Croatia Airlines sees weaker annual performance


Croatia Airlines saw its losses widen and passenger numbers slightly decline during the first three quarters of 2019. The company recorded a net loss of 6.5 million euros during the nine-month period, up from its loss of 4.6 million euros over the same period last year. In the third quarter alone, traditionally its strongest, the airline’s net profit amounted to 5.5 million euros, which is weaker than the 6.1-million-euro profit achieved last year. “Despite registering a profit in the second and third quarters, we were unable to cover the losses generated over the winter months”, the carrier said. During the first nine months, revenue increased 1.4% to 177 million euros, while expenditure was up 1.3% totalling 181.8 million euros. The airline spent most on flight operations, followed by air transport services and maintenance.

The national carrier handled 1.701.571 passengers on board its aircraft during the January - September period, a decline of 0.2%. Of those, 397.308 travellers were carried on domestic flights, down 3.7%, while 1.242.081 passengers flew on international services, an improvement of 1.5%. The remaining 62.182 passengers were carried on charter flights, down 11% year-on-year. However, charters accounted for less than 4% of overall traffic. The airline noted the decline in travellers on charter operations was mostly a result of less traffic, since the carrier ran a number of special flights to Russia last summer for the FIFA World Cup football championships.

The airline operated 22.235 flights during the first three quarters of the year, which was up 2% compared to the same period in 2018. The average cabin load factor stood at 73.8%, an improvement of 0.1 point. Loads were lighter on domestic flights by 3.4 points for an average of 69%, while on international services they were up 0.1 point to 74%. Passenger carrying capacity, measured in Available Seat Kilometres (ASKs), stood at 1.8 billion, down 0.1% year-on-year. The airline’s cargo operations were weaker by 10.1%, with 1.504 tonnes of mail and freight uplifted in the first three quarters of 2019, compared to 1.674 the year before. The number of employees at the company stayed mostly unchanged at 1.019.




Comments

  1. It's worrying that the number of flights are up while passenger numbers went down.

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  2. Welcome to stagnation and eventual decay that will take you down the same path as JP... that is bankruptcy.

    What's funny is that Aegean lost the contract for winter flying out of DBV and it was assigned to Freebird. What is OU doing? Second years in row they lose this opportunity! Useless.

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    1. Like at Adria, too many aparatschiks at commercial dept with not much clue of todays aviation market. But HR is more smart than Slovenians, they are better lobbyists and will manage OU thru the EU subsidies regulation djungle.
      Re our more northern neighbours, LH pleased them with a new early morning dep out of LJU ETD 0705 to FRA as of SUTT 2020. They ll hve night stop fm FRA with ETA 2145h in LJU. So OU will stay alive and in SLO no one will cry after JP anymore

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  3. So it's official. OU will have a loss at the end of the year. Now we will just see how big the minus will be in Q4.

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    Replies
    1. I estimate in total 9 mil EUR

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    2. Loss will proably be about 8 million euros at the end of the year.

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    3. All depends how they spin the government injection. Thanks to accounting tricks they can spin it as profit or something.

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    4. But they didn't display it in these results.

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    5. They couldn't they got the aid in October. These results are January - September.

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    6. We all know Government help is 33 mil.

      So if they announce the "profit" of 24 mil EUR you will know how big their loss is

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    7. I don't think they will be able to display it as profit. Also they only got 13 million this year. The rest is paid out next year.

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    8. So their loss per plane is bigger than FlyBosnia (about $500K loss per plane)?

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  4. They should fly to warmer destinations in winter. Croatians travel a lot and spend a lot on travel.

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    1. Do they really? ZAG numbers should be higher then.

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  5. This is not good for potential sale.

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    1. I don't think sale will be successful.

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    2. Let's hope LO takes over.

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    3. The privatization might be too little too late.

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  6. This will have a negative impact on ZAG numbers this coming winter. Airport can't grow without a strong and smart local airline.

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    1. FlyDubai reductions, KE absence from ZAG during the winter, no new airlines, no new routes together with problematic OU will cause very bad results for ZAG

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    2. Very bad? that is how much in pax numbers?

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    3. I think growth this winter will be around 0%. Hopefully soon they publish October numbers so we will see how 'winter' started.

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    4. At the time when all the airports significantly grow (average grow percentage for 100 biggest European airports was 6,76 % last year) ZAG will have max 1-2%.

      You can calculate it by yourself how "good" it is

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  7. Well now we know why the government had to step in.

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  8. Passenger numbers will go up thanks to Adria in Q4 but overall a really lousy year from OU.

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    1. And how much can Slovenia help? It's a tiny number compared to the whole number. Maybe 10 to 20 thousand, not more.

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    2. I am not sure OU had big benefit from LJU passengers

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  9. It looks like JPs prolonged demise hit OU hard. With that state aid, at present loss rate, they can buy 4, maybe 5 more years and maybe a few more if they try to pull their stuff together. And after that what? A319s are getting old and it is now clear that they will need to think about replacement that they can't finance.

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    1. They could pull JU's trick. Operate museum-material old aircraft and claim "it's OK because they don't have a lot of hours".

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    2. Well at least JU is replacing their old aircraft. More recently YU-ANJ was retired and YU-APK was introduced into the fleet. ;)

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  10. "Despite registering a profit in the second and third quarters, we were unable to cover the losses generated over the winter months"

    There is only once solution for this: STOP flying in Winter!

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    Replies
    1. It simply means "we can make some money only when tourists' stampedo runs to the coast and we catch some of them to fly with us. Otherwise we have no idea how to run this business successfully."

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    2. Yes- parked aircraft do not cost anything and the crews and systems are willing to renounce their salaries in winter.

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    3. Maybe that is the way forward for them? Park the fleet over winter in a cheap place like OSI and resume operations from April, maybe March depending on when Easter falls.

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    4. Hire seasonal staff like Dubrovnik Airline did. Very simple really.

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    5. They do have seasonal flight staff.

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    6. Pay crew more per flying hour and less in bssic salary - just like every other airline with extreme seasonality does.

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    7. conclusion: they should only fly Q2 & Q3 with feeding VIE,MUC,FRA in Q1&Q4 as well

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    8. Fire adminstration staff. Way to many of them. Use software and automatisation. Close bloody office in Frankfurt and anywhere else. You don't need them.
      As mentioned above, why did CTN missed opportunity to fly these charter flights from DBV? That's such easy money.
      Anyway, as employee I'm happy and grateful for tax payers money. Sufficient for 2-3 more years to gain experience and go somewhere to work and earn.

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    9. Does anyone know if OU even applied for these DBV flights?

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  11. Came back yesterday from BCN and there were at least 20 passengers from SLO, so I am sure that a lot of people from SLO use ZAG and indeed OU.

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    1. What was the load like in general?

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    2. No one is saying there are no Slovenes it's just that their numbers are exaggerated on here. It's like someone saying BEG is booming because of Romanians from western Romania who use the airport to fly. Sure, there are some but not enough to change the whole fortune of the airport. That's the same with ZAG. Until OU starts to get transfers and I mean serious transfers not SKP, DBV, SPU... but from major markets like SKG, ATH, ESB... it will just keep on sinking deeper and deeper. JU understood this.

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    3. ZAG is full of Slovenian car plates recently and there will definitely be a positive impact on the airline and airport.

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    4. Just to add, tonight JU has the following night departures:

      BEY - A319
      SVO- A319
      LCA - A320
      TIA- ATR
      SKP - ATR

      These flights will bring at least 500 transfer passengers tomorrow morning to fill the morning wave of departures. This is what OU is missing and what they need. Same way BT, LO, A3... did. Nothing too revolutionary.

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    5. What's the point if you are again going to loose money like JU does?

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    6. The flight was almost full on A319, while last week on CRJ1000 to BCN around 70%

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    7. Anon 09.37

      You gotta spend money to make money. Same thing with JU. Their losses are dwindling each year meaning they are on the right track. That was the same scenario with BT and LO. So there is a point, you are just missing it.

      Delete
    8. Who would transfer in ZAG from SKG and ATH, perhaps only to domestic destinations but to western Europe, ATH is very strong.
      While ZAG has around 3.5m passengers a year believe me every single one from SLO counts despite being a small market which both LJU and ZAG are.

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    9. Yesterday evening border control at ZAG was empty as we arrived, I truly believe they have to do much more to bring in more airlines and passengers. Someone is too protective towards OU, as soon as new airlines arrive OU is heading the same way as JP.

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    10. Thanks @anon9.40. Good to hear.

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    11. My mother flew on FZ to ZAG today and said there were maybe 80 passengers.

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  12. What I find interesting is that such a small regional airline has 1019 number of staff, way too much.

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    1. easyJet had 14605 employees at the end of FY2018, for 315 aircraft, which turns out to about 46.4 employees per aircraft.

      OU has 1019 for 12 aircraft, turning out to around 84.9 employees per aircraft.

      I wonder why they can't make profit?

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    2. Everything decreases at OU each quarter except for the number of employees.

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    3. How many employees would be optimal for OU?

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  13. The good news in all of it is that the LF is improving. For ex-Yu airline standards that is a good LF.

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    Replies
    1. True. I think they have the highest average load factor in ex-Yu.

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    2. I mean among ex-Yu national airlines.

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  14. I think that Croatia Airline biggest problem is their weak and miss-aligned organizational culture.

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  15. 1.5 tonnes of cargo and mail in 3 quarters? There's no economic sense in carrying cargo and mail there, for the amount of people and other resources they need to transport this.

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  16. Q4 is always bad so a yearly loss could amount to €10 million by the end of the year..

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  17. OU must keep on growing next year especially in ZAG. This year they copied what they did last year without any additions so numbers grew by a tiny fraction. OU needs volume, that should be their priority.

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  18. This shows that most of the growth at ZAG came from foreign carriers meaning the airport must work on attracting more customers.

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  19. In 10 years we'll have about about five airlines in the EU and 0 in the Balkans - this is written in stone, it's going to happen. The airline business is simply to expensive to play without the support of big, influential players.

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  20. It really worries me to see that despite tourism boom in HR, limited salaries by majority of OU staff, the airlines loses passengers and is flying not profitable. Here the management is absolutely put in question.
    And its not that OU has a questionable product, I flew this year FRA SPU FRA too and its not top but absolutely ok (all went ok, so dont know how their product is, if things are going wrong).
    Their must be a quute a but of inefficiency to reach such results.

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    Replies
    1. Completely agree with you. The worse thing is the government recently again extended the term of the management. As if they are doing a brilliant job.

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    2. We need Kucko to come back :D

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    3. Ivan Misetic is the one who needs to come back. OU only started going downhill and selling all its assets off when Kucko arrived!

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  21. As predicted, unfortunately the summer wasn't enough to fix 2019.

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    Replies
    1. The winter loss is getting bigger to the point that summer profits can no longer cover it.

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  22. At the start of the year they said they expected 5% passenger growth. I'm not sure if that is still relevant.

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  23. You really have to be a genius to achieve these results with all the resources/coastline Croatia has.

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    Replies
    1. Don't forget that competition is huge during winter.

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  24. They 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.

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    Replies
    1. Agree with you.
      But in this case it's clearly that sweet little LinkedIn story where one manger want's to give training to employees for better performance while other is worried they will leave once trained.
      OU management decision is not to give training...
      Let us keep incompetent people, let others Part145 come to Croatia and take money which is thrown in front of OU.

      Delete
  25. How about trying the long-haul market?

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    Replies
    1. They can't make it on the short haul market let alone on the long haul market.

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  26. Is this the company that is buying brand new A320 NEOs? And where do they plan to get the money? The taxpayers?

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    Replies
    1. Exactly, from the taxpayers. That's why they got 30+ million EUR from the government.

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    2. And they will have to get a lot more money from taxpayers, considering a single A320neo costs 100 million EUR.

      Delete
  27. I was expecting a loss but I was not expecting passenger numbers to decrease as well.

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  28. So at least now we know why ZAG had such sluggish performance. Time to bring in someone new who can do their job properly.

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  29. Cargo is constantly decreasing at Croatia Airlines. Anyone know why? Competition from other airlines?

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  30. Given the results, 2019 will be a disaster. Let's hope someone takes over and OU ca realize its full potential.

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  31. Any particular reason for this loss?

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  32. Dismiss the management!!

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  33. They need to operate more charters.

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    Replies
    1. They could have operated the Freebird deal with one A319 or A320. Two daily fights to European destinations. Now the Turks will profit.

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  34. This just proves how bad the management is.

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  35. What is the passenger yield, based on revenue passenger kilometers?

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  36. Can someone predict what are realistic and possible outcomes for OU? Please exclude privatization as I don't think that's going to happen.

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    Replies
    1. ^ Sorry to disappoint you but that won't happen. Unlike JP, Croatia Airlines is a national project in Croatia and no government would allow it to go bankrupt.

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    2. ...and you speak with authority on behalf of all governments, past, present AND future? Just made my day!

      Delete
  37. Let me guess, loss is because of engine repairs. OU - the only European airline that always seems to have losses because of engine repairs.

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  38. Impressive differences between the Croatian capital and its coastal airports. ZAG should probably consider DBV management in bringing new routes and growing all the time.
    It cannot be that a developed EU capital like Zagreb with a remarkable terminal and excellent geographic position be lagging behind other EU capitals.
    If no agressive move is made by OU numbers will not grow. They were very passive when JP went bust, have not considered new markets, resumed LHR and expand eastwards: Ukraine, Bulgaria, Moldova, Russia, etc. With the arrival of the 32N, OU will have one of the most modern fleets in the region and ex-Yu.
    Go ZAG and OU! You can!

    ReplyDelete
    Replies
    1. What's the point of having the most modern fleet if they don't know how to use it? OU doesn't lack new planes, it lacks vision.

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    2. A modern fleet is seen good and reflects prestige.
      OU by then will be considered as such and not using ageing turboprops or canned Airbuses.
      But yes, vision is needed indeed.

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    3. Oh it's the prestige troll...

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    4. LCCs have hundreds of new aircraft, yet no-one calls it prestige.

      A heavy loss-making Balkan airline needs several government financial injections to buy their first new aircraft after 30 years - PRESTIGE.

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  39. It's crazy how there are no passengers flights from ZAG once JU departs tonight.

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    Replies
    1. Because Croats don't travel. That is the fact. That is why all the airlines are reducing flights or not flying at all (to the coast) during the winter. It has nothing to do with OU. If there was a demand from Croatian market there would be flights during the winter from other ailines. All foreign airlines are planning their time tables according to the demand from origin. The end.

      Delete

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