Croatia Airlines and Airbus yet to reach deal over A320neo cancellation


Croatia Airlines is yet to finalise the cancellation of its order for four Airbus A320neo aircraft. The first two of the jets were scheduled to arrive in Zagreb this year, while the remaining two were due in 2023. Prior to signalling plans to cancel the order, the carrier deposited over eight million euros for the four jets. The total value of the deal has never been disclosed. The airline commenced negotiations over the termination of the order just prior to the coronavirus pandemic, however, a final agreement is yet to be reached. The outcome of the negotiations with Airbus may be tied in with the airline’s fleet renewal plans, as part of its post-Covid strategy. The company continues to hold talks with different manufacturers over a potential order for up to fifteen aircraft.

Commenting on talks with Airbus, the carrier previously said, “Negotiations concerning the Termination Agreement, which will result in the cancellation of the A320neo order and the use of the deposit for other Airbus services were put on hold due to Covid-19”. Croatia Airlines successfully converted a 2008 order for four A319s to the neos in 2015. Although the new aircraft were originally to be delivered by the end of 2013, their arrival was put on hold and the deal was renegotiated. The carrier put off the arrival of the jets due to the company's financial situation at the time.

Croatia Airlines is yet to make a final decision on the future make-up of its fleet. Recently, the carrier said, “Croatia Airlines is currently conducting aircraft market research on possible fleet renewal, as envisaged in the post-covid strategy. In this context, potential options with multiple aircraft manufacturers are being considered and possible fleet renewal scenarios are being developed, which will begin when the necessary conditions are met”. The airline had previously said the Airbus A220 would be a “perfect fit” for its future fleet. The Croatian carrier currently boasts a fleet of five A319s, one A320s and six Dash 8 Q400 turboprops.



Comments

  1. Anonymous09:02

    This is why I'm certain they will pick the A220. They already have money with Airbus.

    ReplyDelete
    Replies
    1. Anonymous09:07

      It can also be a way to avoid penalties for cancelling the order.

      Delete
    2. Anonymous09:09

      A220 would be ideal.

      Delete
    3. Anonymous09:12

      I think they need to invest in more Q400s.

      Delete
    4. Anonymous09:14

      ^ Why?

      Delete
    5. Anonymous09:26

      A220 (USD 70-75 million) is like 30-40% more expensive compared to E195 (USD 55 million), while having the same characteristics. The difference in purchase price for one place is already more than the whole deposit they have with Airbus currently. I believe E195 is best fit for OU.

      Delete
    6. Anonymous09:26

      Q400s saved them during Covid. The plane can easily turn a profit on thin routes. And let's be honest, the majority of their routes are thin. Especially in winter.

      Delete
    7. Anonymous09:28

      Q400 is too slow for the longer routes they have. Having the Q400 for the routes to western Europe is a big disadvantage for travellers but also for its own network. Instead of having 6-8 flights per day, this plane could only do 4 to max 6.

      Delete
    8. Anonymous09:40

      I think Q400 is ideal for OU. This winter it was a regular to CPH and it was sent quite often to Paris and Amsterdam. All of these were between 2 and 2.5 hours on the Q400.

      Investing in a new aircraft will kill them especially if it is high density A320neo.

      Delete
    9. Anonymous09:50

      A320neo is not in the picture anymore, that's what this article is about. I agree with you that Q400 is a good fit for the shorter routes, but they also need some replacement for the A319 and A320, which would be E195 or A220.

      Delete
    10. Anonymous22:44

      A220 is a good plane with good economics and passenger friendly.

      Delete
    11. Anonymous22:49

      It is also expensive...

      Delete
  2. Anonymous09:02

    The saga with this order should really come to and end. Its been going on for 14 years.

    ReplyDelete
  3. Anonymous09:03

    What other "Airbus services" could they get with 8.5 million?

    ReplyDelete
    Replies
    1. Anonymous09:05

      A helicopter?

      Delete
    2. Anonymous10:19

      Over priced airbus support services

      Delete
  4. Anonymous09:03

    This order would have been cancelled regardless of corona.

    ReplyDelete
    Replies
    1. Anonymous09:05

      This order was destined for failure from the beginning. It was a politically motivated order by the government in 2008 to get French to approve EU membership. No consultations with OU were made about it.

      Delete
    2. Anonymous10:31

      I didn't know that EU membership was so cheap to buy. So Serbia or Montenegro only has to buy a few airbuses and become a member? If only the world were that simple.
      Even at that time almost nobody in europe bought the B737.

      Delete
    3. Anonymous10:33

      Read leaked documents about the decision to purchase Airbus planes. It was published in Croatian media and is well documented. Airbus planes were purchased over Boeing to sweeten the deal to get French parliament to approve Croatia's EU membership.

      Delete
    4. Anonymous11:12

      and why would the B737 have been a better choice?
      as I said, almost no comparable airline in europe has bought the b737. but whether there was corruption ("commissions") involved in the purchase is another matter.

      and why hasn't the european ATR been included in the fleet instead of the q400?

      Delete
    5. Anonymous12:49

      It would have been a more affordable choice with crew and pilots already trained.

      Delete
  5. Anonymous09:04

    The current A319/A320s are getting quite old. I hope they hurry up and finally start replacing them.

    ReplyDelete
    Replies
    1. Anonymous12:49

      Yes, all except 1 A319 are over 20 years old.

      Delete
    2. Anonymous13:15

      That one is 9 yrs old, that arrived at OU during Covid.

      Delete
  6. Anonymous09:04

    How many planes does Croatia Airlines own?

    ReplyDelete
    Replies
    1. Anonymous09:10

      5 airbuses. 4 A319s and 1 A320.

      Delete
    2. Anonymous09:16

      Also I think the Q400s are on financial lease. So when they pay it off they should become OU property.

      Delete
  7. Anonymous09:09

    Should have cancelled it in 2015 when they converted it to neos. At least they would have avoided paying the deposit.

    ReplyDelete
    Replies
    1. Anonymous09:18

      I doubt they could have predicted the situation with global aviation would turn out like this.

      Delete
    2. Anonymous09:38

      Their financial situation would not have been much better. With or without Covid.

      Delete
  8. Anonymous09:11

    Still waiting for that post-covid strategy to kick in like new routes, aircraft order... so far I have seen nothing but talk.

    ReplyDelete
    Replies
    1. Anonymous09:38

      The longer we wait the less hope I have in any meaningful change. It has been almost a year since they announced this strategy. This summer, literally every airline is launching new routes. But not OU.

      Delete
  9. Anonymous09:12

    The A220 would be a good move by CTN. They actually need a plane between the Dash and A320.

    ReplyDelete
    Replies
    1. Anonymous13:15

      But the plans is to get rid of Dash and A320 family which I think is very risky.

      Delete
  10. Anonymous09:14

    You have to be crazy to buy new aircraft knowing the financial status of the company. Better to lease out older planes.

    ReplyDelete
    Replies
    1. Anonymous09:37

      There are many ways they can finance acquisition of newer planes. Loan guarantees by government, sale and lease back arrangements, sale of existing owned fleet....

      Delete
  11. Anonymous09:15

    BCG proposes that deal to OU with A220 because they will then get a fat provision from Airbus.

    ReplyDelete
    Replies
    1. Anonymous09:36

      Well BCG is the main advisor to KLM and have advised them to replace all Boeing short haul planes with Airbus

      Delete
  12. Anonymous09:18

    If the rumors I've been hearing about their performance in 2021 are true, then I really do not understand how they plan to renew their fleet. But official results will be released soon so we will see.

    ReplyDelete
    Replies
    1. Anonymous09:34

      I've also heard that their passenger numbers increased just 3-4% in 2021 compared to 2020 which would be an absolute disaster. I can't believe it. Like you said, we will see soon enough.

      Delete
    2. Anonymous09:39

      It's not passenger numbers we should be focusing on but rather their financial performance. I think that's the worst part.

      Delete
  13. Anonymous09:19

    Best of luck OU

    ReplyDelete
  14. Anonymous09:22

    They should not cancel entire A320neo order. I think they still need some bigger capacity planes, even if they choose A220 for fleet new renewal. Maybe 5 A220s and 2 A320neos would be best. Plus the 6 Q400s.

    ReplyDelete
    Replies
    1. Anonymous09:26

      My suggestion would be: 10 Q400, 6 A220-100 and 2 A220-300.

      Delete
    2. Anonymous09:31

      They are actually looking at potentially operating a single type fleet in the next 5 years. Meaning Q400s will likely go.

      Delete
    3. Anonymous09:38

      OU changes its strategy every few months because they themselves don't know what kind of business they want to be. In the end FR will destroy what little financial performance they have left and they will collapse. After all, OU did perform quite badly last year despite European market recovering from covid.

      Delete
    4. Anonymous10:33

      My suggestion would be 6x E175, 4x E190, 6x E195-E2

      Delete
    5. Anonymous12:50

      And what do they do with the Airbus deposit in that case?

      Delete
    6. Anonymous14:19

      the A220 is $20 million more than the E195-E2. This means for every three A220s you buy, you could have bought an extra E195-E2.

      Delete
  15. Anonymous09:23

    "Potential options with multiple aircraft manufacturers are being considered and possible fleet renewal scenarios are being developed, which will begin when the necessary conditions are met"

    Mark my words, this fleet renewal will never happen.

    ReplyDelete
    Replies
    1. Anonymous09:24

      Unfortunately, you are probably right.

      Delete
  16. Anonymous09:25

    Way to go for paying a deposit. No strategy at all.

    ReplyDelete
  17. Anonymous09:32

    Deposit for 4 A320neos won't get them A220s.

    ReplyDelete
    Replies
    1. Anonymous09:48

      No, but it's a start :)

      Delete
  18. Anonymous09:37

    How is it possible for the value of this deal never to be disclosed? Isn't that illegal since OU is a government owned business?

    ReplyDelete
    Replies
    1. Anonymous09:39

      You can ask Sanader about this one.

      Delete
    2. Anonymous10:21

      Same as order for (most probably) A220 will be timed by Plenković for the next election.

      Delete
  19. Anonymous09:48

    Any wide bodies planned?

    ReplyDelete
    Replies
    1. Anonymous09:50

      Yes that's really what they need right now...

      Delete
    2. Anonymous09:55

      Why not? They could fly to markets which are biggest source of tourism in HR and feed short haul network.

      Delete
    3. Anonymous09:59

      It costs a lot to impalement a widebody in the fleet and operate it.

      Delete
    4. Anonymous10:01

      For the current financial situation at OU widebodies are the last thing they need.

      Delete
    5. Anonymous10:16

      And what would those widebodies do the other 7-8 months of the year when there is reduced tourist demand for Croatia?

      Delete
    6. @An.09.59
      It does not cost lot. The lease prices the lowest ever, due to corona. 330's available to lease on per flown hours bases. CCQ aplies on 320/330, so almost no training costs, major overseas competitors withdrawn from Croatia at the moment, again due to covid scam. The World is opening up. Ideal time to lease 2 330's yesterday, and convert neo order to 321XLR order, plus Embraers for renewal of 319 fleet and regional network expansion. But it will never happen, of course. For their mental condition and state of mind, the only important is they can reach FRA

      Delete
    7. Anonymous14:24

      Long haul obssession is real. You don't need A330 flights to Delhi and Johannesburg to be profitable. OU has a lot more things to worry about right now.

      Delete
    8. If they were profitable feeding LH, I would sign under every single word you wrote. But they are making huge losses with what they do right now and that's why they should try something else. Jo'burg for sure not, but New York and/or Chicago and/or Toronto yes. Even Delhi/Mumbai yes. And it's not my "obsession" with long haul what's the problem here. It's your obsession with remaining feeder loss making model. And one more thing you are right about : OU has a lot more things to worry about : political influence which will once again choose wrong type for wrong model of continuos feeding, crime, corruption, incompetence in "management", inertness, lack of vision and strategy, incapability to adapt and adjust to new reality, nepotism, huge surpluss of administrative working force, low work productivity, mindset stuck between Graz and the past, and much more. If that was different, even Rio and Johannesburg wouldn't be impossible, but unfortunatelly zabokrecina will stay as it is and stink even more in the future

      Delete
    9. Anonymous21:02

      Instead of buying a whole new widebody fleet, just merge OU with Pragusa. They will take care of all long haul flying!

      Delete
    10. No company buy planes anymore today. It's lease, in 95 %. And I am suggesting limited time lease for 330 and long term lease for 321 XLR. Also, I don't consider your Pragusa joke very funny. Actually it is funny how you try to move the focus from criticism of existing company which bleeds money and achieve no results, to joke about phantom startup which will probably never take off

      Delete
    11. Anonymous00:02

      I agree with pozdrav. In aviation today it is "pukovnik ili pokojnik". Companies work their way up with huge number of destinations and frequences, bigger and more diverse fleet, launching the long haul, introducing premium economy and so much more... And at the end of the day, they profit so little, because profit margins are going down year after year. The second model is obviously LCC. The third way doesn't exist.
      So, the only way for OU is to work tirelessly in the following 2-3 years, and to pray to have a lot of luck down the way. And to change management ASAP, that's conditio sine qua non.

      Delete
    12. Anonymous00:14

      I agree with pozdrav too, but i don't think leasing 2 A330s and launching long-haul operations overnight will save OU with one foot in the grave. Long way to go before long-haul. Also pozdrav i'm anon 14:24, anon 21:02 is someone else.

      Delete
  20. Can they get a capable manager from Airbus for a lease with 8.5$? That would be better investment than any possible airplane.

    ReplyDelete
  21. Anonymous09:50

    I haven't seen any positive development at OU for the last 3 years. This A320 order has been a burden and the sooner they get rid of it the better.

    ReplyDelete
  22. Anonymous10:17

    Lots of talks and no action.

    ReplyDelete
  23. Anonymous10:17

    If they were to order the A220 as early as today, when is it realistic that the aircraft could be delivered?

    ReplyDelete
    Replies
    1. Anonymous13:28

      2024 at the earliest, 2025-2026 more realistic

      Delete
    2. Anonymous22:55

      That's a very long way off!

      Delete
  24. Anonymous10:19

    They would have been better off dry leasing an a320neo from a lesser with the 8.5 million rather then use it as a downpayment

    ReplyDelete
    Replies
    1. Anonymous22:55

      That's what will probably happen in the end.

      Delete
  25. Anonymous10:20

    In my opinion this will is a win or bust moment for OU. They definitely need new planes and the A220 is a very nice bird. If they play it right, launch new profitable routes then it could work, although I think a change in management would be required. But it could also be a bust moment. These aircraft could be a huge financial burden if they are unable to generate a profit.

    ReplyDelete
    Replies
    1. Somehow in aviation tends to be more important that bird is 20 million cheaper, per piece, than to be nice. It's contradictory to everything else you said, and I agree with everything else

      Delete
  26. Anonymous10:48

    The cooperation Croatia Airlines has with Airbus and the deposit they have with them will help get the A220 deal moving.

    ReplyDelete
    Replies
    1. Anonymous10:52

      Nope, money will help the deal moving

      Delete
    2. Anonymous10:54

      It has been 5 months since Airbus sent an A220 to Zagreb for demo and there is still no progress.

      Delete
    3. Anonymous12:45

      I would rather they take time to make the right decision than rush anything. Their current fleet is enough to suit their current needs.

      Delete
    4. Anonymous13:26

      Fleet should suit market needs not company needs.

      Delete
  27. Anonymous12:30

    They have been an Airbus customer for decades and bought planes directly from them so I'm sure they will manage to sort things out.

    ReplyDelete
    Replies
    1. Anonymous12:44

      Tell that to Qatar Airways :D

      Delete
  28. Anonymous12:30

    The A220 is the best jet replacement on the market for the A320s.

    ReplyDelete
    Replies
    1. Anonymous22:43

      Isn't it smaller than the A320?

      Delete
    2. Anonymous00:19

      A220-300 is comparable with A320, it goes up to 160pax. While A220-100 is smaller (cca 100-130 pax)

      Delete
  29. Anonymous12:51

    Unfortunately I think this deposit will result in them getting the A220. The alternative is probably them losing the deposit and having to pay penalties.

    ReplyDelete
    Replies
    1. Anonymous22:42

      I would love to see Boeing make a comeback to OU fleet. With MAX jets no less :D

      Delete
  30. Anonymous12:52

    The 8M Airbus deposit will be used for A220. Sale of existing A319/A320 will add funds. State guaranteed commercial loan will be used to finance the rest; or used for sale-and-leaseback deal with some of the leasing companies.

    ReplyDelete
  31. Anonymous22:42

    Would be cool if they could work out a deal with Airbus and start replacing existing fleet.

    ReplyDelete
  32. Anonymous22:43

    Hope something will happen

    ReplyDelete
  33. Anonymous22:45

    Can somebody please explain to me what is happening here. One minute I am reading that OU is loosing money and needs aid to inject cash flow the next minute I am reading that they are considering renewing their fleet.

    ReplyDelete
    Replies
    1. Anonymous22:51

      There are various ways you can finance fleet expansion. But they announced they would expand their fleet back in September and we it is now 10 days until March and nothing has happened. I am starting to think more and more that this will end up like their announcement to open bases across the Balkans which never happened either.

      Delete
  34. Anonymous22:50

    No matter the outcome, at least something is finally happening at OU.

    ReplyDelete
    Replies
    1. Anonymous22:51

      But so far nothing has happened.

      Delete
    2. No matter the outcome, absolutely nothing is happening in OU, except they will continue to feed LH on expense of tax payers with new and more expensive planes, if at all

      Delete
  35. Anonymous22:52

    No Bravo Hrvatska guy today?

    ReplyDelete

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