Croatia Airlines has said it is drafting plans for its business in the aftermath of the coronavirus pandemic, which has devastated the aviation industry. In a statement, the Croatian carrier said, “Croatia Airlines would like to inform the corporate public that it has begun work on a ‘Post Covid Strategy’. We are exploring the market for potential expert advisors who can work alongside in the drafting and implementation of the Post Covid Strategy. We will inform the public in due course of all future steps that will be undertaken”. Last year, Croatia Airlines registered its biggest financial loss in eight years, while carrying the fewest passengers in over 25 years as the aviation industry was obliterated by the pandemic. The company also received 11.7 million euros in direct state aid and 33.2 million euros as an equity loan by the government. It was also recapitalised by the state with a 46.2 million euro cash injection.
Croatia Airlines is expected to remain state-owned for at least another two years. Prior to the coronavirus pandemic the Croatian government set a deadline to privatise the carrier by June 2020. Last month, the company noted, “The privatisation process was halted at the onset of the Covid-19 crisis. This has been done due to unfavourable circumstances and force majeure. Given IATA projections for the aviation industry and the uncertainty surrounding the duration of the corona crisis, it is unlikely this process will be resumed before 2023. Croatia Airlines, as Croatia’s national carrier, represents a strategic part of Croatia’s transport infrastructure, and its importance has been amplified during the ongoing crisis because the company has contributed in maintaining the country’s connectivity”.
Croatia Airlines is rebuilding its network and will restore several routes next month. The carrier will increase frequencies out of Zagreb to key cities in Western Europe from mid-May with Frankfurt and Amsterdam to have the most weekly rotations with at least one flight per day. The airline will restore seasonal operations from Split to London, Vienna and Zurich towards the end of next month, as well as services from Dubrovnik to Frankfurt. Based on its existing schedule for May, which is subject to change, the carrier plans to operate a total of 1.095 commercial flight operations and offer 96.842 seats on sale. This represents a 24% increase in frequencies compared to April and a 28% increase in capacity.
Don't know who did more damage to ZAG aviation market, covid or OU.
ReplyDeleteYes, it was the only airline to fly from ZAG during height of covid and that somehow did damage to the airport... seriously
DeleteHaha
DeleteCovid is harming ZAG for one year. OU is harming ZAG for almost 30 years, by remaining small instead of growing and simultaneously preventing others to do anything in ZAG. Clearly they did much bigger damage.
DeleteOU flew to FRA only during covid times, that's hardly some major benefit. It again helped Mutti get some extra dough in the process.
DeleteNo, it helped the state save money by not paying for repatriation flights.
DeleteOU growth between 2014-2019 (CAGR) at ZAG is less than half of the other carriers average. That means, OU is the one dragging ZAG's growth down significantly.
DeleteOh dear, only now thinking of a plan...
ReplyDeleteWell Covid is nowhere near over so...
DeleteIsn't it too early?
ReplyDeleteActually, for once they are thinking on time in my opinion :)
DeleteIt will be interesting to see what they've got planned.
ReplyDeleteProbably another begging bowl to the government. How about they start by getting rid of half of there bloated workforce and getting in the real world. Communism died decades ago.
DeleteI find it surprising that OU has not reduced its workforce.
DeleteIn the past the union would strike, now with Covid they would have to accept job reductions.
DeleteThey said a few months ago that they will renew fleet with mid age A319s and A320s instead of neos. It was written here. So that's the direction their fleet will be going in.
DeleteInteresting. Didn't know that
DeleteMany of those workers are voters... So cutting staff is a big no no in these sacred Balkan lands:)))
DeleteJU fired 500 employees in covid times. So at least one airlines used this opportunity to redice its workforce. Man left through early retirement plans.
DeleteEarly retirement packages are different. And firing seasonal, agency workers are not your voters :)
DeleteGood I support this initiative. I only hope it isn't an attempt to hire and pay big sums to "expert advisors".
ReplyDeletePerhaps they need to spend a few hundred million Euros investing in a longhaul fleet so they can run shuttles to NYC, Delhi, Bangkok.... You just know someone will suggest this later in the day
DeleteTwo days ago director of croatian tourist board in New York said she was expecting all 3 big US carriers, United, American and Delta, to"connect various destinations in the US and Croatia ". 500.000 passengers yearly between Croatia and North America. And uhljebs still bitterly defending their feeder loss making model.
DeleteFirstly OU has to get rid of Lufthansa influence (you can read that as Misetic influcence) in order to start thinking independently and logically. And this seems impossible, considering his very close relations with the current PM.
DeleteSounds quite ridiculous. They are now in the process again of hiring some external advisors to give them millions for an outcome that most likely won't be worth it. Like they don't have the numbers within OU for themselves? God dann it just analyze them and you will find out it will probably be best to operate mainly charters with airbusses from the coast in summer and in winter build up a small hub and spoke system in ZAG and store remaining planes in winter. Sorry for ZAG regarding summer high season but I am convinced if you do it right planes will bring more money when you do charters on the coast.
ReplyDelete+1
DeleteWhy do I have the feeling the external advisor will be LH Systems or LH Consulting.
DeleteI would be over the moon if one of those was the external advisor.
DeleteThey should explore new market opportunities i.e new routes.
ReplyDeleteTheir fleet structure will also be interesting. They confirmed that the A320s neos are being cancelled.
ReplyDeleteLike someone said above, they will be leasing mid-age A319s and A320s in the future. At least that's what they said a couple of months ago.
DeleteOU needs 100-seaters.
DeleteWhat they need is more CRJ planes if you ask me. Lower capacity plus cheaper.
Deletewith what money?
DeleteYes, I like the CRJs.. All new E2s... More pricey I know but still.
DeleteThe current A319/A320s are getting quite old
DeleteAccording to airfleets.com
DeleteA319 - On 125 airlines operating this type of aircraft Croatia Airlines ranks 112
A320 - On 259 airlines operating this type of aircraft Croatia Airlines ranks 230
^ouch
DeleteGood luck in the post covid world OU.
ReplyDeleteCroatia Airlines will be around for a LONG time
DeleteDifficult to go bankrupt with an unlimited flow of state aid, I agree.
DeleteAt one point the state will be unable to keep pumping money in.
Delete^ They have been doing a good jobs so far.
DeleteThey are planning? Not too early? :)
ReplyDeleteIn my opinion for once they have started planning on time. I think this is a positive development.
DeleteAfter corona, i dont think anyone would be interested in buying OU.
ReplyDeleteNo one was interested before either.
DeleteNot true actually. Several airlines were.
DeleteI really hoped that one day we will get a wide body aircraft, and offer routes to East Asia and the US, but we probably won't happen.
ReplyDeleteI don't think it's part of OU's strategy to fly long haul
Delete1994 flights to JFK, ORD and YYZ were announced and published for sale, with ex LH DC-10. In 1991, original start up plan was to start with MD-80 on medium haul and within two years acquire 767 and start US, Canada and Australia. Then, corrupted "managers" bought ATR and decided to leave the most lucrative long-haul market to LH, filled the company with uhljebs, and continuing to ruin it, day by day, including the "brilliant" last "post covid consultants" strategy
Deletewow that would have been a very different airline if those plans realized.
DeleteHow many DC-10s were planned? I guess another issue is that back then they had people who worked for JAT. Today they have many people who got jobs because they were politically active or put up posters in the streets.
DeleteYeah, in 1994. long haul in Croatia at airline with five 120 seaters and two 50 seaters would totally work.
DeleteYeah, in 1994 MEB3 didn't exist. Only Emirates, relatively small, providing almost no transfers. And conservative North American companies absolutely haven't considered flying to Croatia. Half of the Balkans was migrating to North America. Serbia under sanctions, couldn't operate flights. So, yeah, it was right time to start it, and develop it with the development of tourism and with spreading all over the Balkans and central and eastern Europe. Today they could have been the size of Austrian. But why when LH needs feed, yeah
DeleteIn the end, nothing will change.
ReplyDeleteWe all know that
DeleteThat has been OU's problem for many years. Little innovation, just going through the motions. I wish this airline the best and it's just sad because I know it has so much potential.
Delete+1 last anon
DeleteBut why the need for an external partner?
ReplyDeleteSo hopefully some sustainable plan can be made.
DeleteSecond cousin twice removed of a government member perhaps, in need of some cash?
DeleteProbably. I really don't see why an external entity would have to do their job for them.
DeleteHope for the best.
ReplyDeleteStrategy is to keep all the benefits and get the money from taxpayers...
ReplyDeleteOU has a very good network and good fleet. It just needs to learn to use this to its advantage.
ReplyDeleteHahahahahahahahahahahahahaha
DeleteWell let's see what will happen regarding OU.
ReplyDeleteNothing.
DeleteThe only way OU can be privatised is for the government to offer super favourable conditions to the buyer, being 1 euro purchasing price and incentives and benefits for taxes and airport fees. Otherwise, literally no one will be interested.
ReplyDeleteIn the end I think this will happen. They won't be able to keep supporting the company because at some point the EU will express concern about it. They will decide it's better to offload the company than for it to go bankrupt and they will probably offer some good conditions for someone to buy it.
DeleteIf nothing let's hope this wakes up the management and they really seize some opportunities as they have left many slip.
ReplyDeleteWith Ryanair entering the scene, it is too little too late.
DeleteFor years OU has basically relied on the LH Group and feeding their airlines and hubs. OU must decide what it wants to do. Either they should use this opportunity to become more independent and rely more on themselves or to continue accumulating losses while helping Lufthansa and its airlines grow and recover from Covid.
ReplyDeleteI hope things improve
ReplyDeleteTime to revisit plans to open a base in LJU.
ReplyDeleteI still think there is an opportunity there actually.
DeleteThey are looking for external experts, but I bet if they go bankrupt one day, they will all be crying like in Adria's case - how much know-how has been lost.
ReplyDeleteKnow-how in making a loss, year after year, after year.
It's not that there is no know-how. It is just that they are sidelined because those at the top lack it.
DeleteWill they make the document public when it's completed?
ReplyDeleteYes, an airline will willingly publish its future strategy for all of its competitors to see.
Delete:D
Delete*Paging Mr Garuda*
ReplyDeleteFR just announced a RIX base with 16 destinations where most of them are indirect competitors to BT. Seems like Ryanair is determined to attack weaker players and to force them into bankruptcy... hence why both ZAG and RIX are starting in autumn when demand starts to gradually fall. I suppose they hope neither BT nor OU could last until spring when bookings normally pick up.
ReplyDeleteThis could very well be their strategy. BTW BT has a similar kind of reputation in the Baltics to Croatia Airlines when it comes to competition and shielding itself from competition (they use all means necessary, complain. etc..)
DeleteInteresting, I don't know about OU prices in general but all the Latvians I met have always complained that BT is good but expensive. I guess they struggle because their market is very limited and they do have a lot of competition. Now RIX will be home to three airlines: BT, W6 and FR.
DeleteBut BT is still an airline with good managment? They are expanding every year, taking brand new planes every year. They are not like OU so much, but you are right about prices. They are always so expensive here in Split when you try to book tickets to Riga or some other city near by.
DeleteI would assume that's because their flights from Split are full...
DeleteInteresting reading and finally an admission from OU management with a call for external advisors - they have no idea how to manage through this crisis or to pull together a plan going forward. How sad.
ReplyDeleteIf only they had been equally as honest during the good times between 2015 - 2019 and had advisors come in to tell them how to take advantage of aviation's good years !!!
I wonder at what cost
ReplyDeleteWell, they say they will inform us of future steps. Maybe we find out the price too.
DeleteSo, what next for OU?
ReplyDeleteNo one knows
DeleteWill there be a tender for the external parnter?
ReplyDeleteSeems so.
Delete"We will inform the public in due course of all future steps that will be undertaken"
That is basically announcing a tender will take place.
Their clock is ticking
ReplyDeleteI have to wonder what possessed them to announce this publicly.
ReplyDeleteI think this was a stock exchange filing where they have to announce future tenders.
DeleteIt seems they have found the solution to pay someone externally. We already had two privatization advisors paid for unsuccessful privatization attempts. Since it would be hard to justify another privatization advisor, I guess this will do.
ReplyDelete