Croatia Airlines saw its losses widen and passenger numbers decline during the first quarter of 2020 as a result of the coronavirus Covid-19 pandemic, which began in March. The carrier registered a net loss of 14.6 million euros during the three-month period, up from its loss of 13.3 million in Q1 2019. During the first three months, revenue declined 3% to 32.7 million euros, while expenditure was up 1% totalling 47.2 million euros. The airline warned the full effects of the coronavirus will be felt during the second quarter, when much of its operations were suspended. Croatia Airlines was one of the few carriers in Europe to maintain services during the height of the pandemic by maintaining a daily service between Zagreb and Frankfurt.
Croatia Airlines said, “Revenue from tourism makes up a significant share of Croatia’s GDP, while the tourism and transport sectors have been hit hardest by the coronavirus pandemic. It is now obvious that the pre-season has been lost, and the main tourist season will be impacted as well. European countries, most notably Germany, Slovenia, Italy and Austria, as the main markets for Croatian tourism, have had their economies severely affected”. The carrier added, “The company’s performance in 2020 will greatly depend on external factors, as well as the decisions and recommendations made by the Croatian Civil Protection Authority, which directly impacts on the likelihood of domestic and international travel”. From the onset of the pandemic until the end of March, Croatia Airlines saw its sales decline by 18.3 million euros, while the amount it spent on ticket refunds increased by 1.2 million euros on 2019. “Despite launching a voucher system, which can be used by passengers for future travel, it is expected that a significant number of unused tickets will have be refunded which will serve as another blow to the business and the company’s liquidity”, the airline noted.
The national carrier handled 270.413 passengers on board its aircraft during the January - March period, a decline of 21.8%. Of those, 65.809 travellers were carried on domestic flights, down 25.4%, while 203.130 passengers flew on international services, a decline of 20.8%. The remaining 1.474 passengers were carried on charter flights, up 28.1% year-on-year. However, charters accounted for only 1% of overall traffic. The airline operated 4.528 flights during the first quarter of the year, which is down 9.8% compared to the same period in 2019. The average cabin load factor stood at 60.1%, down 8.5 points. Loads were softer on international flights by 9.5 points for an average of 60.7%, while on domestic services they were down 3.9 points to 56.5%. Passenger carrying capacity, measured in Available Seat Kilometres (ASKs), stood at 305 million, down 8.4% year-on-year. The number of employees at the company increased slightly, from 1.000 to 1.037. This was primarily as a result of taking on additional cabin crew members in the lead-up to what was to be a busy summer season with a record number of aircraft in the airline’s fleet.
Q2 is when it going to get really bad unfortunately :(
ReplyDelete* its
DeleteAre there any details on how the government plans tp help OU?
ReplyDeleteThe government said it would cover OU's losses but didn't give details. EU has allocated 10.7 billion in funds to Croatia over next four years.
DeleteUnfortunately I don't think that will be enough, Croatia will need those 10.7 this year alone as its GDP is set to collapse by close to 10% (official estimates). It seems like June and the first half of July are not going to see any serious tourism that will considerably impact the country's finances. Don't forget that even if we get tourists in August it will not be enough to cover losses from May, June and July.
DeleteOuch
ReplyDeleteThe question is, would there be a loss if there was no corona?
ReplyDeleteThere would. But it seems to be it would have been lower than last year.
DeleteIt can't be known
DeleteThis year will be a disaster. The issue is that most of OU's traffic in summer depends on tourists. Unfortunately there will be few this year.
ReplyDeleteThe next couple of years will be very bad for all airlines (those that survive)
DeleteAre there any realistic chances OU could find a strategic partner now that corona has happened?
ReplyDeleteThere were few chances before corona. Now there are virtually none.
DeleteI saw Garuda started restructuring so maybe after they can complete the take over process?
DeleteHilarious....
DeleteAirline who is changing their European routes timetable every two months. Im not even sure from which cities in Indonesia they are operating European routes.
DeleteWell, ZAG could be the hub through which they cover all of Europe. Like an Indonesian distribution center in the EU.
DeleteThey are in Skyteam so they are covering most of Europe with KLM's hub in Amsterdam.
Delete@11.27 that is what Garuda announced when they were interested in OU several years ago.
DeleteGaruda's plan was quite stupid.
DeleteEverything decreased but the number of employees, the one metric that is already too high for a company of OU's size.
ReplyDeleteIt says why
Delete" This was primarily as a result of taking on additional cabin crew members in the lead-up to what was to be a busy summer season with a record number of aircraft in the airline’s fleet."
With only 12-14 aircraft, over 1,000 employees seems excessive. That is what drives their costs up.
DeleteAnon 09:16: easyJet has 15.000 employees for a fleet of 339 aircraft = 44.3 employees/aircraft
DeleteCroatia Airlines on the other hand, has 1037 employees for a fleet of 13 aircraft = 79.8 employees/aircraft.
So almost twice as many people as a profitable airline. And then people wonder why they can't make profit...
Actually OU had 12 aircraft during Q1. They got the thirteenth just two weeks ago.
DeleteAnd Easy's planes have much more seats than Dashes which are half of OU fleet so actually it makes the count much worse, not twice more but three times more employees than actually needed
DeleteThis is bad.
ReplyDeleteFinancial figures are very poor this year but you can't blame them for it.
ReplyDeleteTheir financial results have been poor for years, especially during Q1.
DeleteLet's hope there is a strong recovery in Q3 and Q4.
ReplyDeleteI wouldn't hold my breath. Not just OU but any airline for that matter.
DeleteGiven the results, 2020 will be a disaster.
ReplyDeleteFor everyone.
DeleteIt will be a disaster for everyone but not in the same percentage. Countries depending from tourism including their national air carrier will be mostly hit.
DeleteIn ex-Yu it is Croatia.
Airlines depending mostly on transfer traffic will also be severely affected due to different regulations and border rules for each country.
DeleteEntry regulations do not apply on transfer airports..
DeleteIf the prices , as expected, go up the passengers will be in bigger percentage oriented towards transfer flights as they almost always offer better price than the direct flights.
Entry regulations very much apply to transfer passengers. It's not about whether you are allowed to transfer through an airport but about whether you are allowed to enter the country of your final destination. So airlines depending on transfer traffic from non-EU countries to EU countries will be affected. Even OU stated that it expects routes such as Skopje which relies on transfers to the Netherlands to be affected.
DeleteIf you are transfer passenger on transfer airport you can't have "entry" regulations as you do not enter that country.
DeleteBig majority of the countries in Europe are EU countries or EU rules apply on them (Schengen countries) where entry regulations do not apply anymore or will be very soon lifted
For example
SOF-BEG-ZAG
ATH-IEV-ARN
OTP-IST-MAD
etc
Once the bans for non EU countries get lifted people will have to travel mostly for business or flying home (diaspora).
Tourism will be, no matter if there is travel ban or not and no matter if the country is in EU or not, at the bottom of the priorities. Therefore countries depending from the tourism and their national air carriers will be mostly hit.
The bans for non-EU citizens won't be lifted any time soon.
DeleteMost probably it will be soon at least for some countries...
DeleteVery few countries have actual bans, most have recommendations and many are lifting them. Italy, Cyprus and Greece will lift them in 13 days. Some like Hungary, Romania and Bulgaria already allow non-EU people to enter, at least they allow Serbs. So there is no some blanket rule that applies to all.
DeleteThat's 6 out of 27 countries.
DeleteThis is just the tip of the iceberg.
ReplyDeleteOU will have to adopt a completely different approach and strategy to their operations once things stabilize with the pandemic if they want to survive.
ReplyDeleteSuch as?
DeleteTheir opportunity was long gone, their domestic network is shrinking (passengers) and Europe isn't performing that well either.
DeleteSummer will be bad but a historically weak winter will be even weaker. Demand for Croatia seems to have collapsed all around as we could see from posts on this blog. Every day someone is either cancelling or delaying their return to the market. This is also impacting OU. They wll get money to make it through the summer but what about the upcoming winter season? They need to survive somehow until summer 2021.
ReplyDeletePersonally I don't see them making out long-term no matter how much money the government injects into them. I mean they already burned through €133 million while changing almost next to nothing.
And they burnt that money in the time when tourism in Croatia was expanding like never
DeleteKE has tentatively scheduled their return to BUD for summer 2021. Maybe this is the perfect opportunity to get a cheap A330 and to launch ICN flights. They can run two weekly flights at great profit and with their transfers they can maybe even push it to three. They need to start thinking outside the box.
ReplyDeleteThey can also introduce two weekly flights to JFK. JU seems to be doing ok there so OU should too since Croatia is a popular tourist destination in the US.
+100 something has to change
DeleteJust read a title of this text
DeleteYes but they are getting a cash injection from the government. They should use it as an investment in their growth.
DeleteLast anon: Losses are that big that they will use State aid to pay ongoing debt and salaries to employees. There is no money for obtaining widebody.
DeleteGood luck OU and I hope the management does the right thing and finances improve.
ReplyDeleteUnless they can end the pandemic, I don't think there is much they can do.
DeleteWhat is the passenger yield, based on revenue passenger kilometers?
ReplyDeleteCompletely expected, what's with all the surprises??????
ReplyDeleteIs there ANY airline that made money in Q1/2020, or that will make money in Q2,Q3,Q4?
Stop with the Crocodile tears all you OU "lovers".
Croatia Airlines WILL SURVIVE with Croatian Government subsidies for many years and decades to come, just like JU will, especially since now this became easier when EU lifted the restrictions to recapitalize airlines.
OU saved by the bell, A1+
What is your problem? I don't see that anyone is surprised or crying "crocodile tears" (not an english saying btw). The loss is expected. Even if there was no corona, no one would have been surprised by them posting a loss for a 4th consecutive year.
DeleteAlso, there is a common misconception that the EU is now allowing state aid left and right. There are a lot of strings attached to all the aid.
You make it sound as if the government can fund them ad infinitum which is obviously not the case. Also there are still EU approvals that need to be secured and the government hasn't moved on state aid. The longer they wait the worse it will be.
DeleteOU won’t go bankrupt to many peoples dismay....
DeleteI also don't think OU will go bankrupt or any other ex-Yu airline for that matter.
DeleteIt is so not true that Croatia was "was one of the few carriers in Europe to maintain services during the height of the pandemic".
ReplyDeleteRegular internacional (and domestic) routes had:
British
Aer Lingus
Icelandair
Air Greenland
Iberia
Air Europe
TAP Portugal
Vueling
Ryanair
Wizz Air
Air France
KLM
Lufthansa
Condor
Swiss
Eurowings
Alitalia
And domestic flights were operated by:
Aegean
SAS
Norwegian
Wideroe
Loganair
Eastern
Aeroflot
That's 24 airlines out of hundreds. So yes, it was one of a few.
DeleteAegean dis have a single intl route that was never suspended - Brussels.
DeleteOut of hundreds? In Europe there are hundreds companies? Are you for real?
DeleteYes there are 165 operational scheduled airlines in Europe at the moment. Not including charter airlines.
DeleteWill Croatia Airlines resume all flights in its network some time during summer or will some routes be cut?
ReplyDeleteI think the seasonal Scandinavia routes will be cut for this year. But I'm not 100% certain.
DeleteHopefully ex-Yu airline weather the crisis.
ReplyDeleteNow imagine wizzair makes a blitzkrieg and opens a base in Zagreb and Split what they did in Tirana.
ReplyDeleteThey will kill OU within a minute and attract both gasto and the lower number of tourists this year.
Wizzair don't snooze.
Wizz opened TIA not because of the market but because of the conditions the airport offered, something ZAG doesn't do.
Deletewill they ever use the 9A-CTN airplane or they are paying for it just to be sitting down and stored?!!
ReplyDeletePayment agreement has been renegotiated. They are not paying for it at the moment.
DeleteTo be honest I thought it would be much worse.
ReplyDeleteCan it be worse?
Delete