Croatia Airlines posts €10.7 million loss


Croatia Airlines registered a net loss of 10.7 million euros in 2019, representing an improvement on the year before when the figure stood at eleven million. The company blamed its results on new IFRS 16 accounting standards, costs relating to aircraft overhaul and maintenance, as well as growing expenses under the European Union’s emission trading system. Revenue grew from 229 million euros in 2018 to 230 million last year, while expenditure remained mostly unchanged, totalling 238 million euros. It spent most on aircraft leasing, as a result of the wet lease for two Air Nostrum Bombardier CRJ1000 jets, as well as “unexpected” engine work on its fleet.

Croatia Airlines handled a record 2.179 million passengers during the year, an increase of 0.5%. The company operated 28.432 flights during 2019, which was up 1.5% compared to the year before. The average cabin load factor, a measure of seat capacity utilisation, stood at 73.6%, up from 73.5% in 2018. Passenger carrying capacity, measured in Available Seat Kilometres (ASKs), amounted to 2.3 billion, up 0.5% year-on-year. The airline’s cargo operations recorded a decline of 5.7%, with 2.135 tonnes of mail and freight uplifted in 2019, compared to 2.264 tonnes the year before. Overall, the carrier maintained flights to 38 destinations in 24 countries.

Croatia Airlines' market share on its home turf averaged 23% during the year, down from 25% in 2018 and 38% in 2017, although it peaked at 52% over the winter months (January and December). Its lowest market share was recorded in July and August when it averaged just 15%, 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.

Croatia Airlines is expected to be privatised during the year, with the government setting the month of June as a deadline to finalise a deal with a potential investor. The company recently outlined its plans for 2020, which includes two new seasonal routes, the long-term lease of two aircraft and one short-term wetlease.




Comments

  1. Anonymous09:01

    So basically stagnation on all fronts. Nice to see them blame pretty much everyone for their growing losses than themselves. I think winter 2020/2021 will be especially brutal for them.

    ReplyDelete
    Replies
    1. Anonymous09:14

      What growing losses are you talking about? They actually lost 300.000 Euros less despite using IFRS accounting standards which make losses and liabilities seem larger compared with the previous accounting standard. And that is true for all airlines.

      Delete
    2. Anonymous09:17

      Anon 09:14
      +1
      They should have also said what the results would have been if they had used the previous accounting standards in order to be able to make a like for like comparison.

      Delete
    3. I wonder if TAX-payers in Croatia are still ready to accept that some incompetent so called "management" will loose 11 million euros of they money every year? I believe there are many better ways to spend TAX money! Young and educated people are leaving Croatia because there is no support for them...

      Delete
    4. Anonymous10:06

      I am always impressed by some who no matter how bad a result is manage to somehow present it as something positive or encouraging. €10.7 million is a disaster for an airline that is so small and which can't rely on the government for support. No matter what accounting standards they used, if they were a well run business they would have had a decent profit. Since they are not they are where they are today.

      Delete
    5. Anonymous10:07

      ...which can't rely on the government for support.

      How do you call 33.7 mil EUR?

      Delete
    6. Anonymous10:15

      As a Croatian taxpayer, please, shut them down! Enough is enough!

      Delete
    7. Anonymous10:23

      Well let's be honest, the Croatian government was scolded and they were forced to turn that state aid into a loan which has to be actually repaid.

      Delete
    8. Anonymous10:29

      And we all know OU won't be able to repay it

      Delete
  2. Anonymous09:03

    The commendable thing at least is that they did not use the financial injection they got to show a profit.

    ReplyDelete
    Replies
    1. Anonymous09:05

      They can't because of new accounting practices, I think that's what he is referring to in the text.

      'The company blamed its results on new IFRS 16 accounting standards, costs relating to aircraft overhaul and maintenance...'

      Delete
    2. Anonymous09:20

      IFRS 16 standard puts a larger part of leases under the liabilities section and increases reported costs.
      So it makes profits look smaller or losses look larger compared with the previous accounting conditions.

      Delete
    3. Anonymous09:54

      @Anon 9:03 - if they received state aid it is for sure calculated into results. Meaning, that minus of 10mil is after they calculated aid, so total minus is bigger...

      Delete
    4. Anonymous10:07

      @09:54
      No, state aid is not calculated in the results by anyone.

      Delete
    5. Anonymous10:13

      How come it's not calculated? If they received money it needs to be shown in report? No matter how, as income, as tax refund, as loan, as charity...it needs to be in books.

      Delete
    6. Anonymous10:17

      No state aid in the books of OU for 2019.
      The announced aid will probably be in 2020 report.

      Delete
    7. Anonymous10:20

      But they did receive some aid from government in 2019?

      Delete
  3. Anonymous09:03

    No bueno. They need to re-think their approach to aviation business. Something has to change otherwise Croatia will lose one of the biggest symbols of its statehood.

    ReplyDelete
    Replies
    1. Anonymous09:13

      As long as OU Is viewed as a symbol of statehood, it stands no chance of surviving in modern aviation.

      Delete
    2. Anonymous09:17

      But why not? I mean many countries view their airlines in the same way and they are perfectly run carriers. Look at how Dutch treat KLM, Finns view Finnair, Latvian pride of airBaltic...

      Same can be the case with OU!

      Delete
    3. Anonymous10:24

      Except the Dutch sold KLM (funny enough, the company would do better without AF). Finnair has found a successful business model in providing connections to Asian passengers to Europe, and airBaltic was significantly overhauled to be what it is today, with smart fleet planning and sound business model.If people of the nations these carriers are based in are proud of them it is because there is something to be proud of.

      OU on the other hand has a huge gap in its fleet sans wet leased CRJs (do note that OU is missing a plane with seat capacity that all the airlines you mentioned use very effectively), it is very slow to react to market, it has sold LHR slots because LHR flights were “unprofitable” while a plane ticket from LON to ZAG costs almost as much as a plane ticket from LHR to JFK. It is losing market share every year, and amounts huge losses. Don't get me wrong, I like flying OU, their flight attendants who are always smiling, the fact that their pilots land more smoothly than pilots of other airlines I frequently travel with, their cabin interior design, even the livery. But their uncreative management is syphoning money, pocketing it while they can, and running the airline into the ground.

      Delete
    4. Anonymous10:43

      The problem is that all the above airlines are run by professional management and not government-appointed cronies.

      Delete
    5. Anonymous21:08

      Air Serbtihad is taking over regional leader on the market. Makes sense why JP had to go.

      Delete
    6. Anonymous21:12

      Etihad is no more important player in this game

      Delete
    7. Anonymous07:22

      Exactly, Etihad is literally falling apart and shrinking while JU is growing and booming. Actually what JU is doing is what AY, BT, LO... have all done: securing volume. OU doesn't have that and that is why they are struggling and that's bad because margins in aviation are already low, I think most airlines make like 5% profit margin.

      Delete
  4. Anonymous09:04

    I'm really surprised that passenger numbers barely grew last year. How come? There were no protests or announcement of protests like there were in 2018.

    ReplyDelete
    Replies
    1. Anonymous09:05

      I think there was barely any growth, they just copy pasted last year's schedule.

      Delete
    2. Anonymous09:09

      Regardless their load factor is 73% so there was room to increase numbers. The issue is growing competition.

      Delete
    3. Anonymous09:12

      Exactly, the low LF indicates that there is room for improvement but that they are doing little to improve it. Adding TGD with limited connectivity and virtually no O&D between ZAG and MNE won't help either.

      They are like a ship without a captain, sailing aimlessly on the open ocean while their hull slowly decays and rots away.

      Delete
    4. Anonymous09:51

      I'm surprised their passenger numbers didn't improve much. I though they would see good growth in Q4 because of Adria's bankruptcy but that doesn't seem to be the case. While ZAG benefited from Adria's bankruptcy, this doesn't seem to have rubbed off on Croatia Airlines.

      Delete
    5. Anonymous12:04

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

      Delete
  5. Anonymous09:07

    I ask this after every single quarterly and yearly report by Croatia Airlines so here I go again. How are they the only carrier that does "engine overhaul" on a near constant basis?

    ReplyDelete
    Replies
    1. Anonymous09:10

      Maybe because they are the only ones to publicly speak of it? I remember when JU overhauled its 733 engines there was no mention of it anywhere. My guess is that for OU that's just another convenient excuse.

      Delete
    2. Anonymous10:21

      Exactly

      Delete
  6. Anonymous09:08

    So, basically, the same results as last year.

    ReplyDelete
  7. Anonymous09:08

    Did they give any forecast for this year?

    ReplyDelete
    Replies
    1. Anonymous09:17

      Considering the virus situation, I think it is difficult for any airline to forecast their perofrmance for 2020.

      Delete
  8. Anonymous09:13

    Those results are not looking too good.

    ReplyDelete
  9. Anonymous09:14

    So OU was the ExYu airline with the fewer losses last year!

    ReplyDelete
    Replies
    1. Anonymous09:17

      We have to see how other exYu airlines did.

      Delete
    2. Anonymous09:23

      Judging by the amount of subsidies Serbia and Montenegro gave to their carriers
      OU think OU's 10.7 million Euro loss is easily the smallest.

      Delete
    3. Anonymous09:43

      Which subsidies?

      Serbian gov is only paying back the old debts which was part of the deal.

      Delete
    4. Anonymous09:51

      OU is also the one with the bleakest situation since, unlike YM and JU, they can't rely on the government to protect them. From now on they will have to rely on the little assets they have after which they will have to start taking unfavorable loans.

      Delete
    5. Anonymous10:18

      Anon at 09:43
      LOL, I have a great bridge across the Danube to sell you!

      Delete
    6. Anonymous10:24

      Anon 10.18 why would you want to sell a bridge?

      Delete
    7. Anonymous10:25

      34 mil EUR is direct financial help from Government.

      It is only the question if this loss includes this ilegal help or not.

      And for all of those you mentioned AZ as the company who received state aid as well the following news

      http://rs.n1info.com/Biznis/a574232/EU-proverava-da-li-je-italijanska-pomoc-Alitaliji-protivzakonita.html

      It is just the question of time when we shall see the same news for OU

      Delete
    8. Anonymous11:11

      Anon at 10:24
      Because you seem like someone who would believe anything!

      Delete
    9. Anonymous07:23

      That's a mean thing to say and it's stupid to sell a bridge over Danube when I can put a toll on it and pay for people to cross. :/

      Delete
  10. Anonymous09:19

    OU should stop cooperating with Lufthansa and publish joint venture with smaller airlines.

    ReplyDelete
  11. Anonymous09:19

    It looks like bad moment to look for potential buyer. With all those cancellations related to corona virus, companies will be hit hard this year. Not to mention reduced capacities because of 737Max failed deliveries.

    ReplyDelete
  12. Anonymous09:24

    Every accountant that had ever to book IFRS16 knows that that excuse is false. Before IFRS16 1000€ was totally booked at general ledger for rent costs; now the only difference is that 1000 € is split on the interest costs and depreciation costs. At the end of leasing contract the costs has to be balanced in the same amount as before the implementation of IFRS16. Implementation of IFRS16 is one of the most weird things that IASB has ever invented.

    ReplyDelete
  13. Anonymous09:30

    I don't see any possibility that the results will be much better in 2020 but let's wait and see.

    ReplyDelete
    Replies
    1. Anonymous10:26

      As they will have more costs for leasing the planes on non profiable routes (TGD) the results will be even worse

      Delete
  14. Anonymous09:30

    This result has a lot to do with pure mismanagement.

    ReplyDelete
    Replies
    1. Anonymous09:38

      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.

      Delete
    2. Anonymous09:40

      No airline in Europe or any other developed market with this low load factor is making money.

      Delete
  15. Anonymous09:30

    Let's hope someone takes over.

    ReplyDelete
  16. Anonymous09:34

    disappointing

    ReplyDelete
  17. Anonymous09:34

    Good luck in 2020 OU.

    ReplyDelete
  18. Anonymous09:35

    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.

    ReplyDelete
  19. Anonymous09:35

    Sell the airline ASAP!

    ReplyDelete
    Replies
    1. Anonymous09:38

      Time to get the government out of Croatia Airlines.

      Delete
    2. Anonymous09:41

      First they need to find a buyer.

      Delete
    3. Anonymous09:49

      The privatization might be too little too late.

      Delete
    4. Anonymous10:17

      I don't understand why the government postpones privatization until June?

      Delete
    5. Anonymous10:50

      In June they could say that with the Summer season upon us they can not upset the unions and risk strikes so once again the bitter pill of privatization would be avoided.
      THAT is the goal of politicians of all parties. Keep state companies and their employees happy.

      Delete
    6. Anonymous13:44

      They should fly to warmer destinations in winter.

      Delete
  20. Anonymous09:41

    I wasn't expecting the loss to be this big.

    ReplyDelete
    Replies
    1. Anonymous13:45

      All indicated that it would be around the same as 2018. I was expecting bigger passenger growth though. 2019 was a much calmer year for OU than 2018. Remember in 2018 that was that whole battle around strikes, the banning of the strike by the constitutional court as well as a whole lot of short term wet leases of planes.

      Delete
  21. Anonymous09:42

    How many employees does Croatia Airlines have?

    ReplyDelete
    Replies
    1. Anonymous09:44

      Too many.

      Delete
    2. Anonymous09:45

      Just over 1,000.

      Delete
    3. Anonymous09:54

      That is way too much for its size.

      Delete
    4. Anonymous10:21

      It is even worse in JU and YM!

      Delete
    5. Anonymous10:23

      And that makes it somehow better? Why should I care if its worse at JU and YM?

      Delete
    6. Anonymous10:25

      It is because of people like you that this company is performing so badly. Pulling out examples of someone doing worse to explain that Croatia Airlines' performance is fine. Constantly finding excuses and putting your head in the sand.

      Delete
    7. Anonymous10:47

      All exyu airlines have a bloated workforce. OU compared with the other two probably has less but still bad.
      That and the low loadfactors is what makes all three loss making.

      Delete
    8. Anonymous15:37

      How many employees would be optimal for OU?

      Delete
  22. Anonymous09:45

    nista cudno..
    moze biti samo gore..natjecaj za novi pso jos nije objavljen,letovi iz osijeka i braca jos nisu pusteni u prodaju..to ce takoder u 2020 pridonjeti jos goroj sliku stanja kompanije i jos losije rezultate..

    ReplyDelete
    Replies
    1. Anonymous09:49

      +1 :(

      Delete
    2. Anonymous10:27

      What would be the loss without PSO?

      Delete
    3. Anonymous17:38

      Around 35 mil EUR.

      Disaster for any airliner of that size especially for national carrier of the country with such a tourism

      Delete
  23. Anonymous09:49

    This is not good for potential sale.

    ReplyDelete
  24. Anonymous09:50

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

    ReplyDelete
  25. Anonymous09:56

    How much money they received from government during 2019?
    What is total minus they generated?

    ReplyDelete
    Replies
    1. Anonymous10:02

      The state aid was 13.5 million in 2019 and the will get another 20.2 this year.

      Delete
    2. Anonymous10:02

      *they

      Delete
    3. Anonymous10:07

      So, basically, minus the generated in 2019 is 24 million eur?

      Delete
    4. Anonymous10:41

      @Admin,

      Could you please confirm if 13.5 mil are included into 10.7 mil loss?

      This state cash injection was given to OU in 2019 and it must be seen in the books (at least as extraordinary income).

      Thank you.

      Delete
    5. Anonymous13:57

      Yup, the "minus" in 2019 is ~24 mil EUR

      Delete
  26. Anonymous09:59

    What about accumulated loss? How much of it do they have right now?

    ReplyDelete
    Replies
    1. Anonymous10:28

      And do they have any credit liabilities?

      Delete
  27. Anonymous10:01

    OU need to introduce flights with a lot of O&D passnegers. They could easily fly to Berlin three times per week.

    ReplyDelete
  28. Anonymous11:04


    Best option for OU, and it would only work if the government supports this, separate the maintenance department from the carrier, to move all the support departments to whoever buys them (hopefully it will be Aegean)like sales, marketing, customer support, etc and keep only the operational departments in Zagreb (crew and operations).
    Ground crew and handling should be outsourced, which will eventually show to be much more affordable especially during winter.
    Government should make agreements with A3 about minimum required connectivity and let them decide how to run the company.

    You would still have 12 aircrafts, and around 250 employees, instead of the current 1.000, and have at least the same connectivity. This way there is a chance that OU could survive.

    ReplyDelete
  29. Anonymous11:26

    I was gobsmacked when I read the following statement by Management:

    "The high level of seasonality on the Croatian aviation market continues to pose a major problem for the company and its business".

    The high demand summer period is a golden opportunity that no other ex-yu market has, so it should therefore be an OPPORTUNITY rather than a "problem".

    The fact that this management doesn't see it that way, speaks volumes for the lack of competency and capability that this group of people has.

    Shame on them.

    Time for somebody else to be given a go.

    ReplyDelete
    Replies
    1. Anonymous11:41

      +100

      If there is any time left

      Delete
    2. Anonymous12:09

      I thought I had read everything and that nothing could surprise me. But when I read that "high season" is a problem for the current management, then there is really nothing more to say ....

      Delete
  30. Anonymous12:04

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

    ReplyDelete
    Replies
    1. Anonymous12:11

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

      Delete
  31. Anonymous12:05

    At the start of last year they said they expected 5% passenger growth. So much for that...

    ReplyDelete
  32. Anonymous12:12

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

    ReplyDelete
    Replies
    1. Anonymous12:51

      Competition. Especially from the likes of Emirates so there is no need to transport cargo to places like Frankfurt anymore.

      Delete
  33. Anonymous12:50

    Given these results and the way this year has started with the virus 2020 will be a disaster. Let's hope someone takes over and OU ca realize its full potential.

    ReplyDelete
  34. Anonymous13:43

    Any particular reason for this loss?

    ReplyDelete
  35. gde je sada stari haver kučko da im objasni kako se posluje pozitivno?

    ReplyDelete
  36. Just everybody watch this video that is on YOUTUBE from a guy Luka T. Its a trip report from London to Zagreb with Croatia airlines on a a320. He says there that his outbound flight from Zagreb to London on a 174 seat airplane had only 30 passengers!, and if everybody watch closely, will notice that the flight he is on is half empty. I don't know if it's seasonality the matter or the management fault. Just judge for yourself.

    ReplyDelete
    Replies
    1. Anonymous01:59

      Seasonailty should not be a new issue. Even Ju is struggling with Beirut. Those are market trends.

      Delete

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