Croatia Airlines has said it will undertake rigorous cost cutting measures in order to safeguard jobs and preserve its liquidity. The state injected 91.4 million euros into the company over the past two months, 46.5 million of which through recapitalisation, 33.2 million as an equity loan and 11.7 million euros in direct aid. “Croatia Airlines has shared the fate of the entire aviation industry. Our operations in 2021 will be highly dependent on the epidemiological situation, which will have a crucial impact on demand. Despite it all, Croatia Airlines will continue to actively contribute to the development of the Croatian economy by ensuring air connectivity. The health crisis has reaffirmed the importance of the Croatian national carrier for the country’s transport infrastructure, considering that we continued to fly throughout the crisis by carrying passengers and humanitarian aid unlike foreign airlines that left the Croatian market at the very start of the crisis”, the company said.
Commenting on the year ahead, Croatia Airlines noted, “We will continuously harmonise our business activities during 2021 based on the existing epidemiological situation at the given time. In line with announcements and the gradual normalisation of the health crisis, as well as the expected lifting of travel restrictions, we stand ready to gradually increase capacity and flight operations on routes that we were forced to reduce in 2020. The normalisation of passenger flow and the return of confidence in air travel will be key to restoring market demand, which will dictate the business rhythm for the entire aviation sector, including Croatia Airlines”, it said.
The Croatian carrier has so far introduced a number of measures to bring down costs and plans to maintain them in the coming months. “Until further notice, we are continuing to rationalise our business in all segments. We will undertake rigorous cost saving with the aim to safeguard our liquidity and preserve jobs. During this winter season, we are maintaining flights from Croatia to around ten European destinations, and are operating to five airports within Croatia itself”, the carrier noted. This month, Croatia Airlines is operating 701 flights (both directions included) and has 66.724 seats on sale. It represents a 63.4% decline in capacity compared to the same month last year.
Croatia Airlines' top routes in January based on offered capacity
They are planning? Not too early? :)
ReplyDeleteI'm guessing they will do away with the free snacks sooner or later.
ReplyDeleteGee, that should help them back to profitability in no time !
DeleteJust a little memory from some 30 years ago, to show you how they function from the day 1 : Brilliant idea of the first CEO, Katicic, while there were real meals as inflight service, to take out small bags of salt and pepper from the meals, and be given on request only, in order to "save costs". Aproximately the same time frame, represrntative from Switzerland asked him to reduce the ticket prices on ZRH, which at the time had some 30% LF. He had talks with Albanian diaspora in Switzerland, and guaranteed 90% LF on both ZRH and SKP flightsu, providing transfers. OU tickets were more expensive than Swissair's, and were supposed to be reduced for some 10-15 %. He refused, telling, literally, "No, we are not lowering prices". I believe nothing else is to be said here.
DeleteWell, he was certainly a visionary !
DeleteYes, and his vision is in effect until this very day, and going on
DeleteI find it surprising that OU has not reduced its workforce.
ReplyDeleteIn the past the union would strike, now with Covid they would have to accept job reductions.
DeleteI still think they should have established a base in LJU with one Q400. Could have been successful.
ReplyDeleteToo close to ZAG.
DeleteWould be cutting into their own turf.
So they got 91.4 million?? That's almost as much as they asked for back in June 2020
ReplyDeletehttps://www.exyuaviation.com/2020/06/croatia-airlines-seeks-927-million-in.html
Good on them.
Unlike our former government in Slovenia, I'm glad that governments in other ex-yugo countries saw the need for national airlines and are willing to help them.
DeleteOne of the smartest things that your govt did was to wave goodbye ... if there is a need for a new carrier, then they should encourage and support private capital to establish such an airline
DeleteHelping a national carrier is ok when losses are able to be recovered through taxes and other contributions to the economy ie tourism, business. Idealy, one excepts the carrier to make a profit.
DeleteHowever, pumping cash into a carrier that year after year shows no financial improvement or improvement into overall connectivity regardless of subsidies is not a solution either.
JP and YM were both examples of carriers that were simply no where near worth the investment, YM especially. OU is unfortunately, slowly going down that road, yet has great potential.
@JATBEGMEL:
DeleteAre you sure about that? It's not like LJU has airlies lined up and willing to fly everywhere. Adria was Slovenia's only connection to the rest of the world.
Smart
ReplyDeleteGreat comment, very detailed.
DeleteHe probably put a lot of thought into it.
DeleteToo little, too late. They are not competitive to capture the post covid market, especially if ETF takes off.
ReplyDeleteWouldn't hold my breath about ETF.
DeleteBased on what has been reported abt ETF, they are 2 different business models - one is scheduled while the other is a charter operator. ETF will be like Trade Air - which has been existence for many years and hasn't managed to put OU out of business thus far, even though they have 4 aircraft - so I don't know what you are talking about ETF being a threat to OU
DeleteETF will be focused on the coast like Dubrovnik Airline was in the past. OU is also focusing on that business even though its share has been going down for a while now.
DeleteIt's good at least that they are organised and thinking about costs.
ReplyDeleteWhere have they been up until now ?
DeleteThey have been cutting costs since the start of the crisis. You just haven't been following the news.
DeleteIf they had done their job properly, there would now be no more to cut
DeleteYes, you are right because the situation on the aviation market is so stable and predictable, there is absolutely no need anymore for anyone to revise their plans on a monthly basis.
DeleteI think what Anon at 09:41 was trying to say was that for a company which has been mostly losing money in the past, and have gone through numerous restructuring processes, they should really be as lean as they can get already by now.
DeleteLet's see how things turn out. I wish them good luck. Acting CEO Bajic's terms has been extended by another 6 months by the government.
ReplyDeleteHow long has that been now - 4 or so years ?
DeleteYes, this will be his fourth year.
DeleteNo wonder the poor guy can't make any tough/difficult decisions ... he's making sure not to rock the boat given that he has been on 6 mthly contract extensions all this time
DeleteThe people in charge are utterly incompetent and/or disinterested to improve any aspect of business. That's from my personal run ins with them.
DeleteThey should have gone harder and earlier - like so many other airlines did- instead of waiting like bloodsuckers for the inevitable injection of govt funds. Same applies to JU. Both are and will forever be suckling on mother's milk..
ReplyDeleteWhy the need to bring JU in a topic on Croatia and OU? It also makes no sense to mention JU when they had already reformed and prepared themselves for this scenario. They fired employees and reduced salaries months ago. They also retired YU-ANJ which was destroyed and have returned two expensive planes. JU is proactive and they also have a much larger operation both now and in general.
DeleteIf you think that's the end of JU's cost cutting, I'm sorry to break it to you but you are mistaken.
DeleteThere isn't much more to be cut. Service will remain as it is and the fact they did not cut more of their network is also a good sign. Not to mention that massive boost from MNE market they will get now that YM died. So JU is really not in a bad shape.
DeleteI wish I could be as optimistic as you but let's wait and see.
DeleteWell I am sure you were one of those pessimists since 2013 yet here we are.
DeleteIn the the whole text I didn't find any example on the cost cutting measure they are implementing (or planning to implement).
ReplyDeleteIt was written before that they renegotiated aircraft leases and put off loan repayments. They are also negotiating to cancel A320neo order which was also reported.
DeleteAnon 9:37 did you read the title: Croatia Airlines plans “rigorous” cost saving measures? Plans, not already known or implemented measures. We knew about lease rates and possible cancellation of NEOs.
DeleteNenad is right, there is not one example of new measures OU plans to implement.
Just comes to show how important the domestic traffic is in Croatia. The capital and the coast contribute significantly to the economy. Reminds a bit of the NYC-LAX, MAD-BCN or ATH-SKG routes.
ReplyDeleteYes, ZAG-SPU/DBV is exactly like NYC-LAX.
DeleteYou don't get it. Those routes were similar examples of capitals or bigger cities connected to their coasts. Another example is RUH-JED. Many countries usually have a proper capital and a sea capital.
Deletebut none of them are PSO
DeleteWhenever I hear or read phrase "safeguard jobs" I'm 100% sure it's going to cost other people's money or in one word: socialism
ReplyDelete+1000
DeleteI stopped reading after that first sentence. It's exactly opposite of what should be done - they should get rid of excessive administration on lower levels and mid level uhljebs who are sitting and doing nothing on positions invented for them and non existent in other airline companies
Covid19 is the best thing that has ever happened to Croatia Airlines. They can keep losing money and sucking taxpayer's money for the next 20 years without questions asked. Nitko nije kriv, krivo je more... ili Covid.
ReplyDeleteThe article says little or nothing about how exactly OU intends to cut costs.
ReplyDeleteOn the other hand they could reduce losses by utilizing the unused capacity on the charter market.
Yes, more charters during the summer is something they should have started years ago.
DeleteAren't this a bit late with the planning?
ReplyDeleteCovid is out for 1 year and they are starting to plan to respond ?
Read comment at 9.37.
DeleteYes my point exactly, they should have done this already in early 2020.
DeleteThey are responding to new market conditions with 1 year delay.
I find some of your comments quite sulky when it comes to OU. An airline with a decent network covering many important, primary European cities, an excellent domestic network, prestigious Star Alliance membership, a decent fleet.
ReplyDeleteYes, it may have sucked some money but who else didn't? Wishing OU all the very best and hopefully better times ahead.
"An airline with a decent network..."
DeleteI stopped reading here.
100M eur into OU in the last two months. Taxpayers in countries like Croatia, Serbia and others in EXYU all want to keep paying less taxes. For some reason not too many comments from taxpayers in Croatia are outraged at this number, unlike number of concerned taxpayer comments when some other countries are discussed.
ReplyDeleteArguably, one could arrive at a conclusion about possible correlation between the presence of Wizz/LH at capital airport and number of taxpayer comments advocating against subsidies for active, operational national carrier. This is not to say airlines are in any way linked to those comments.
Thank God I'm not paying taxes anymore in Croatia. But I do suffer every time I need to fly home outside of summer how crappy the connectivity is...even to Zagreb.
Delete