Croatia Airlines to sell aircraft, slots and downsize on employees
Croatia Airlines has been given approval from the Croatian Competition Agency to carry through its restructuring program. The decision comes two weeks after the Agency sent Croatia Airlines’ proposal back for further clarification. The approval will now allow the Croatian carrier to continue on with its cost cutting measures, which are scheduled to be completed by 2015, by which time the airline expects to be operating with a profit. “Encouraging results from the first half of the year further confirm the effectiveness of the restructuring program and Croatia Airlines’ potential to operate as profitable business in the future. Our management is determined to implement all the necessary measures and goals and we believe the restructuring will have a positive outcome”, Croatia Airlines’ CEO, Krešimir Kučko, said following the Agency’s decision.
The restructuring program given to the Agency outlines the airline’s plans to downsize on the number of employees. Croatia Airlines will close its representative offices in Austria, Switzerland, the Netherlands, Great Britain, Bosnia and Herzegovina and Macedonia. Furthermore, it outlines “a change in the carrier’s fleet structure” and a reduction in the number of operational jets. The airline is looking to sell some of its Airbuses as well as spare parts for the aircraft. The sale of slots at various European airports is also part of the restructuring program which should help the airline return to profitability.
During this week Croatia Airlines held talks with Airbus in an attempt to cancel its 2008 order for four Airbus A319s. Following this year’s discontinuation of several routes, the airline further plans to cancel some loss making services in 2014 and 2015. “It is important to note that the European Commission is keeping a close eye on what is happening at Croatia Airlines. It is encouraging to see that the management realises that restructuring is the only way Croatia Airlines can stay competitive in the future”, Olgica Spevec, the head of the Competition Agency, says.
Does anyone know what slots are we talking about? I am sure we are not talking about Frankfurt or Munich.
ReplyDeleteCould it be that they will discontinue their London Heathrow flights? With increased taxes at the airport I doubt Croatia Airlines can actually make a profit.
Croatia airlines made profits before the recession, airline can make a profit, problem is airline has to return about 800 million kuna by 2016 and only way to do that is to sell some slots and downsize a bit.
DeleteEven under EU law airline is allowed to seek support from the state in tune of 250$ million, but this rule can be applied only once per decade or something and airline must repay loan in its entirety.
And only airline in the region that has any perspectives in Croatian Airlines, for profits JAT and all others are doomed to fail as they have no internal market and must compete with likes of Lufthansa, British Air, Air France/KLM, Easy Jet...
U simply stand no chance, and JAt has been receiving subsidies in tune of $25-30 million each year since 2000.
Once Serbia joins the EU, if it joins the EU, should I say, it'll have to face other EU airlines and without internal market its doomed to fail.
Ethiad thing is just a phase, i strongly doubt much will come out of this. even if JAT receives few airbuses, I strongly doubt JAT can make any profits short or long term.
First of all, when I was mentioning profits I was referring to their route from Zagreb to London Heathrow, not overall as an airline.
DeleteFurthermore, I do not see why you have to bring Jat into this discussion? Are you that incompetent that you can't discuss something about Croatia without dragging Serbia into it?
Furthermore, the only reason why OU made profits in the past was because the market was not as competitive. The moment it started to compete with other carriers problems started. So the real problem for falling profits is not the recession but the airline's failure to cope with a changing environment within which it operates.
Of course it was very competitive, you had Wizz air, Air France, Lufthansa, German Air and all other major airlines, even LOT and the Czech Airlines.
DeleteProblem why Croatian air is loosing money is due to bad recession that has hit the EU and Croatia, traditional markets for Croatian Airlines, also very bad management at the Airline, who got their positions due to political favors of the former HDZ regime.
Croatian can make good profits if airline was run by a competent person and someone who knows how to run an airline.
Also Croatian Airlines has too many staff, way too many for such small airline, airline should have max of 70 staff (ideally 50) per aircraft they currently employ 100 staff per aircraft.
From September 19 Belavia will be flying from Minsk to Belgrade via Budapest. It seems that the flights will be operated twice per week with their CRJ 200 and they will have fifth freedom between Belgrade and Budapest.
ReplyDeleteGreat news! It would be nice to see some other new links between Belgrade and CIS. Kiev, Baku, St. Peterburg and Sochi could be profitable options
DeleteI agree with all the cities with the exception of Kiev. AeroSvit tried it and the market was just too limited.. or their fares were too high.
DeleteSorry for offtopic. Here are the Belavia flights to BEG:
ReplyDeleteB2 811 1 MSQ BEG 2 0810 1040 1 23SEP13 21OCT13 CRJ 3:30
B2 811 4 MSQ BEG 2 1340 1610 1 19SEP13 24OCT13 CRJ 3:30
Also, from this August Wizz Air will be adding a fourth weekly flight between Belgrade and Beauvais.
ReplyDeleteThe Government of Croatia to vouch for the EIB loan for ZAG airport construction.
ReplyDeletehttp://www.vecernji.hr/vijesti/vlada-ipak-daje-jamstva-eib-u-zracnu-luku-clanak-576417
Lets hope so!
DeleteGood to read in the article that Croatian government is very keen to have construction start asap.
The airline is in deep water and restructuring is an unavoidable thing. Should have been done long ago. This might have come too late for Croatian Airlines.
ReplyDeleteThe question is, ' Who's going to do it.' The same managing board? What are the criteria under which it is going to be done?
They've come to grips for sure. The managing board has to go to great lengths so as to save the company.
Can they do that?
For example, I wonder if many of those trolley dollies, that went to industrial dispute several weeks ago, are going to get the elbow now?
JAT experienced the same and, at length, the Government bit the bullet selling the company off to Etihad.
It first has to become worse before it can get better...
ReplyDeleteThus in regard to OU i wish them good luck in their restructuring efforts!
Ex Yu admin can you please explain to me why is it so difficult for you to create a separate page in which all of us would be able to discuss some topics other than the main one, so that there is fewer Off Topics.
ReplyDeletebtw good job on creating news flash, but still some improvements should occur
I think they should sever ties with Lufthansa as soon as possible and launch more and more flights from the croatian coast to destinations around europe rather than focusing so much on ZAG especially during summmer season. Restructuring is the only way to go for this airline. Needs to be done. I am just worried that croatia airlines might not be able to survive in such a competitive EU environment.
ReplyDeleteYour idea is a good one but there are two questions that should addressed if they are to concentrate on the coast more:
Delete1. Are the Dash-8 the right aircraft for the coast? I believe that a fleet of A319s and A320s would be more suitable. Does anyone know if OU has a market for A321s in summer?
2. What would happen in the winter? They need to find a way to overcome the issue of seasonality. That is where a hub in Zagreb comes in handy because they can reduce this effect by offering connections from the few regional destinations they serve. Then again, if they did not manage to make Istanbul work then I really don't know what to say.
1), I think A320 family is better for coastal summer season airports. You are right about the DHC8 not being the right a/c.
Delete2) I'm not exactly sure about this and correct me if I'm wrong but could they not get involved with ski charters during the winter or such things? Seasonality is a very big issue here.