State to sell up to 70% stake in Croatia Airlines


The Croatian government plans to sell a 70% stake in the national carrier by June 2020, while retaining a 30% share. The Minister for Sea, Transport and Infrastructure, Oleg Butković, said the government’s recent decision to inject 33.7 million euros into the airline would help it find a strategic investor which would agree to a partnership “based on 30% state ownership, and 70% private investment”. He added, “Consultants are currently looking into potential strategic partners and will decide on the best possible recapitalisation model by year’s end. Then we will launch a public tender. Based on the government’s decision, we will select a strategic partner by the end of June 2020. The focus is currently on finding an investor from the aviation sector, but we are not insisting on it. Different sale models foresee interest from different types of investors. Interest has certainly been shown”.

Mr Butković said the Croatian government would avoid concluding a similar agreement to the one its Slovenian counterparts made with Germany’s 4K Invest over the sale of the now- bankrupt Adria Airways. “We don’t want such a strategic partnership, where state interests and services of importance to Croatia would not be safeguarded”, Mr Butković said. He warned that Croatia Airlines could face a similar scenario to that of Adria if the privatisation process fails. “If we are unable to find a strategic partner and the process is unsuccessful, such a scenario is possible. However, I am certain we will find the best possible solution to stabilise Croatia Airlines and enable it to grow. Croatia, as a country dependent on tourism, needs a national carrier. We are not in the same situation as Slovenia. Adria Airways was a privately-owned company and, as a result, the state was limited in its ability to provide financial assistance. Furthermore, we can’t put the two companies on an equal footing in terms of the size of the market and volume of operations”, the Minister said.

The Croatian government has set up a multi-member, inter-agency committee whose main task is to seek out potential investors for Croatia Airlines, while a consortium made of the Privredna banka Zagreb and Germany's DVB Bank are acting as its privatisation advisors. Earlier this year, Mr Butković hinted that Croatia Airlines' various divisions could be divided and sold off separately to increase the carrier's privatisation prospects, noting that "several scenarios" were in play and being considered. Last year, the President of the Croatia Airlines Supervisory Board, Zlatko Mateša, who is also a member of the above-mentioned inter-agency committee, said a European partner would be ideal for Croatia Airlines as it could take over a majority stake in line with European Union regulations.




Comments

  1. I think it will be very difficult for them to find a partner but good luck to them anyway.

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  2. Anyone express any interest?

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    1. Officially, no. But if you read the article minister says there is interest.

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    2. I don't understand that it is that hard to get interest for OU.

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    3. I would assume that LH would be interested followig the events in Slovenia and the consequences for them. If anyone else taps into the Croatian market, LH and Star would be left without a partner in this part of Europe.

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    4. Yeah but that's the thing, no one is looking to tap into the Croatian market, at least not the one in the continental part of the country so LH Group is safe.

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    5. I would have thought that too last but the Slovenia example has shown that Lufthansa isn't all that interested in saving feeder airlines from the region. Now OU is a much bigger airline than Adria so who knows.

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    6. LH already flies to ZAG so all they have to do is increase the size of the plane. Give me one reason why buying OU would be a sound business move for LH especially at the moment when SN, OS and EW are a mess?

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    7. Because OU´s costs are even lower than those of EW and costs are what matter most in aviation.

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    8. Maybe OU's costs are lower than those at EW but airport charges and a limited market potential matter more in this case.

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    9. Costs are lower, but guess who has an ageing fleet with new A320neos on order, with (I'm guessing) a much worse deal that LH group has negotiated with Airbus?

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    10. OU will eventually join Lufthansa. No doubt about it.

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    11. There are more chances of OU joining JP than LH, if you know what I mean.

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    12. "I don't understand that it is that hard to get interest for OU."

      Because the government won't butt out.
      Croatia has a terrible reputation when it comes to foreign investment and unless some major changes are made there is no chance they will find an investor/buyer.

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  3. "IAG chief Willie Walsh believes there is greater reluctance among investors to save collapsing airlines, and insists that a tough attitude towards weak carriers is necessary."
    https://www.flightglobal.com/news/articles/investors-shying-away-from-saving-weak-airlines-iag-462110/

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    1. So I guess we can rule out IAG buying Croatia Airlines.

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    2. None of the large players has interest in small unprofitable national airlines.

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  4. In the end no one will buy them. Coast was lost to the competition, ZAG is not a big market, difficult relationship with the unions, mounting debt, ageing fleet, expensive base to operate out of ...

    On top of that VIE is not far and even if they want to build a hub model BEG, BUD, FCO and VIE are too close to make it work.

    Too little too late.

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  5. What happened to the initiative LOT had? Or was it nothing but a wishful thinking?

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    1. I think LO is still sniffing around, probably deciding if it's wise to go ahead. I think it's either them or Garuda.

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    2. lol man Garuda happened 5 years ago. They said they were interested and never applied for the tender.

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    3. If they are targeting to sell 70%, it has to be a company from the EU.

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  6. Please stick to aviation sector. The fact that they are open to companies outside the aviation sector is not good and would be a dumb move. But I have a feeling they are desperate to sell it to anyone.

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    1. And then we end up with another 4K Invest.

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    2. The fact they are also considering selling the company bit by bit is also worrying to me.

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    3. ^ That could be the only solution. I think OU's maintenance division would be of great interest even to LH Technick. But then again, making all these different companies cooperate could be a challenge.

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  7. The real thing is - There is no big investors interested in this company. They will sell what they can sell in the next few years and OU will survive until than. For next 3 or 4 years gouverment can again invest money in the company so future is quite safe for next 8-9 years...

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  8. No chance they can sell it in 7 months unless they already have a buyer lined up which I highly doubt they do. The negotiations themselves would take months and months.

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    1. The longer they wait the more difficult it will become.

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    2. "It is too early" - the new slogan of Croatia Airlines.

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  9. This is being drawn out a lot. Hope they manage to sell it to someone.

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  10. Maybe Fly Bosnia could buy them. They could move all their operations from SJJ to ZAG. Makes more sense than OMO or TZL. After all, their owners have deep pockets. :D

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    Replies
    1. Excellent :-)

      May I add my 50 cents? To sell it to Kappa Star Limited... Should be sweet :-)

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    2. HAHAHAHA brilliant, I think that would be the safest way to have the government collapse and to go to new elections :D

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  11. I don't see a major airline buying OU. What I do see happening is a local pension fund or a local company buy OU, with the government probably standing behind it.

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  12. Sell to who?

    4K Invest might be the only one interested. And they have some spare time now...

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  13. What will happen if this privatisation attempt also fails?

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    1. Nothing, it wouldn't be the first time the process will fail.

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    2. The EU will sell it instead. Or they will have to give the money back -> the end.

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    3. I am not going to be surprised if nothing happens till June 2020 or any other June of any year!

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    4. I would expect EC to order OU to pay back 33 mil EUR

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  14. OU definitely needs a change.

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  15. In the end nothing will happen as usual.

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  16. The best chance for Croatia would have been a merger with Adria at least a decade ago (ideally much longer). They could have pooled their resources and shared a fleet type. It would have taken a lot of work and plenty of political and national resistance but if done properly, consolidation would probably have been their best chance of surviving this new age of airlines. Instead Adria is gone and Croatia is flirting with possible infringement of the EU state aid rules.

    I mean this is what, the tenth time the Croatian government is announcing the sale of the airline? Why bother? It actually diminishes the chance of the sale when an investor sees how long it's been on the market for. I could announce that I'm selling the keyboard I'm typing this comment with, doesn't mean anyone is going to buy it.

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    1. it could not work because Slovenes would insist on running the show and Croats wouldn't agree to that. The proposal was stillborn.

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  17. This is just a smokescreen to justify the state aid in front of the EU Commission. They know full well no one is interested.

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  18. This is funny. When they put millions into the company some of us said, that this wont pass the EU regulation and that they will have to do it „the Adria way“. But Croatian politians and few people on this site said the opposite. That they will find a „way“. Voila, now we are here. They will have to sell it otherwise EU will order it. I dont think anyone would buy only 70%… not for this company. 100% or nothing. And if no one comes by, the EU will sell it. We have seen this scenario many times in last decade but some people are just to stubborn and want to do it the hard way.

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  19. I would prefer if a non European airline or company bought them. But then they would not be able to get over 49%.

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    Replies
    1. Anything other than a European airline would be good for OU because it eliminates the possibility of them being a feeder.

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    2. Lufty knows this and that is why the Germans wrote the 49 percent limit into the EU law ...

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  20. It is no doubt that it will be difficult to attract interest. Main reason is that airlines are focused on different acquisitions.

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  21. Same old story. They are repeating the same thing and nothing comes out of it.

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  22. Does this mean another summer season without expansion in 2020? if the deadline is June.

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  23. I see Lufthansa Group eventually buying Croatia Airlines and integrating it into Eurowings but retaining its own brand. Same as they did with Brussels Airlines.

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    Replies
    1. Compared the size of BRU and ZAG, when you do many things will become much clearer.

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  24. A right investor with a vision could do wonders with the company. I think OU has a lot of potential.

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    1. Croatia had and has the potential for a good national carrier, but unfortunately the government did nothing to develop the airline.

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    2. Croatia as a country has a lot of potential. Apart from tourism the country is at rock bottom when you consider the possibilities. But we need a major change in the political and economic landscape before we see a real rise in her potential (The Rimac story which in my opinion will be worth more to Croatia than tourism in 10 years is a perfect example and he was told by Croatian politicians that he should move his operations to Germany because Croatians don't make cars lol). So anyone who can get the airline today still has a decent chance to make something decent of it but it will require a lot to happen to make Croatia a safe place for doing business.

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  25. They should have started the first year after restructuring ready with a new owner and fresh capital. Instead they just prologued the "business as usual" policy which I don't think they can afford anymore with so much competition. Time to get things moving and fast.

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    1. Kind of difficult to find an interested investor while you are restructuring and trying to avoid bankruptcy. You can do it after you have successfully restructured, which is what they are doing now.

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    2. OU has successfully restructured? I guess that's why the government needed to inject aid 2 months ago.

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  26. There was talk that Aegean was interested a few years ago. I think that would have been a great combo. Aegean + Croatia Airlines. Could have been a strong airline.

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    1. There is no point because A3 has a massive network and there is barely any demand from Zagreb to Athens, they can't even operate a turboprop on a year round basis. The more time passes the more I am convinced OU is doomed to fail. The government allowed the company to decay for too long, now they are beyond the point of no return.

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    2. Aegean was as credible as Garuda.

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  27. Could be that EU Commission sort of approved that aid and asked in change the company to be sold asap.

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    Replies
    1. The fact that the government tied the aid to selling the company by June would indicate so.

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  28. The saga continues.

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    Replies
    1. another round of jatovanje...

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    2. You mean kroatovanje?

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  29. Would be interesting if Qatar bought a stake. They won't but we can always dream.

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    Replies
    1. The chances of that are slim, especially since they have struggling Air Italy in ownership.

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    2. The moment Qatar buys 70% of OU, 99% of the flights would stop, because they couldn't fly inter-EU routes.

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    3. Nonsense. Qatar Airways owns Air Italy. It flies inter EU and domestically in Italy.

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    4. No. Qatar owns 49% of Air Italy.

      "Qatar Airways holds a 49 per cent stake in Air Italy’s parent company, AQA."

      https://www.qatarairways.com/en/press-releases/2019/April/AirItalyInvestment.html

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    5. I didn't see you wrote that if Qatar bought 70%. That is not allowed anyway under EU rules so they certainly won't sell 70% to QR. They could sell 49%.

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  30. Who would be interested in participating and investing in an airline where politics is unpredictable, corrupted politicians, undeveloped economy, market conditions after airline consolidations, be in the neighbourhood of AZ JU TK all government sponsored carriers with different calculations than private ownership, plus strong presence of LCC in nearby markets.
    Would u invest? Really?

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    Replies
    1. Sad but true.

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    2. The only chance they will find a buyer is if they find someone who is willing to risk tens of millions of dollars in the airlines, has a bit of vision and a little patriotism helps too is the sense they want to see the airline a major Croatia success story. Do these people exist around the world? Yes. Will they risk their money in Croatia today? not likely.

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    3. Well Etihad did :D

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    4. Jat caught the last train and OU was at that time as usually sleeping.
      There is no more companies like Etihad that would invest the money in some small east European airline that is in terrible financial state

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  31. OU being sold to anyone would definitely increase competition in the region.

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    Replies
    1. I do hope OU gets bought by a strong investor as it will increase competition.

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    2. It would be interesting to see how JU and YM would respond.

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  32. I really hope they find a buyer. It is getting harder and harder to compete each year.

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  33. I know this will never happen because of many factors but maybe the best way forward for OU would be to finally reach out to JU. JU does really well in ZAG this year so there is room for expansion but they can't do anything because they lack Atrs. Why doesn't OU offer to JU to revise their schedule, JU can keep their 17.00 departure to ZAG but OU could introduce an evening departure to BEG that would arrive at around 22.00 and return at 23.40. Like that they could get access to JU's night bank to the Balkans and the Middle East but could also carry passengers from JU's European flights that arrive at night.

    I know they already cooperate with LH Group but when they go there to negotiate they have to stand in line with TAP, ANA, United, LOT ... while in Belgrade they could probably get a better deal. It's easier to negotiate with a regional airlines than a global corporation, especially when you are a small airline like OU.

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    Replies
    1. Or they could spend the night in Beograd?

      zag-beg 21.00-22.10
      beg-zag 06.40-07.50

      they could carry also their transfers like this

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    2. Wasn't it said that Kucko rejected Kondic's suggestion Air Serbia to have code share with OU?

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    3. @ Nemjee,
      Agree with you that not only OU and JU but all airlines in this region should have stronger cooperation, but it's not the topic today. Topic is OU privatisation and JU does not have enough funds to renew and extend its regional fleet, let alone investing in others, OU in this case. So your comment on this topic today is useless, which I did not expect.

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    4. Today's topic is not just about OU's privatization but it's survival. Furthermore, we all know this attempt will most likely fail so maybe we should also discuss what happens then and what actions OU should take in order to improve its state otherwise it will end up like Cyprus Airways and Malev which couldn't afford to repay the state funds they got.

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    5. First, unlike till now, the privatisation advisor this time is serious. Second, unlike till now, the the govt seem to really mean to go on with privatisation. Third, we don't know that this attempt "will most likely fail". Fourth, you can not distinguish OU privatisation from its survival, as it is prerequisite - no privatisation, no survival. And fifth, OU proved during last 20 years it is not able and willing to take any actions to improve anything, unlike you say. I had all of these in mind when writing my original comment and that's why I once again disagree with you.

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    6. Sure thing buddy.

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  34. Let's not beat around the bush. If they had found someone interested they would have sold the airline by now.

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    1. Of course no one is interested into buying OU, especially after they sold LHR slots. Also, their fleet is very poor and older than European average. The only good thing could be benefits they have from Croatian airports and cheap deals, but then again, Croatia is very seasonal market. I have no hope for this company.

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    2. I have no hope for this company as well if it remains like it is now. Therefore, not to disappear, it has to change. The only way to change is to change the ownership structure, and to take the state and the politics out of it. It should result in change of management, getting rid of excess administrative workforce, real costcut, new scheduling, closer cooperation with ZAG, making ZAG real hub, enlarging fleet by at least double, changing role of feeder, introducing long-haul on A321XLR, strengthening regional network by triple, and lot more. Croatia, both country and the airline, have big potential. It's only about politics and their will to give up of OU. So far, there was no real will to do that, and that's why privatisation attempts failed. Whether politicians are honest this time and have they really decided to finally do the only positive thing for OU, remains to be seen.

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  35. I'm disappointed in the whole Croatia Airlines prioritization process. First of all I was hoping it would be much quicker, that there would be more interest because the airline certainly has potential.

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  36. In my opinion, if they want to stabilise and expand they need to launch new routes.

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    Replies
    1. And they can do that without a partner.

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    2. With what aircraft and what money?

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    3. If LH was an option, they would have already bought Adria Airways instead...
      Still, the Croatian government at least has some vision and is aware of the strategic importance of the national airline, while Slovenian blockheads regrettably do not posses that breadth of mind

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  37. 5K investments is intrested I hear...

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  38. OU should launch ZAG-DUS flights next summer since EW is suspending flights at the end of winter. All flights to DUS are sold via STR on their website.

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    Replies
    1. Some mentioned there will be surprises from OU. I guess they are going to be taking over from them?

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    2. Why not choosing 4K ??? they have a lot of experience with ex. Adria ......

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  39. I am surprised no one mentioned Ryanair. Ryanair could do the same with Croatia Airlines what they did in Malta or with Lauda in Vienna.

    Lowcost fighter on the coast and quasi-legacy merry-go-round up north teamed up with Lauda.

    However, I said "could," I don't believe Ryanair would unless Croatian state gives them full support, that is.

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    Replies
    1. But I guess the most important domestic routes will be done then, because I don't think they will operate regional aircraft anymore and a 180 or 189seater is far too big for domestic.

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  40. That is what happens when every sheepherder wants to be president, CEO etc. Instead of having company on SAS model in ex-Yu, all these peasant quasi countries want to have same thing as France or UK.

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