Croatia Airlines has posted mixed results for the first half of the year by recording a 12.1 million euro net loss, while passenger numbers improved slightly to reach record levels. The carrier's consolidated net loss increased compared to its 10.7 million euro loss during the same period last year. The airline improved its overall financial performance during the second quarter, amounting to a profit of 1.2 million euros, up from 660.000 euros last year. However, the gains were insufficient to make up for the loss registered during the first quarter. Croatia Airlines increased its expenditure by 2.6%, while revenue grew 1.6% 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, as well as increased benefits for cabin crew members, then maintenance and promotion and sales. At the end of the first half of the year, Croatia Airlines had 1.040 employees and fourteen aircraft with an overall capacity of 1.580 seats. Two of the airline's jets are on wet-lease from Air Nostrum until the end of the summer season.
The national carrier handled 960.620 passengers on board its aircraft during the January - June period, an increase of 1.2%. Of those, 227.681 travellers were carried on domestic flights, down 3.1%, while 714.624 passengers flew on international services, an improvement of 3.5%. The remaining 18.315 passengers were carried on charter flights, down 21.5% year-on-year. However, charters accounted for only 2% of overall traffic. Last year Croatia Airlines ran a number of charters to Russia due to the FIFA World Cup. The airline operated 13.199 flights during the first half of the year, which is up 3.1% compared to the same period in 2018.
The average cabin load factor stood at 71.1%, up 0.2 points. Loads improved on international flights by 0.6 points for an average of 71.8%, while they were down 3.3 points on domestic services at 64.7%. Croatia Airlines expects to see a 5% increase in passenger numbers by the end of the year. Passenger carrying capacity, measured in Available Seat Kilometres (ASKs), stood at one billion, up 1.6% year-on-year. The airline’s cargo operations weakened by 10.2%, with 972 tonnes of mail and freight uplifted in the first half of 2019, compared to 1.081 the year before. It represents the cargo division's weakest performance in over a decade.
Don't think these are great. Putting finances aside, their operations were more or less the same but they only increased passenger numbers 1% at a load factor of around 71%.
ReplyDeleteWell don't forget that competition across Croatia and Zagreb too is getting stronger. Take Korean for example. I'm sure it has taken away some passengers who used to fly with a LH/OU combination via Germany to Zagreb.
DeleteAgain, most of those losses were for LH, not really OU. Like Kucko said, most of their flying is loss-making which includes those flights to Star Alliance hubs. LH is smart, why should they lose money when OU can.
DeleteSo I think KL's AMS-ZAG was the last entrant on the ZAG market that directly affected OU.
So they are losing massively on flights to LH hubs? Probably LH group pays little for transfer passengers. Anybody has idea how much do they get per transfer passenger?
DeleteI think it was reported in one of the articles or in one of the interviews that those flights are not that profitable. In a way and from a LH perspective that makes perfect sense. Unfortunately OU never built their own hub in ZAG to reduce its reliance on LH and now they are paying for that.
DeleteWhat's the reason for numbers falling on domestic flights? There is no competition on domestic sectors.
ReplyDeleteBecause fewer people need to transfer through Zagreb to get to places like Dubrovnik, Split, Pula, Zadar. There are more and more nonstop options to the coast. Or at least that's my theory.
DeleteNo but the coast has more non stop flights and OU is not particularly cheap.
DeletePlus you have good roads now for years.
DeleteThe new roads are a huge factor. If you can drive somewhere in three hours, why would you pay for an airline ticket, baggage, have to be at the airport well before your flight, possibly get delayed, have to rent a car at the destination, etc? It just isn't worth it because you basically do not save any time in the end.
DeleteThat's the point, good road connection. Few times happen to me eg. SPU - FRA - LIS and in the way back LIS - ZAG - SPU. Layover in ZAG 3+ hours. I preferred to go by car and at least be in move than wait at the airport. At the end I came in the same time at Split as the flight but....
DeleteSo the loss at the end will be close to €15 million? ...if not more?
ReplyDeleteNot necessarily. It depends on how much of loss they have in Q4. In Q3 they should have a profit which will reduce the current overall loss.
DeleteQ3 also depends on how well they do in September, more specifically after 15.09 when demand drops sharply.
DeleteHopefully they make 20 mil profit in Q3!
DeleteLet's see how they go in third quarter. That's when they make the most money.
ReplyDeleteIn 2018 they had a loss for the entire year of 11.2 million. Wonder if those losses will this year.
ReplyDeleteTheir costs are up while their operations remained more or less the same. Have they increased anything from Zagrab this summer? I don't think they have though I might be wrong .
DeleteEuropean aviation is heading into decline, even Ryanair is warning of job losses. If OU couldn't make money in the current climate... they have no hope in a recession.
ReplyDeleteLosses 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.
DeleteAnd that's an issue. Usually summers were enough to cover winter losses. Now they can't count on that anymore.
DeleteOU has always had large losses in first 6 months, or should I say first 4 months.
ReplyDeleteWill they be able to make up for this loss in the third quarter which is usually strong?
DeleteThey will make it up... but then comes the 4th quarter which is generally weak.
DeleteQ4 is brutal, that's for sure. Demand drops everywhere but OU is forced to keep all those flights to Mutti's hubs even if they are flying half-full. I mean do they really need multiple daily flights on the Airbus to FRA in November? Bringing it down to 10 weekly should be enough.
DeleteCould better advertisement of Zagreb as destination bring more tourists from LH hub cities areas in low season? If tickets are offered at around 100 return?
DeleteMany things COULD happen but in the Balkans potential or possible prospects usually don't happen in reality.
DeleteThey issue here is that last year they had large losses because of last minute plane leases and a lot of cancelled flights. This year there is no excuse. The problem is there losses are even bigger.
ReplyDeleteI am sorry to say this but with only 12 aircrafts (with own staff) more than 1,000 employees seems excessive.
ReplyDeleteIf remember well, last time arround they had less employees (arround 950).
DeleteFor arguments sake, lets let say there is 100 extra bodies x 1000 euros x 12 months = 1.2M euros just there
At the end of the day they did improve Q2 result which is promising.
ReplyDeleteWhat's going on with cargo?? Why is it always declining?
ReplyDeleteI'm guessing its competition. Cargo used to go through OU and then transferred onto other airlines from Germany. Now you have EK, KE flying with big planes that can transfer cargo to destinations.
DeleteAnd that's on top of them winning Slovenia post contract from late last year to carry mail this year.
DeleteWill they be adding any new destinations this winter?
ReplyDeletehttps://www.exyuaviation.com/2019/07/croatia-airlines-plans-modest-growth.html
DeleteWhy not extend some of the 10 new routes they launched in the last 3 years?
DeleteBecause they would produce losses in winter.
DeleteYou should see how the Croatia Airlines press release spinned their results. They didn't even write what their net loss was but their operating loss, which is some 2 million euros lower then net loss obviously. LOL.
ReplyDeleteWell what should they have done. It's PR ;)
DeleteLast year they were saying how losses are there but that they sold slots the year before. The year before they made no mention of slot sale.
DeleteThis year the official reason for increased losses is that accounting practices have changed. I wonder what will be next year.
DeleteCompletely agree with @9.26.
DeleteAnd of course the media being the way they are they didn't even bother to check, they just went along with it. At least here we can see the actual result. You can't pick and choose which year you are going to account asset sale and which not, which year you report net results and which year operating results. And who are they lying to exactly. Themselves? Or us? Like little children trying to hide a bad result.
Imagine if FR or W6 would expand in ZAG...which by the way is just a matter of time.
ReplyDeleteTick tock tick tock
10-9-8-7-6-5-4-3-2-1
Doubt it, I think it will be EW. I doubt ZAG will be willing to slash its charges while EW will be happy to pay a bit more... but then again I don't think they would be the best choice for ZAG.
Deletelol EW is in even deeper xxxx then OU
DeleteFor the sake of OU let it be EW !
DeleteAny other LCC would bring OU onto its knees .
I work at EWG and the airline (EW group) will be cutting its operating costs an additional 15% by 2022 due to the terrible situation it is in (80%+ PLF yet 7 times bigger losses in Q1) which means no additional routes coming into LDZA. If MZLZ offers RYR or WZZ some cheap ass contract, that might mark the end of CTN
DeleteThey need a turnaround fund to get them back on their feet!
ReplyDeleteHopefully OU will have a new concept soon.
ReplyDeleteIn my opinion their biggest potential would come from two seasonal summer bases in Dubrovnik and Split. Other opportunities are PSO, opening routes outside the EU and Open skies agreement area and (limited) charters.
This is depressing.
ReplyDeleteWhy not just sell the 4 remaining slots at Heathrow and move to Gatwick. It could save them money and I doubt they would loose too many passengers by moving airports.
ReplyDeleteSelling Heathrow slot's has done damage!
DeleteI don't think there are any plans to sell anything.
DeleteLet's be realistic, is there really that much demand for London? I mean they sold their slots and BA has barely increased flights. This only shows that the decision was a good one and that their losses were probably astronomical before.
DeleteRight.
DeleteHeathrow slots are only for showing off but OU does not get any profit from this vanity route.
They might be getting profits now with 4 weekly. Maybe daily was too much especially once BA entered the market.
DeleteIs OU expected to turn a profit this year?
ReplyDeleteThey 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.
ReplyDeleteAren't they dealing with a shortage of mechanics?
DeleteTourism trends also have a big impact on OU.
ReplyDeleteLess tourist but revenue is up over 10%. Trends won’t effect this year but maybe next if the numbers decline further.
DeleteLosses increase but government extends CEOs term. No logic.
ReplyDeleteLF is still really low. I know this is the standard LF in ex-Yu but it is really behind the rest of the continent in those terms.
ReplyDeleteUnfortunately the summer won't enough to fix 2019. My guess is the loss this year will amount to 5 million euros.
ReplyDeleteThat would be great considering they had 11 million euros loss in 2018.
DeleteI don't understand how an airline from a country with flourishing tourism, a country with a recognizable global brand, struggles so much.
ReplyDeleteShit management, no ambition in the local Croatian mentality unless is has to do the the service sector and (apart from those in the diaspora) which the locals do thief best to keep from returning (this is changing but at a slow... way too slow), focus on short term results, corruption, nepotism, lack of understanding how capitalism works.....
DeleteTrue. It's just unfortunate because Croatian tourism industry is constantly growing and has a lot of potential to grow even more but OU's results are getting worse an worse.
DeleteLet's hope LO takes over.
ReplyDeleteOU needs a partner to modernize fleet. I.e to pay for A320neo order.
DeleteI am rooting for Garuda :D
DeleteSo OU is looking for suckers to pay for the a320 neo?
DeleteYes. They even said so publicly.
DeleteThe smaller airlines will never be profitable! OU should be expanding or merging with another carrier.
DeleteTime to get the government out of Croatia Airlines, if it fails then some private company will take its place.
DeleteKucko come back! All is forgiven
ReplyDeleteYes he created great profit for the company through loans, sold slots and engines/aircraft.
DeleteNo keep him in Bahrain thanks.
DeleteBoth him and Dane destroyed their airlines and then they were rewarded by high ranking, well paid positions in the Middle East.
DeleteBoth did reasonably well with what they had to work with. ME airlines did their homework before hiring them. Keep in mind most ME airlines have resources to source and hire talent on a global scale. In other words, if they destroyed their previous airlines they would not get those jobs.
DeleteRight because both Saudia and/or Gulf Air are commercially run airlines...please. One is a government project funded by petrodollars while the other is disillusioned by thinking it still matters. Neither one of the two is really a good example of a well run business.
DeleteLufthansa is a really good example of a well run business, right? Only $132 million H1 loss :)
DeleteLufthansa had a bad H1, compare this year to last year and you will see what I am talking about. ;) Dane's greatest achievement was destroying JU's reputation, changing the business model all of the time and let's not forget when he introduced the disastrous business class product. That was all him.
DeleteOh so you don't have a problem with Kucko, just Kondic. Today's topic is Croatia Airlines.
DeleteBad
ReplyDeleteOU is a dead man walking.
DeleteWhat was OU's market share during the first half of the year?
ReplyDeletePity that most other EX-YU airlines do not publish such detailed infos at all.
ReplyDelete+1
DeleteExcept for the actual passenger numbers, those results are not looking too good.
ReplyDeleteI don't see any possibility that the results will be much better in second half of 2019 or in 2020 but let's wait and see.
ReplyDeleteObviously their business model just isn’t working. Core of the fleet needs to be A220s (at least 6) to fly alongside the Q400s and use the larger/older airbus aircraft for summer charter ops and winter leasing where possible or just park them.
ReplyDeleteA lot of it has to do with pure mismanagement.
DeleteNot 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
DeleteWhy don't they sell the remaining slots in London? If a Dash-8-400 can make it to London city airport, why don't they buy some slots there and forget the expensive Heathrow?
ReplyDeleteImagine flying to London with a Dash hahaha
Delete@Vlad I don't understand the hahaha??!!! They fly to Brussels with the Dash - 8 - 400, why not to London city airport???
DeleteIn Q3 It we will know which direction the company is going in this year.
ReplyDeleteI think the direction is already obvious.
DeleteI'm lost with OU.
ReplyDeleteCroatia 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.
ReplyDeleteSell the airline ASAP!
ReplyDeletePutting the airline up for sale isn't the issue, it's finding a buyer.
DeleteSo many of the world's airlines are posting financial losses so the figures mentioned aren't surprising.
ReplyDeleteThe airline has out of control costs and that's why it is losing so much money.
ReplyDeleteToo many employees.
ReplyDeleteCroatia Airlines is a flagship Airline of Croatia, and all of us know very well Croatians, as well as any Croatian government will never allow this Airline to go bust.... if they sell good. If not, the taxpayers will assume the bill as is the case for Air Serbia every year. And for those that will reply " its against EU rules to subsidize companies", that's a joke rule, all EU countries are subsidizing their strategic assets, there's always a loop hole....
ReplyDeleteHow much did they earn in Q3 last lear?
ReplyDeletePlus €6 million net profit in Q3 2018 but minus €4.6 million Q1-Q3 2018.
DeleteThanks! We will see how they perform next quarter.
Delete1040 employees?!.. where? How?
ReplyDeleteOk so we can safely assume they are not going to be sold. Can someone make a realistic prediction of what will happen to OU in the next five years? How long can they handle mounting losses? They are accumulating quite a bit.
ReplyDeleteAs long as Lufti of Hansa is profiting nothing will change .
ReplyDeleteWhy not axe all routes except Frankfurt and Munich and make these two twenty times daily ?!
OU needs a billionaire investor who wants to become a millionaire ...
ReplyDelete