Following the announcement by Croatia Airlines’ CEO, Ivan Mišetić, that only privatisation could save the airline from collapse, Croatian economic analysts believe that the airline could soon be under Lufthansa’s wing, which has supported the Croatian national carrier since the early 1990s. Lufthansa and Croatia Airlines signed a strategic partnership agreement in 2004 when Croatia Airlines become a regional Star Alliance member with the support and sponsorship of Lufthansa. It was in fact Lufthansa which provided Croatia Airlines with 3 Boeing B737-200s in 1993 at a heavily discounted price. All of these factors, including Croatia Airlines’ route network would, analysts believe, be enough motive for a Lufthansa purchase.
Croatia Airlines did not wish to comment on the speculations. In a statement released by the airline it said, “The privatisation of Croatia Airlines is a possible future business move. Whether it will take place and in which form will be up to the owners, the Government, to decide. We can not speculate about future owners or partnerships”.
Adding to the airline’s big losses is the monopoly it is forced to operate under. Croatia Airlines is only allowed to buy its fuel from Croatia’s National Petroleum Industry (INA) which the carrier believes is too expensive while airports across the country have enforced new, more expensive, handling fees under the Government’s order. Analysts predict that Croatia Airlines is far from bankruptcy because, as in the past, the Government will continue to cover all of the airline’s losses.
Do you think that Croatia Airlines should be bought by Lufthansa or another airline? Send a comment.
The Balkans have way too many countries, each small in size and population. Each country has a flag carrier that tries to stay profitable which is almost impossible given the depth of the market. It's exactly like the small carriers of the small countries of the Central America back in the 90s, all having so much financial trouble. Eventually, the TACA Group is formed which comprises a group of five independently IATA coded and owned Central American airlines, whose operations are combined to function as one.
ReplyDeleteI believe that's like the best that could happen to the airlines in the Balkans. If only they could get together and join efforts, it would be the ultimate solution for their own profitability and for the people's transportation access.
Being small is not working in the volume businesses such as airlines.
But in real life, LH will probably eat them all up. Those countries could not even manage to stay together on the map, I doubt they would manage a strategic partnership with absolute brand neutrality.
The deal makes sense for both Lufthansa and Croatia Government.
ReplyDeleteThe Governement can no longer support an airline and is willing to unload it for next to nothing.
The deal makes even more sense for Lufhtansa. Maybe for as little as million eur they acquire an airline that is already integrated in their system. CA is in STAR, uses the same computer platform there virtually no overlap on the routes.
The real question is, was this planned all along?
It is no secret that the two CEO's are personal friends. Did Croatia managment purposly ruined the company so that LH can buy it for next to nothing?
..."Analysts predict that Croatia Airlines is far from bankruptcy because, as in the past, the Government will continue to cover all of the airline’s losses"
ReplyDeleteIt sounds familiar? I agree with globe trotter.
Then again, like anonymous said, maybe destroying the airline was with a single purpose, to bring down the price of OU. Also that is probably why they are not that interested of having an airbus fleet but a fleet made up of Dash's. But still, I don't see LH buying OU to make it a strong airline in the region, they have OS and TK for that, especially OS!
ReplyDeleteAgree. And here is JP (Adria Airways) as well. As member os Star Aliance with good route network on the Balkans, flexible freet of CRJs and as the best standing airline in EX Yu, could easily be the regional leader. At the end of the day OU would serve only few LH and STAR A. hubs or focus destinations
ReplyDeleteBEG -PRG
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CSA is not a Star Aliance member. It's a part of SkyTeam what means direct competition.
ReplyDeleteStar Aliance will by all means take care about the market and strategiclly serve it through at least one member (LH, TK, JP, OS)
Yep, set up all right. And what a f***ing disaster for 'the little airline that could' - excluding the recent debt problems, quite a success story given the circumstances and the regional upheavals in modern times.
ReplyDeleteOU will only lose from this arrangement, but of course it will be spun out only for the positives due to dodgy dealings and the widespread corruption still going on in Croatia. No chance to grow its network or fleet, and forced to exclusively feed existing LH hubs (would they take over the LH&subsidiary-operated flights at least?). Is this the same 'political carrot' for EU accession that OU tried with buying 4 new 319s in 2008?
And what a shame that it would just become another 'small cog' in the LH - is no small/medium European airline safe? There needs to be a difference between 'airline alliance' where smaller players get a chance, and the anti-competitive 'megaairline' which sees higher fares, profits taken out of the country, and ultimately poorer service from a passenger's point of view.
The only solution for privatisation is a '49%' clause' in any contract - with 3 parties required for anything, the airline is guaranteed to be independent.
JP, beware! Get out of *A and LH's grasp while you can, otherwise you will probably be next.
@ Anonymous (#4)
Not true. They had to upgrade the AT4s, the Qs are the best on the market at the minute, and have a lower operating cost. They will never be able to get rid of the 32S in the fleet simply because they need the larger capacity, but if were serious about regional expansion would actually end up with a fleet of 8 or 9 Qs.
Bavarian giant - Lufthansa should definetly come to Croatia. Same thing happend with BH Airlines. Governmant itselve can not monitore and lead company, so in BHAIrl, TURKISH came with It's possition.
ReplyDeletei hardly think that there's going to be anything of this. just remember JAT's privatisation. so many "potential buyers" and no body purchased anything
ReplyDeleteLufthansa won't touch Croatian airlines - why should they when everything they could acheive from an acquisition they can already achieve through Star Alliance.
ReplyDeleteLufthansa senior management are extremely busy integrating 3 airlines at the moment, all of whom have HUGE issues: SN Brussels, bmi and Austrian Airlines. Out of those, Austrian has the biggest problems to resolve.
As frequent flyer said, any purchase should be capped at 49%.
ReplyDeleteI would rather see an airline outside the region take a share in OU then LH.
Also, you can't compare the purchase of OU with the maybe takeovers of Jat. Croatia and Adria have been making positive progress over the years with little scandal. Remember, with a smaller fleet then both Jat and Adria, OU carried almost more then both carriers put together! I am more inclined to believe that money is taken out of OU by the Croatian government to pay for government debts and this has a big impact as we can see, on OU bottom line.
OU with the smallest fleet?
ReplyDeleteAccording to aircraft register:
JU 15 with capacity 1668
OU 12 with capacity 1488
JP 12 with capacity 842
Someone must be really blind not to see what Germany is trying to do. Their military invasion of Europe might fail but they have chosen better tactic trying to enslave the rest of the Europe economically. That's exactly what LH is doing with all those acquisitions and buy-outs first of Swiss, now SN Brussels and Austrian, next it will be SAS and Croatia. Europe has been always dominated by UK, GER and FRA, the three rivals who have never given up their goal to conquer and rule others. This is more than obvious from the airline industry stand-point. Soon there will be only three airlines in Europe: British Airways, Air France and Lufthansa. The EU will never be a union of equality but an opportunity for UK, GER and FRA to "democratically" gain the power and lead over the rest of Europe.
ReplyDeleteTotally agree with Globe Trotter, very good comment. Sounds it's coming from aviation professional!
ReplyDeleteTim
@ Anonymous #14
ReplyDeleteQ400 is right.
You're forgetting JP had (up until a couple of months back) 2x 162-seat A320s in its fleet, so add an extra 324 to the 842 and you have a fleet of 14 with 1166 seats. And these will be replaced next month with 3 132-seat A319s. Yes, less capacity, but still more aircraft.
Also, OU only got 2 of its Qs (totalling 152 seats) mid-year.
@ Adria
To (mis)quote Basil Fawlty:
Don't mention the war!
@ Adria:
ReplyDeleteFrom the view of someone who doesn't understand the industry, you might be right about Lufthansa trying to conquer Europe.
HOWEVER - 2 Facts:
Lufthansa's short haul network is loss making. It is there to subsidise and bring in feed to the profitable long haul network ex-Frankfurt, Munich and Zurich (Swiss).
They will likely not touch SAS or Craotia airlines as they only have short haul (apart from SAS's minor long haul network which is loss making).
And it is most certainly NOT 3 airlines in Europe. The two most powerful European airlines are Ryanair and easyJet, with Wizz emerging rapidly as the Central/Eastern European airline for short haul.
Lufthansa bought Swiss for next to nothing, just after they went bust, and Zurich is one of the best O&D markets in Europe. SN Brussels have a strong niche market to western Africa, and Austrian is probably something they'll regret.