Tough times ahead for Croatia Airlines

Desperate times call for desperate measures

Croatia Airlines is in crisis mode as its looks to shed its workforce, fleet and network. The carrier ended 2012 with a record deficit of 62.6 million euros as a result of a nine million euro operational loss and the revaluation of its fleet worth around 40 million euros. As a result, the company has announced plans to reduce its workforce by 20%, a decision which did not go down well with employees. Yesterday, representatives of the workers’ union met up with the airline’s management and the consultancy firm advising the carrier on its restructuring program. However, employees stormed out of the meeting after tempers flared with the consultancy firm BDO, who called the workers “nothing more than a mob”.

Croatia Airlines is planning to reduce its fleet by one Airbus A320. It is also considering suspending services to London Gatwick and Priština this year, while flights to London Heathrow will be reviewed in 2014. Other destinations also struggling include Paris, Istanbul and Copenhagen as well as domestic flights between Zagreb, Dubrovnik and Split though they are subsidised by the government and local authorities. The carrier’s most profitable destinations are Frankfurt and Munich. Early last year, consultancy firms warned Croatia Airlines of the need to reduce its destination network and fleet. However, the airline did the opposite, leasing additional aircraft throughout the summer and drafting one of its busiest upcoming summer season timetables with a significant number of new destinations and frequency increases.

The poor financial performance in 2012 comes on top of the airline’s busiest year on record. Croatia Airlines welcomed 1.951.501 passengers, an increase of 4% compared to the year before. The carrier’s average cabin load factor for the entire year stood at 69.1%, its best since launching services over twenty years ago.