Croatia Airlines plans modest growth prior to sale


Croatia Airlines expects to see a 5% increase in passenger numbers by the end of the year and is holding off on major changes to its route network prior to the conclusion of its ongoing privatisation process. The carrier plans to add an additional weekly flight to Brussels this coming winter season, for a total of twelve per week, and has partially upgraded its seasonal Dublin service, which will run until late January. On the other hand, flights to Lisbon, which were maintained for part of the winter last year, will end in late October and resume during the 2020 summer season. At this point, the airline has dropped plans to extend the wet-lease for one of Air Nostrum's Bombardier CRJ1000 jets into the winter.

This summer, Croatia Airlines accounts for just under half of all scheduled seat capacity in Zagreb, well ahead of its nearest rival, fellow Star Alliance member Lufthansa, which, combined with its low cost subsidiary Eurowings, accounts for around 12% of the airport’s capacity. After launching four new international routes from Zagreb in 2016 and 2017, and a further two in 2018, Croatia Airlines has not added new destinations to its network this year. Conversely, it has not dropped any routes either. During the peak of the summer season, in August, the carrier will have the most Available Seat Kilometres (ASK) on flights from Zagreb to Frankfurt, followed by Zagreb to Dubrovnik, Zagreb to Lisbon, Zagreb to Amsterdam, Dubrovnik to Frankfurt, Zagreb to Tel Aviv, Zagreb to Paris, Zagreb to Brussels, Split to Frankfurt, Dubrovnik to Paris, Zagreb to Split, Zagreb to Skopje and from Zagreb to Copenhagen.

Croatia Airlines' CEO, Jasmin Bajić, recently said the carrier requires some 33 million euros in order to launch a new investment cycle which would include new aircraft and routes, in order to make it more competitive against its rivals. It is hoped a new strategic partner will be able to provide the necessary funds. The carrier recently selected a consortium made of the Privredna banka Zagreb and Germany's DVB Bank to act as its privatisation advisors. During the ongoing initial phase of their work, the advisors are analysing Croatia Airlines' business and results. The second phase will involve identifying the best privatisation model, while the third will include the transaction itself. The Croatian Minister for Sea, Transport and Infrastructure, Oleg Butković, said, "The company's privatisation process should be completed by the end of the year, and I believe we will deliver within the set timeframe".

Croatia Airlines will mark its thirtieth anniversary on August 20.




Comments

  1. It seems that this is the last possible moment to sell the company.

    ReplyDelete
  2. Even Dublin is no longer year-round. Flights stop on 26 January and do not resume until 9 April.

    ReplyDelete
    Replies
    1. What a shame. Wasn't the expectation that there will be more flights because of the EU presidency?

      Delete
    2. OU still can't find a way to get around seasonality. This is killing them.

      Delete
    3. There were many expectations, but obviously with no real reason

      Delete
    4. Anon 09:07: Natural selection will eliminate the fools eventually. Complaining about seasonality problems and sparing the seat capacity to coastal cities doesn't make sense. It's like complaining about marriage problems while having a mistress everyone knows.

      Delete
  3. Are there still companies interested in buying them?

    ReplyDelete
    Replies
    1. So then how can they expect to complete the privatization process by the end of the year without a buyer/strategic partner?

      Delete
  4. I think it will be very difficult to find someone to pump cash into this airline. Hope for the best though.

    ReplyDelete
    Replies
    1. Well in the end the state can do it- look at Air Serbia or Alitalia. They are the owner anyways.

      Delete
    2. The state can't do anything until 2022. They gave money to OU in 2012 and are barred from doing it for 10 years.

      Delete
  5. So from all the predictions that they will increase ops. in winter they basically just added 1 flight to Brussels. Dublin will end in January, Lisbon is ending in October, no CRJ1000 will be leased...

    ReplyDelete
    Replies
    1. So is it than decrease comparing with last winter?

      Delete
    2. i think they are scared and want to play it safe

      Delete
    3. I think they did have plans to grow in winter but they probably saw the way the finances were heading this year and retreated on those.

      Delete
    4. Not the way to run a business. Yes, they need to get back to profitability. But not using this approach to shrink and stagnate.

      Delete
    5. Yes but playing it safe is leading them deeper into trouble so something has to change.

      Delete
    6. @9.11
      No, there will be the extra flight to Brussels.

      Delete
    7. Wow a whole frequency increase compared to last year! Impressive.

      Delete
    8. I would be surprised if a cost controller endorses a growth plan.

      Delete
  6. So what do they do with the extra aircraft in winter? Park them?

    ReplyDelete
  7. Odlicna vijest.
    S obzirom kako im je svaki putnik gubitak, manje putnika znaci manji gubitci 😉

    ReplyDelete
  8. No money for new routes or frequency increases but enough money to introduce albino livery. Ok.

    ReplyDelete
    Replies
    1. Albino livery was introduced to reduce costs per aircraft.

      Delete
    2. Oh yes the few blue lines they removed really helped them reduce cost. ;)

      Delete
    3. There was a calculation on how much they will save per aircraft on an annual level. It's not small.

      Delete
    4. So why not make it all white with a small sticker? Like that they will save the most.

      Delete
    5. I don't think it's reached that point yet where they have to do that. If I remember correctly, JatAirways did that on all its aircraft for several years.

      Delete
    6. Let's see if they manage to find a buyer like Jat did.

      Delete
  9. Why do they need a privatization consultant? They already got one a few years ago. Why do they need a new one to tell them the same thing? They shiuld save their money.

    ReplyDelete
    Replies
    1. The conditions at the company have changed.

      Delete
    2. Actually more than one. There is always money to give to friends and friends of friends.

      Delete
  10. I still don't get the A320neo order. Who is going to pay for it if they don't find a partner?

    ReplyDelete
    Replies
    1. They are already paying for them with loans! Paying for planes they don't have...., scandalous!!!! For this alone all the senior management needs to be replaced and investigated.

      Also agree, wrong plane for them. They should see if they can change the order to at least 6 A220's.

      Delete
  11. Anyone know where OU is in negotiations with Garuda? They just suspended London and are reducing AMS. Could it be a sign of their cooperation with OU? They could funnel passengers through ZAG. Maybe that's why OU is increasing BRU?

    ReplyDelete
    Replies
    1. No, it's a sign that Garuda is a mess. They certainly won'y be buying any airline.

      Delete
    2. Yes but OU makes sense if you think about it, it gives them access to Europe at a much cheaper price.

      Delete
    3. Are you serious?

      Delete
    4. Why not? Take a moment to think about it and it will make absolute sense. Two struggling airline can work together to survive. Garuda can also tap into the Aussie market which is booming in Croatia.

      Delete
    5. If they were interested they would have bid for OU last time around when they first expressed interest.

      Delete
  12. What value is there left in OU? A few LHR slots and a few old Airbus aircraft they own. Not much really.

    ReplyDelete
  13. Is it realistic to expect that they can be privatized in next 5 months?

    ReplyDelete
    Replies
    1. I don't think so, but Minister believes it.

      Delete
    2. Only if someone shady buys them like 4K- then anything is possible.

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

      Delete
    4. In the end nothing will happen

      Delete
    5. What will happen if this privatization attempt is unsuccessful?

      Delete
    6. Nothing, the company will sink deeper and deeper until there is no way out. Even if they wait for 2022 to get more subsidies the amount will be so high that the government won't go for it. Or they might give them some funds which will be like a drop in the ocean.

      Delete
    7. Well the CEO said in the text what will happen. Stagnation.

      Delete
    8. IPO the company somewhere decent in Europe. Now that Brexit is likely to happen by years end Frankfurt is probably the best option. This will give them the capital injection they need and will also make the management liable to shareholders and regulators (the reason they wont consider this option).

      Than we can let the free market decide OU's fate. I'll be comfortable with that!

      Delete
    9. * Then...

      Delete
  14. Good luck OU!

    ReplyDelete
  15. Everyone can see how successful that restructuring from 2012-2016 was.

    ReplyDelete
    Replies
    1. This is true. Both at Adria and OU the restructuring seemed to work short term but long term nothing has changed.

      Delete
  16. I'm disappointed. It looked as if they would extend some routes during winter with the extra CRJ but in the end nothing. They just substituted Lisbon with Dublin and that's it.

    ReplyDelete
    Replies
    1. I'm sorry bur what did you expect? Look at their finances. If they do anything drastic they will just dig their hole deeper.

      Delete
  17. OU needs to grow - routes and fleet. Expand towards east

    ReplyDelete
  18. Will OU actually achieve profitability this year?

    ReplyDelete
    Replies
    1. I think it will be difficult.

      Delete
    2. It all depends on Q2 and Q3. When the Q2 results are out I think we will know.

      Delete
    3. If it was going well they wouldn't have scrapped all their winter plans.

      Delete
    4. We will know Q2 results in around a week.

      Delete
  19. Good luck OU in privatisation and I hope the management does the right thing.

    ReplyDelete
    Replies
    1. The management said they need 33 million euros for the airline to expand or it will shrink next year. Good luck with that.

      Delete
    2. If they IPO the company, they could get a cash injection of anywhere from 50 to 100 million euros (money they wont have to pay back) depending on how the prospectus looks. For this the company needs a drastic change in upper management and a will to go down this path. Big mindset change too. Would be great to see OU do this so they can set an example to other companies in Croatia (ship building etc). Communism is gone, need to stop thinking this way. Start running companies in line with capitalistic principles or die this slow death we are all seeing.

      Delete
  20. Winter 2019/2020 - iz šupljeg u prazno.

    ReplyDelete
  21. If they don't find a buyer this is just a beginning. It's unfortunate because they have an excellent position in Zagreb. Not too much competition on key routes, very little LCC penetration....

    ReplyDelete
    Replies
    1. Croatia Airlines is very lucky that a major LCC hasn't s based a plane in Zagreb.

      Delete
    2. Extremely lucky!

      Delete
    3. I think ZAG is also protecting them to a certain extent. They are making more money from OU today than they would if they go bust and LCCs moved in. First thing LCC would ask is to lower airport fees and charges something ZAG absolutely wants to avoid at all cost.

      Delete
    4. Their luck will eventually run out. OU had ample time again to take the initiative here and have a small LLC operation. Low cost flexible airline they could dedicate to charter and LLC services from Zagreb. Just annoys me to think of all the missed opportunists. Any normal airline for example would have taken full advantage of Dubrovnik Airlines collapse. This airline was flying 500,000 passengers per year and OU just let them go to competitor airlines. HOPELESS!!!!!

      Delete
    5. What are LLC services?

      Delete
    6. He obviously meant LCC

      Delete
    7. Other airlines are stepping in, we saw that BA is considerably increasing its presence this winter. Iberia did the same and there are strong rumors going around that TP is looking at returning to ZAG with direct flights. ZAG is growing slowly and improving it's offer day by day and when OU goes bust no one will feel them.

      Next goal for MZLZ is to bring a new Asian carrier possible Singapore Airlines. They are encouraged by KE"s total success in ZAG.

      Delete
    8. Would it be Singapore Airlines or Scoot?

      Delete
    9. If you consider that Zagreb has only little more than half of Belgrades pax numbers, the management does a damn good job in attracting the big carriers that come with big planes.
      Hat off !

      Delete
    10. Yes but they should work harder on making them year round though.

      Delete
  22. Why can't OU follow the model of Aegean??
    Both economies are highly reliant on seasonal tourism and a car-unfriendly geographical distribution...

    ReplyDelete
    Replies
    1. Because Aegean is a privately run company with competent management, OU is the exact opposite. OU is more similar to OA than A3.

      Delete
    2. car-unfriendly geographical distribution ?!

      Croatia is just the opposite of car-unfriendly country with modern highways connected to central and western Europe. Greece is different story, impossible to visit without plane.

      Delete
    3. Impossible to visit without a plane? Say that to the thousands of Poles, Czechs, Lithuanians, Germans.... who drive to Greece every summer.

      Greece is not a remote island just in case you skipped on geography lessons.

      Delete
    4. It is possible to reach Tehran from Europe without plane, that is not the point. The point is, that Croatia is incomparably closer then Greece by car, for the biggest part of Europe. And most of tourists in Greece coming with plane.

      Delete
    5. The point is that we always read excuses here. Barcelona is also accessible by car like Croatia but BCN and Girona have a ton of flights year-round.

      Delete
    6. * sorry, should be than Greece by car ...

      Delete
    7. @Anon14:30 This isn't about excuses (read through the comments and find one excuse), but about facts regarding this one specific thing. Croatia is most definitely not car-unfriendly considering where the majority of its tourists still arrive from, and considering how small and well covered with motorways it is. Greece is a different story what with it being distant to most Europeans. So is Barcelona, where most people fly to or use high speed rail - even the domestic visitors, not to mention the Brits, Germans, Dutch, Scandinavians, Italians, all of central Europe...etc. Your comparison of Zagreb and Barcelona is ridiculous at so many levels.

      Delete
    8. The last time I checked Zagreb wasn't a summer holiday destination. I was speaking about coastal airports. We always hear so many excuses when Croatia is concerned, there is always some justification out there. Like Greece has more plane visitors because it's far and not because we haven't done enough to promote our country and that we are lagging behind. And anyway, ready up on this summer season, camping and private accommodation are down and those are the people that drive on holidays.

      Delete
  23. Maybe TAP should give LIS-ZAG another go. As far as I remember they used to serve this route in winter via Bologna.

    ReplyDelete
    Replies
    1. TAP is rationalizing its route network too so I don't think they will be opening any new routes soon.

      Delete
  24. Difficult road ahead

    ReplyDelete
  25. so they picked DVB Bank just after DVB Bank sold their aviation business?

    looking through the names there left in DVB Bank, it is a shame ... why do they have to proof over and over again that we are still living in the nineties?

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

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

      Delete
    2. A220s would be ideal.

      Delete
    3. If the neos ever happen..

      Delete
    4. They have already started paying for them.

      Delete
    5. Anyone know which engines they chose?

      Delete
  27. Well there go my hopes of them making Helsinki, Milan and Stockholm year round.

    ReplyDelete
    Replies
    1. I really don't get that there are no flights between ZAG and ARN in winter. Crazy.

      Delete

Post a Comment

EX-YU Aviation News does not tolerate insults, excessive swearing, racist, homophobic or any other chauvinist remarks or provocative posts with the intention of creating further arguments. A full list of comment guidelines can be found here. Thank you for your cooperation.