Croatia Airlines to cut costs and implement new strategy


Croatia Airlines plans to further cut its costs and implement its much talked about post-Covid strategy next year, the company’s CEO, Jasmin Bajić, has said. The CEO noted, “Traffic will continue to be contingent on external factors, beyond the company’s control, such as restrictions, bans and other measures, which directly impact on people’s ability to travel both domestically and internationally. Accordingly, we will focus on flexible planning of our network. Our goal is to achieve optimal load factors with average fares in existing conditions of reduced capacity. However, there is some optimism based on the latest forecast by the International Monetary Fund which predicts the recovery of the Croatian economy in 2022 with 5.6% GDP growth. Therefore, in 2022 our focus will be on greater rationalisation of costs and the implementation of the company’s defined post-Covid strategy”.

Mr Bajić noted the carrier’s post-Covid strategy, developed in cooperation with the Boston Consulting Group (BCG) will be the foundation of the airline's development for years to come. “We continue to take all the necessary measures to safeguard liquidity and optimise the business, as well as undertake rigorous cost cutting measures. During the year, we worked with the leading international strategic consulting company BCG to develop a post-Covid strategy in order to define strategic initiatives, the implementation of which, with prior consent of the majority owner - the government of the Republic of Croatia - will take thee years to enable a sustainable business”.

The post-Covid strategy is soon expected to be adopted by the Croatian government and foresees the renewal of the fleet, improvement in efficiency and competitiveness, as well as the optimisation of Croatia Airlines’ year-round route network. The Croatian carrier will also further digitalise its business by switching to a new SAP system (Systems Applications and Products), a widely used enterprise resource planning software, as well as study and analyse data in more detail, improve management skills at all managerial levels, increase productivity, focus on quality, entrepreneurship, cost awareness and innovation. “We will inform the public of all upcoming steps in due course”, the company noted.



Comments

  1. Anonymous10:36

    In other words we should not expect major expansion if they plan to continue cutting costs next year.

    ReplyDelete
    Replies
    1. Anonymous10:41

      We probably won't see expansion until new aircraft start arriving.

      Delete
    2. Anonymous10:49

      Well at least it seems BCG didn't conclude that feeding LH hubs is the best way forward and the only way to make money.

      Delete
    3. Anonymous12:53

      Feel sorry for this guys!

      Delete
    4. Anonymous12:55

      Who?

      Delete
  2. Anonymous10:39

    New strategy be like: Begging for more state support and cash, then sitting and doing nothing and begging for cash again and so on.

    Such a disappointment, OU is in stagnation for years ....

    ReplyDelete
    Replies
    1. Anonymous22:32

      I agree. This is nothing new. It has been the case for many years.

      Delete
  3. Anonymous10:42

    Had the price of the BCG agreement ever been revealed?

    ReplyDelete
  4. Anonymous10:42

    What does route network optimization mean?

    ReplyDelete
    Replies
    1. Anonymous10:43

      It says "optimisation of its year-round route network."

      It means that they will try and reduce seasonality. Which in all honesty is something they really need to do. So I support that move.

      Delete
    2. Anonymous11:41

      Most of their Zagreb routes are year round. They discontinued all of the seasonal ones.

      Delete
  5. Anonymous10:46

    My advice to them would first be to replace the management and those that make the decision behind the scenes. A lot of issues would be resolved that way

    ReplyDelete
    Replies
    1. Anonymous22:33

      +1

      Delete
    2. Anonymous07:47

      Whoever comes here would have major difficulties. They are now paying prices for not adapting to market trends in the previous 10 years and it’s only a matter of time when they will collapse. Only a huge cash investment, major adaptation of business model and finding their niche (if there’s any) could extend their lifetime a bit. National air carriers are a lost cause.

      Delete
  6. Anonymous10:49

    This process is moving so slowly. If the government now has to adopt this plan, it probably means that its implementation won't start until summer 2022. By that time, Ryanair will probably announce another 10 routes from Zagreb.

    ReplyDelete
    Replies
    1. Anonymous10:53

      We will juts have to wait and be patient. I'm sure once new aircraft start arriving there will be some real change at OU on all levels.

      Delete
  7. Anonymous10:50

    More cost cutting?

    ReplyDelete
    Replies
    1. Anonymous10:55

      I'm wondering what other cuts could be made. In terms of passenger experience I think most have been reduced. Complimentary catering is no longer offered in economy, business class catering is now what economy class passengers used to get...

      Delete
    2. Anonymous11:00

      Does OU charge for seat selection? If not that is certainly something they could do as is the case with most European airlines.

      Delete
    3. Anonymous11:06

      Yes, seat selection for all passengers (except business) is charged up to 48 hours prior to the flights. After that it is free.

      Delete
    4. Anonymous11:24

      It's good at least that they are organised and thinking about costs.

      Delete
  8. Anonymous11:08

    The thing they should be working most on is their network. They should have been quick if they wanted to open new routes to prevent Ryanair from further expanding. With them launching Bratislava soon, they will be attacking Vienna route as well. At the end of the day, OU will only be left with transfer passengers which they can not survive on alone.

    ReplyDelete
    Replies
    1. Anonymous11:27

      Agree. They should have gone harder and earlier - like so many other airlines did.

      Delete
  9. Anonymous11:08

    KSC - BWK 2022 ou 18.06 - 17.09 charter

    ReplyDelete
    Replies
    1. Anonymous11:40

      Q400 or A319?

      Delete
    2. Anonymous12:49

      There is no information yet on which type of aircraft will fly, but with Bratislava this is the second charter line from Bulgaria to Bwk ...
      Unfortunately, none from Germany, although the Germans are the most prominent guests on the island of Brač ...
      I think it will be q400

      Delete
    3. Anonymous17:46

      It's Slovakia;)

      Delete
  10. Anonymous11:17

    Difficult road ahead.

    ReplyDelete
  11. Anonymous11:23

    Has OU reduced its workforce?

    ReplyDelete
    Replies
    1. Anonymous11:30

      At the end of the third quarter this year they had 934 staff members compared to 999 during same period in 2020.

      Delete
    2. Anonymous11:41

      Thanks. So they have pretty much kept their entire workforce on.

      Delete
    3. Anonymous22:33

      Hmmm

      Delete
  12. Anonymous11:23

    In this state and form, they are not competitive to capture the post covid market.

    ReplyDelete
    Replies
    1. Anonymous11:28

      I'm sorry but Croatia Airlines has a decent network covering many important, primary European cities, an excellent domestic network, Star Alliance membership and a decent fleet. It will be fine.

      Delete
    2. Decent network with 15 destinations? Yeah right. Primary European airports and Star membership are there only with purpose of feeding others for peanuts, unfortunately . Domestic network will be excellent when all pairs of bigger cities in HR are connected twice daily, not twice weekly with TDR turbolet operations, and fleet is far from decent, at least the age of the fleet . Not saying it cannot be fine sometime in the future, but definitely not with this politics, these people, and if situation as it is is described as fantastic, seen through the pink glasses

      Delete
  13. Anonymous11:26

    Let's see how things turn out. I wish them good luck.

    ReplyDelete
  14. Anonymous11:27

    Isn't this a bit late with the planning?

    ReplyDelete
    Replies
    1. Anonymous22:33

      It was too early before...

      Delete
  15. Anonymous11:46

    They should have launched flights to Moscow and profited from the current vaccination tourism. They should also look into some markets they previously served like Istanbul and Tirana.

    ReplyDelete
    Replies
    1. Anonymous22:34

      Eastern Europe is not on OU's radar.

      Delete
  16. Anonymous12:32

    BCG were engaged to advise them on the need to :-

    - digitalise their business
    - study and analyse data in more detail
    - improve management skills at all managerial levels
    - increase productivity
    - focus on quality, entrepreneurship, cost awareness and innovation

    So what is the role of the current mgt team ? Isn't this the stuff that any mgt team needs to be dealing with and manage in any business / industry ? Yet, these guys need a high cost management consulting company to come along to tell what they need to do.

    Gosh, are we in serious trouble or what, if the likes of these people are given the responsibility for managing our airline ....

    ReplyDelete
    Replies
    1. Anonymous12:59

      The only recommendation that should have come out of this BCG review is for the shareholder to invest in a bunch of Labrador blind guide dogs - one for each member of the mgt team

      Delete
    2. Anonymous13:01

      They need some of Marek's famous strategic planning skills

      Delete
    3. Anonymous13:04

      Perhaps they do considering the airline he is strategically managing has 20 routes more than Croatia Airlines, around 600,000 passengers more and a load factor ten points ahead of Croatia Airlines. At the same time, the airline he is strategically managing still offers a decent business class product with actual food rather than a snack box and complimentary snack in economy class rather than a bottle of water. So yeah, maybe they do.

      Delete
    4. Croatia airlines should leave the star Alliance and stop being a passenger feeder for the lufhansa group and move away from lot airlines, which is another strong company in the region. what croatia airlines needs is to be more independent, go to skyteam alliance and position itself As the Croatian airline and branches, even though it is a small airline, it is still possible for crotia airlines to face the competition of rivals and be a strong airline taking advantage of the full potential of tourism and business travel in Croatia and creating a dormer network punctual and confident with quality and efficient services, with a modern hub flying to new destinations where croatia airlines has passengers moving around the branch area and becoming one of the main companies in europe with the help of air france and klm of Aeroflot from czech airlines from tarom, Croatia airlines has the chance to develop its own network and stop being a feeder for lufhansa and star allince since skyteam alli ance does not have an airline in the branch region croatia airlines has the chance to develop the full potential of Croatia a strong company in its branch region

      Delete
    5. Dear @fly, be careful, you will very soon be labeled as delusional, stupid, hater, enemy, from Cacak.... Uhljebs and Party bots will spit on you, provoke, insult, curse.... Or maybe it's reserved for me only because of my crime and corruption comments that you omitted, accidentaly or deliberately

      Delete
    6. Anonymous16:00

      Why would anyone spit on him? Or call him delusional? His comment is quite good and shows problems in OU which should be solved and he gives some logical advice how OU should expand its cooperation to other non Star Alliance members while offering passengers more direct options what would reduce feeding via FRA.

      On the other hand, he didnt come here with mumbo jumbo ideas with 0 logic like daily flights with A330 to Bangkok and Delhi.

      Delete
    7. My mentioning of BKK and DEL was with some 10 ifs : If OU started long-haul decade ago, if regional network was much bigger, if there was no corruption and nepotism, if management were not politically appointed and competent, if marketing was much better, and many more ifs, plus I never emphasized Far East as priority, it was always North America - New York, Toronto and Chicago, but you decided to disregard all of the mentioned and spit on me for suggesting OU to be bigger and better, the same what @An.15.12 is suggesting

      Delete
  17. Matt Shatt Tampa FL20:33

    SAP is super pricey.

    Cost cutting and fleet renewal? Pick one.

    ReplyDelete

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