on 2017, while 526.578 travelled on domestic services, which is on par with figures achieved the year before. The company operated 28.003 flights during 2018, which was up 1.9% compared to the year before. The average cabin load factor, a measure of seat capacity utilisation, stood at 73.5%, down from 74.4% in 2017. Passenger carrying capacity, measured in Available Seat Kilometres (ASKs), amounted to 2.3 billion, up 3.4% year-on-year. The airline’s cargo operations recorded a decline of 0.4%, with 2.264 tonnes of mail and freight uplifted in 2018, compared to 2.273 tonnes the year before.

Croatia Airlines' market share on its home turf averaged 25% during the year, down from 38% in 2017, although it grew up to 56% over the winter months (January). Its lowest market share was recorded in July when it averaged just 16%, marking its smallest monthly share on record and down 1% on the year before. "The high level of seasonality on the Croatian aviation market continues to pose a major problem for the company and its business. During the summer season, there are almost 100 airlines operating flights to Croatia, with more than a half of all passengers carried during the third quarter, while competition is minimal in winter. Croatia Airlines maintains flights throughout the entire year, providing Croatian airports with year-round connectivity", the carrier said.

In May 2018 Croatia Airlines' CEO, Jasmin Bajić, said he anticipated for the carrier to record an annual profit of one million euros, however, this did not materialise. Last week, Mr Bajić noted the airline was in need of 33 million euros in order to launch a new investment cycle and better compete against its rivals. The comments came after the Croatian government set up a multi-member, inter-agency committee whose main task will be to seek out potential investors for Croatia Airlines. Mr Bajić noted the company would not go bankrupt if it fails to secure a new partner but warned it would likely downsize its operations.




Comments

  1. I wasn't expecting the loss to be this big. And the CEO said the other day he didn't know what the result was...

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    1. The business still isn't managed well and the restructuring from a few years ago whose architect was Kresimir Kucko, today's CEO of Gulf Air, was a complete failure.

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    2. The CEO also said that he can guarantee that OU will be sold. Since he predicted 1 million euro profit in 2018, I wouldn't take him seriously.

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    3. With such results who would want to buy them? Unruly employees, ownership of ancient planes, shrinking market share, growing losses and debt...

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    4. Etihad comes to mind, but they have learnt their lessons.

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    5. Etihad is out of the picture.

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    6. They would be lucky to have Etihad, they maybe didn't fully fix JU but at least they made it much more competitive and they gave them a chance to have a future. OU needs the same.

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    7. They would, I just said that the only company willing to take an airline in such as state used to be Etihad. Now, I don't who could take them.

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    8. Even for LH Group it would be easier to let them die and only then to replace them with EW. I doubt they would keep the brand anyway, look what they are doing to SN.

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    9. That was plan for NIKI also but now it is 100% owned by Ryanair with huge amount of planes in Vienna and other LH bases.

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    10. Exactly they wanted to shut them down but in the end they opened Padora's box with Niki. Makes me happy.

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  2. Two things that stand out for me is that the LF went down and that the market share went down significantly.

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    1. Yes the share went down because in July they had disposed off half of their fleet.

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  3. What was the result last year?

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    1. +3,6 million.

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    2. Don't forget they sold Heathrow slots in 2017. And I'm assuming 9.04 you meant the result for 2017 :)

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  4. Pity that most other EX-YU airlines do not publish such detailed infos at all.

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    1. All of them except Montenegro Airlines published detailed results last year with LFs, ASKs, revenue, expenditure... pretty much all the information you have here. They just do it later on in the year.

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    2. Good cooking takes time.
      That is why most ExYu airline publish their annual results 8-9 months later.
      Compare that with the rest of European airlines...

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    3. Actually you are not correct. They submit their results to the business registry the same time other airlines publish their results. The registry then publishes them when the results are reviewed. It's the same in Slovenia and Serbia.

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    4. https://www.exyuaviation.com/2017/08/air-serbia-posts-2016-profit.html

      How is this DETAILED? where is the info about Revenues, SLF, expenditure etc? It just says one thing: they made a profit/loss. For Air Serbia for instance there is NO other info.

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    5. Because that was based on a press release.

      Here you go, detailed results from last year
      https://www.exyuaviation.com/2018/07/air-serbia-posts-record-2017-profit.html

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    6. ^There was a reason he skipped last year. It didn't fit his argument.

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  5. Terrible result.

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  6. Boo freaking hoo...

    OU is a dead man walking. Who cares if their LF is shrinking, why are they not fighting more for local market? Why is Aegean flying German tourists in winter? Why didn't OU snatch that deal? They are not creative at all, for a few summers they keep on copy pasting their timetable with barely any new additions while everyone around them grows and expands, even JU!

    Why don't they try to fly the whole year to Prague? What about Bucharest? Nothing. Nothing new, no risks but they don't miss a single opportunity to bitch and complain about their bad results.

    Even if they go bankrupt nothing will change. ZAIC will just make a deal with Eurowings and we will be back to where we are today, maybe it will be even worse as I doubt EW would have flights to SKP or SJJ.

    Idiots.

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    1. I think Tirana could be profitable destination for OU. I don't understand why they don't fly already to Tirana.

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    2. Tirana or even Athens. I don't know why they don't operate night flights like JU. They could get a lot of transfers.

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    3. OU flies to Athens... via Dubrovnik.

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    4. haha yes but that route is mostly for DBV passengers. They need an ATH flight a la SKP and SJJ.

      ZAG-ATH 21.10-00.10
      ATH-ZAG 06.00-07.00

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    5. Now that A3 is flying to ZAG almost 11 months a year and during high season to DBV and SPU they should code share. They could also codeshare on their network to the Middle East, Cyprus, Malta etc.etc.
      And also they should do that with the rest of their Star Alliance partners.

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    6. I am still puzzled with the evident lack of strategy in Croatia Airlines when they see what is going on around them.

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    7. Maybe A3 doesn't want to code-share with them? Odd that they have a better relationship with JU than OU, it's fellow Star Alliance carrier.

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  7. Why is cargo down for second year in a row? Is there an explanation for this?

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    1. And interestingly Zagreb Airport has never handled more cargo.

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    2. I think cargo growth at MZLZ is because of EK.

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    3. And Korean probably.

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  8. Losses increase but government extends CEOs term. No logic.

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  9. As predicted, unfortunately the summer wasn't enough to fix 2018.

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    1. And that's an issue. Usually summers were enough to cover winter losses. Now they can't count on that anymore.

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  10. Looking at these results, thank goodness there wasn't that strike. It really would have destroyed the company. The court made the right decision.

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  11. And this is the company that is buying brand new A320 NEOs?

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    1. That's why they constantly say that OU needs a partner "to modernize fleet". I.e to pay for A320neo order.

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    2. And what happens if they don't find a partner? Will this order be cancelled?

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    3. I still don't understand how Croatia Airlines is financing the arrival of the NEO planes? Did they take out a loan or what? Anyone know?

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    4. They have only made the initial payments, which are peanuts. Most probably the contract will be sold to a leasing company and the aircrafts will be leased.

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  12. Except for the actual passenger numbers, those results are not looking too good.

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  13. krešimir is reading OU annual report from his 500m2 CEO office in bahrain and cannot believe what a amateur bajić is.

    but seriously, this is a bad performance. i always hoped that at least OU can score positive out of all ex-yu crowd, but this is disappointing.

    luckily they still have a positive cash flow, so they are not i need for additional government money like others.

    also, this is a great argument for negotiations with the unions. OU just cannot afford higher salaries.

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    1. Well Kucko sold the most valuable things. Not much left for Jasmin!

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    2. He can still sell the remaining LHR slots.

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    3. Positive cash flows? The other week they said they need €33 million to survive. Cash flows are there but are not enough to keep them alive for much longer.

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    4. @9.30 he wouldn't do it now that they are trying to sell the airline. Those slots are the only thing of value.

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    5. They were trying to sell the airline while Kucko was there as well.

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    6. @9:27 true, but i was also thinking about predicting end-year results in may and escalating strikes

      @9:31 he said they need 31mil to expand, not survive

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    7. And you believe him? 11 million loss last year, 9.5 the year before and we are already past 20 million in losses. So what do you think, is it for survival or for expansion?

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    8. I really can't take Bajic seriously.

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    9. @9:52 if you look at their annual report '17 (i didn't found '18 yet) amortization stands close to 13mil€, which is higher then profit loss. so yeah, it seems that they are able to create money from operations. their cashflow is hard to read for me due to sale of assets and engine overhauls.

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    10. That's exactly my point, slot sale is considered as cash flow as it is listed as revenue.

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  14. Let's just hope there isn't any strike this summer.

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    1. There won't be. It was reported in an article on here last week that they finally signed a new collective agreement with staff after 2 years of talks.

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    2. Good. Well that's something at least.

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  15. The worst thing is, I don't see any possibility that the results will be much better in 2019 but let's wait and see.

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    Replies
    1. Revenue might grow a bit as they extended some of their seasonal routes but that's a drop in the ocean of despair.

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  16. It's a shame that this airline is in the situation it is in

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    Replies
    1. A lot of it has to do with pure mismanagement.

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  17. Except for passenger numbers, there isn't a single positive metric in this report. Sad.

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  18. 2018 was a disaster for them. Let's hope LO takes over.

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    1. I am rooting for Garuda.

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    2. Ok, my 5 cents : Very bad idea for just one company to buy part of OU - no matter would it be EU company (let's presume LO) with over 50% share or non-EU (let's presume GA) with under 50% share. In my opinion, ideal result would be to try to find FOUR foreign investors, 2 EU and 2 non-EU. Let me play a bit and suggest Garuda, THY, Aegean and LOT. Government of Croatia keeps 20% shares, value equaling existing assets. All other 4 investors add 20% value/shares each, in form of cash money for new Airbus fleet and new regional fleet and stabilization of operations/losses cover, or physically by adding their part of existing, non-utilized long-haul fleet, or regional fleet, slots, or whatever else. Each partner gives one member of Supervisory board. Supervisory board selects professional independent management. All major decisions brought by 4:1 vote, less important decisions 3:2 vote. Success guaranteed. Of course what I wrote is not "written in the stone", maybe with different companies, less or more share holders, smaller or bigger shares, but generally I think this is the only form which could function for OU to stay alive and progress, because situation as it is now is absolutely unacceptable any more for anyone, except "Misetic, Bajic & uhljebi"

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    3. It only makes sense for several companies to share ownership if it's a major business like Alitalia. However why would Aegean and/or Lot agree to get a small porting of a small struggling carrier and on top of that not to have a controlling stake?

      I think the only way forward is to find someone with deep enough pockets to inject a lot of money into OU so as to restart their business model.

      Maybe they can sell it to FR so as to piss off LH Group... as if Niki wasn't enough. ;)

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    4. @Nemjee
      1.Major business like Alitalia make much bigger losses and it's more difficult to make it profitable than small business like OU. 2.Italian market is very well developed and therefore with less potential compared to croatian. 3. Controlling 80% with 4 persons or 20% with 1 person is irrelevant if everyone is working to aim the same goal. 4. OU shouldn't restart their business model because they don't have business model at all, and it should be changed. 5. It's easier to find good companies with less deep pockets than not so good companies with deep pockets, which we saw in the region recently. Appreciate your reply to my post but I don't agree at all with what you wrote. Cheers!

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    5. All I am saying is that OU doesn't have the time needed to look for several investors, it needs a quick solution to its problems. Even if they find four investors who are willing to invest, will their visions and expectations overlap? What happens if they don't? How many months will OU waste until they start restructuring? There are way too many variables in that scenario and a lot of potential complications.
      How much longer can they last like this? They are running out of things to sell and winter 2019 is coming when God knows what will happen.

      Sure, we can discuss many different potential scenarios until tomorrow but realistically speaking what are the airline's choices and potential outcomes? Like you said they have no strategy and no vision while foreign carriers are eating away their market.

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  19. Load factor was the metric that constantly improved at OU but now they have gone down. What happened?

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    1. The CRJ1000 was leased for a longer period of time?

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    2. Or they thought they made a good deal with Mostar by receiving half million euro subsidy but those flights have around 20% LF.

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  20. Croatian tourism industry is constantly growing and has a lot of potential but OU's results are getting worse an worse.

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    Replies
    1. Because they are poorly managed and unable to compete against others.

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    2. IMHO the tourism factor makes it a must for OU to have its leisure branch. Something similar to Aviolet: a single-class, tightly packed cabin to maximize the number of seats. Those birds would then be used to fly as many tourists as possible to Croatia during the season. When the season ends, OU could wet lease them to Indonesia or some similar market. Or they could simply take wet lease from someone else during the season. OU can't survive on Croatian diaspora, they will never survive the battle for this market with lowcosters and Star Alliance. They can't count on transfer passengers either. They simply need to grab tourists somehow, there is no other prospect for them.

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    3. Yes, because it is super easy for nationalised airlines to do seasonal ACMI. Look at how Air Serbia is wet leasing out A319 for 2nd winter in a row.

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    4. There is so much they could have done but haven't. The Airbus fleet they own should have long ago been converted to high density used solely for the summer season and simply parked or as you suggested leased out during the winter. Get creative, use them for winter charters from anywhere to anywhere in Europe or the surrounding region.

      They should have had a renewed 100 seat fleet by now for year round use. Big mess now, hopeless management which just seem and look lazy!!. They all need to go but the saddest part about all this.... nothing will happen.

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  21. Such a disappointment.

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  22. It will be interesting to see Q1 results for this year and which direction the company is going in this year.

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  23. I'm lost with OU.

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  24. Good luck in 2019 OU. You will need it.

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  25. Croatia Airlines should improve connectivity in ZAG, provide reasonable prices. They should also have two different strategies for summer and winter due to high seasonality of their market and they must take good care of the costs.

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  26. Sell the airline ASAP!

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    1. No one is interested.

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    2. Not the way to run a business. As an important airline in the region, it can't afford to go belly-up. But the constant calls for privatisation are useless if it can't get its house in order ASAP.

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    3. The fact that they are considering selling the airline bit by bit is not encouraging,

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  27. Passenger numbers yes congratulations
    Financial figures very poor.
    So conclusion BAD MANAGEMENT because at the end what counts is the financial figures .

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    Replies
    1. Agree. Quite simply, you need people with a business sense and airline expertise to run a profitable and exciting operation. You don't put in political puppets...

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    2. They need people with vision and ambition. This lot, proved again and again to be full of excuses and beyond hopeless!

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  28. So many of the world's airlines are posting financial losses so the figures mentioned aren't surprising.

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    Replies
    1. The smaller airlines will never be profitable! OU should be expanding or merging with another carrier, as this will allow resources to be shared and lower costs. I think the Croatian government should sell 100 per cent of Ou to the likes of Lufthansa!

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  29. The airline's whole strategy is WRONG - it's no longer 1995 in a newly-independent Croatia! You don't aim to be a business-focused airline in a country where tourism is one of your biggest markets. You don't give your competitors free run over your airports (just look at OUs presence on the coast). You aim to provide seats into markets that there is a demand at affordable, competitive yet profitable prices, and you build on your reputation.

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  30. Croatia Airlines, as I've been saying for years on here - has out of control costs and that's why it is losing so much money, no other reason.

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  31. Time to get the government out of Croatia Airlines, if it fails then some private company will take its place. People flying to the Croatian coast will take other airlines willing to take them there. It doesn't matter to the airport and tourism business who brings them customers as long as they get there.

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    1. Hmm what do you think would happen if Croatia Airlines doesn't make it? Would we would see a new airline re-established?

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    2. I doubt the state would set up any new airline. Others would simply take OU's place. That said, government will never allow OU to go belly up. It would be political suicide.

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  32. How many employees does Croatia Airlines have?

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  33. Bravo Hrvatska!

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    Replies
    1. Bravo Bajic. Bravo Plenkovic koji nisi htio cut da on nije za ovu poziciju

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    2. Pa majstore, sto se vi ne javite sa nekim konkretnim planom?

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  34. Time and time again OU management and proven to be useless, lazy, incompetent and just plane hopeless. saddest part is that nothing will happen and what is more sad is that OU is basically a reflection of the entire country. So much wasted potential.

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  35. And font forget that generated minus is probably even higher but partially covered by PSO, co marketing activities, tourist incentives and similar...

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    1. A lot of airlines (probably most) have access to some type of stimulus so it really doesn’t matter but they also can’t use higher fuel price excuse as this is an issue for all airlines too. Some airlines are very good at minimising fuel cost by buying future contracts when the price is lower for example. I wonder if OU or other airlines in the region have people who specialise in this like other airlines do?

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    2. There is no doubt that every airline in region gets some kind of more or less creative encouragement from government. I mention this as benchmark of how big in total is this hole we are talking about in OU, didn't want to make competition between airlines.
      Potential partner will for sure look for this total number in minus and use it in negotiations.

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  36. font=don't :)

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  37. There is no room for three airlines in this small region. Two weakest airlines should drop off or get united under the leadership of the strongest one. How things have changed over the past seven years:

    https://youtu.be/4TNVU-gaxng?t=42

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  38. Zurich-Zagreb
    1.3. u 19:10
    Croatia Q400

    71/77 = 93,4%
    Business 7/10 = 70%
    Ekonomska 63/66 = 95.5%

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  39. This is so ludicros. They have completly wrong business strategy. They should downsize in the winter time and fly like crazy from the coast in the summer (just like every other airline does). Let's face it Zagreb will never become a Hub and they need to figure it out. The reason why they are loosing so much market share in Summer is because they offer an uncompetitive product. Where they fly to coastline destinations with a connection in Zagreb. Lets face it NO ONE wants that!!!!! Such a bad management which concentrates on Zagreb while the coast is burning for planes, and in the meantime costal airports - especially Split and Dubrovnik already cought up with Zagrebs (PAX terms).

    ReplyDelete

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