The privatisation of Croatia Airlines is back on the agenda after the government adopted plans to raise over 200 million euros from the sale of state-owned companies over the next three years. Businesses which have not been classified of strategic importance to Croatia are all in contention for sale. The state's former administration removed the Croatian carrier from the list in order to pave way for its privatisation. The Minister for State Property, Goran Marić, did not give an exact timeline of when the process could be launched, saying, "What has the highest value on the market at any given time and is not of strategic importance will be sold". The Croatian Minister for Sea, Transport and Infrastructure, Oleg Butković, previously said the airline should first stabilise its operations and business before it is privatised, noting this can only be achieved by increasing the carrier's competitiveness and strengthening its market position. Once these conditions are met, Mr Butković said a strategic partner should be found with "extensive experience in the commercial aviation sector, which would ensure network expansion and market share growth".
In a recent interview with "Ch Aviation", the CEO of Croatia Airlines, Krešimir Kučko, noted, "We need an investor in order to grow faster. Though we could sustain our operations using our own funds, expanding is essential and it requires money". He added, "Air Serbia is heavily subsidised by the Serbian government so it is not very difficult to build an airline when money isn’t an issue. While Adria Airways did manage to find an investor, it was sold for a very low price. I hope that they are going to make it with the present set-up". Croatia Airlines was put up for sale in 2014, however, no interest was expressed during an international tender.
The former Minister for Sea, Transport and Infrastructure in the Croatian government, Siniša Hajdaš Dončić, said that a total of six companies had previously expressed interest in buying a stake in the national carrier and has urged the country's Prime Minister to resume Croatia Airlines' privatisation process. "A total of six parties had expressed interest. Among them was Lufthansa, as well as a company from Cyprus and Greece each. We also held talks with an Indonesian (Garuda) and Chinese (Hainan) airline and there was initial interest from both. It was up to Croatia Airlines to decide which path they would take. Usually, the sale of a company and the search for a strategic partner lasts four to five years. This is not a priority for the new government", Mr Hajdaš Dončić said. He added that following the sale of the carrier's lucrative slots at London's Heathrow Airport to Delta Air Lines, the search for a partner will become more difficult.
I see Lufthansa Group eventually buying Croatia Airlines and integrating it into Eurowings but retaining its own brand. Same as they just did with Eurowings.
ReplyDeleteI think this is the most realistic option at the moment.
DeleteWhy should LH do that? It's cheaper to wait out for OU to go bust and then have EW open a base there.
DeleteBecause it won't go bust.
DeleteGiven the trend it will and it won't take long.
Deleteif they overhaul the engines with heathrow money they could buy themselves another ~4-5 years
DeleteIf OU were to be taken over by LH I think we would see it develop its eastern network, especially the region. To the west I don't think we would see any major development except maybe in Germany.
DeleteIf OU is taken over by LH they would certainly put it under their Eurowings (EW) umbrella. EW has already taken Brussels and Air Dolomiti is probably next. This way they will further grow their EW concept.
DeleteWho said Lufthansa is even considering Croatia Airlines?
Delete@11:20 AM
Delete"A total of six parties had expressed interest. Among them was Lufthansa..."
Doesn't mean they are still interested, but they obviously were.
Why should LH even consider OU? They already have a base in Vienna which acts as a Balkan hub. Eurowings can step in with a few CRJs and takeover the market that's leftover.
DeleteAlso, I don't think EW would even launch any routes outside its main hubs.
DeleteOU does well at CDG because of AF which would just increase flights when OU goes under. Same with AMS.
The only one that might act is easyJet.
Eurowings master plan is to launch bases out of Germany, Switzerland and Austria. They wan to be paneuropean player. Just like Ryanair, easyJet and Norwegian.
DeleteThey have Vienna, but still open Munich and Salzburg. LCC open bases even if they are 200 km distance. There is so many examples. And ZAG - VIE is almost 400.
There are much more reasons to by Croatia then for example Brussels:
1. Market, by this there is no option someone else will step in and by OU
2. Cheap working force
3. Strategical interest
I think it is the last moment to sell Croatia Airlines now before OU sells all the valuable assets. They sold some LHR slots and all will be sold probably by the end of the year. A lot of mechanics have left OU. Almost 10 since the start of the year and I just hope they don't get the crazy idea to sell this segment of their business as it is profitable but issues are starting. The competition in ZAG is also becoming fierce.
ReplyDeleteThe growing competition at ZAG might become one of their biggest problems in the near future.
DeleteThe last sentence in the topic says all .by selling their slots in London they made the airline less interesting for investors. But again as long as the current Ceo is running Croatia Airlines it's not in his personal interest that the company gets privatised. He will be the first on who losses his job .
ReplyDeleteThat's the main reason that UK slots were sold .
Btw Kresimir Kucko's contract got extended by the government. He will be staying on until at least the middle of the year.
DeleteI found this in an older article here from April last year. I wonder what happened...
Delete"Meanwhile, the Croatian State Property Management Office (DUUDI) says it will soon launch procedures to select a new management team at Croatia Airlines. According to DUUDI, it will commission an executive search firm to help identify high performance individuals fit to run the company. This process is expected to start in mid-May, although no firm timeframe has been given for its completion. Croatia Airlines named Krešimir Kučko as its CEO in the summer of 2012. He previously served as the carrier's representative for the Benelux region, based in Brussels. Prior to that, he was airline’s representative in Switzerland and the Netherlands."
@ AnonymousFebruary 20, 2017 at 9:09 AM
DeleteI hope you are joking.
No unfortunately
DeleteWhy??? Is there no one else more competent and qualified in the country?
DeleteOf course there is. I think the parties can't agree on the candidate. In this case HDZ/Most. There certainly are several people in play.
Delete1. Tonči Peović
Delete2. Boško Matković
3. prof. dr. Mirko Tatalović
4. prof. dr. Darko Prebežec
Bogami i Srečko Šimunović i Ivan Mišetić
Basically at least 4 million Croats are better then him.
What a mad house. These people's ideas change as the wind blows.
ReplyDeleteWhy would they delist Croatia Airlines from the list of companies of strategic importance. I mean it is one of the most strategically important companies in the country.
ReplyDeleteSo that they can sell it.
DeleteStrategically about to become bankrupt. That's why.
DeleteNo they won't. They have many assets left which could be sold if the situation became that bad that they were facing bankruptcy. Remember Adria was in a much worse state than Croatia Airlines has ever been and it managed to avoid bankruptcy.
DeleteYes but Slovenes were always the most competent when it came to preserving their own interest.
DeleteKroatovanje. Kucko can't make any viable statement to the press, without bringing up his obsession with JU. So sour and sad.
ReplyDeleteThis is the first time he mentioned JU in any of his statments here on ex yu.
DeleteAre you sure?
DeleteCroatia Airlines CEO: Air Serbia non-transparent
http://www.exyuaviation.com/2015/03/croatia-airlines-ceo-air-serbia-non.html
Kučko: Croatia to avoid ČSA/Air Serbia model
http://www.exyuaviation.com/2014/04/kucko-croatia-to-avoid-csaair-serbia.html
in the second link kučko implies that JU is actually returning invested money to EY through leases. i don't understand the point of making this misleading comments? ok, he always tries to mess with JU, either through government, or by putting a billboard in front of JU headquarters, but this is just stupid.
DeleteI agree with him. It's good to see that OU wasn't soldlike JU was because I don't think this model is sustainable in the long term.
DeleteDo you think that the equity partnership with Etihad didn't cost any money to serbian people or government? Please, come on! And the huge debts of of JAT? Who paid? A national lottery?
DeleteThe press probably put the question to him all the time so he is probably forced to make the comparison.
Delete+1 Q400. I think so too.
Delete@riječanin i don't have problems in regards to unsustainability of JU business, but i do have a problem when someone is lying. ey is not getting return on investment through leases and that is what kučko is implying and that is what i am talking about. you are opening a whole new chapter, i wasn't referring to.
Deletehere is Airbus fleet. i cannot trace back to EY ownership any of these planes, except A330
Deleteas i see it is mostly CIT & BBAM planes, leased by JU
http://www.airfleets.net/flottecie/Air%20Serbia-active-a319.htm
http://www.airfleets.net/flottecie/Air%20Serbia-active-a320.htm
'Businesses which have not been classified of strategic importance to Croatia are all in contention for sale.'
ReplyDeleteThis is the most important part of the text. The government no longer considers OU so important. They are preparing the market for either their bankruptcy or their sale.
Well if they want to "stabilise" and "expand" they need to launch new routes. Will those new routes that they announced and were reported here for the summer going ahead. I mean Oslo, Stockholm, Dublin, Moscow...
ReplyDeleteFrom what I hear Scandinavian destinations are certain at this point. Not sure about Dublin and Moscow.
DeleteThanks. Hopefully they announce some details soon.
DeleteLast year they announced new routes in March so the same will probably happen this year as well.
DeleteDoes anyone know how OU performed financially last year? They have not published their financial report but have neither said anything. In 2015 they were announcing profit for 2016 a few months before the end of the year.
ReplyDeleteI'm dispointed in the whole Croatia Airlines prioritization process. First of all I was hoping it would be much quicker, that there would be more interest because the airline certainly has potential.
ReplyDeleteAnd I wonder how much money the IFC got to find a strategic partner which they never found.
DeleteAsian carrier would have been best for OU. The government should have done more to secure a sale to them.
ReplyDeleteWhatever they do they should not sell to a financial institution.
DeleteI guess we will see how things work out for Adria and whather the same scenario can be applied to Croatia Airlines.
DeleteWould be interesting if Qatar bought a stske. They won't but we can alwags dream.
ReplyDeleteThe chances of that are much slimmer now that they have bought Meridiana.
DeleteThem being sold to anyone would definitely increase competition in the region.
DeleteWhat about Aegean? There were rumors they were interested in OU.
DeleteAegean was as credible as Garuda.
DeleteThe saga continues
ReplyDeleteThere is no reason to rush any privatization, as long as OU keeps making money. It will become more valuable and any future sale would be easier, and more profitable.
ReplyDeleteBut they are not making money. That's why they had to sell LHR slots.
DeleteInstead of starting the first year after restructuring ready with a new owner and fresh capital they just prologued the "business as usual" policy which I don't think they can afford anymore with so much competition.
ReplyDeleteI do hope OU gets bought by a strong investor as it will increase competition in the region. Wondering how Air Serbia and Adria would respond.
ReplyDeleteOT DXB_BEG today full, maybe four empty seats.
ReplyDeleteIt was a long holiday break in Serbia.
DeleteFlights are usually full. That's why they added a 4th flight.
DeleteAnd what is happening with the regional fleet expansion. They have been talking about it for 2 years now.
ReplyDeleteWhy don't they just do an IPO for 49% of the company with one of the many exchanges available to them in the EU?
ReplyDeleteIt would raise a decent amount of capital for the airline, force them to hire above average management and will also most likely see the airline start to focus more on expanding operations.
What is really sad about the OU and her current saga is that it is a really good time to be an airline in Croatia. Economy growing faster than expected (but still a few years away from pre-GFC levels...... how scary is that when you think about it?), tourism boom and a great new facility/terminal in Zagreb and Zagreb itself really starting to become a destination on its own.
ReplyDeleteAll this given to you on a shiny platter and what are they doing with it?
Sometimes I think that unfortunately for Croatia, the people who have found themselves in positions of power and influence don't have enough faith in themselves... almost scared to have a go. This quote from Mate Rimac, the 28 year old who is determined to start an electric car industry in Croatia and doing really well too, when he was looking for support from the Croatian government and what they said to him probably sums up the attitude. "Croatians don't make cars, Germans do"
This represents a real sad attitude which only can end in what we are seeing at OU.
They really said that? According to the government what are Croats supposed to do? Especially those who don't live on the coast? Emigrate to Germany to work in their car factories?
DeleteThere goes another round of jatovanje...
ReplyDeleteWell if they plan to privatize companies within three years that's 2020 so it seems plausible that OU would be sold by then. It's a realistic timeframe.
ReplyDeleteI think that OU will remain state-owned or state-controlled for some time. Croatia had and has the potential for a good national carrier, but unfortunately the government did nothing to develop the airline.
DeleteNow really?
Delete1. every year Croatia Airlines gets 10.000.000 EUR for PSO
2. Croatia invest in 65.000.000 in restructuration of Croatia Airlines
3. Croatia Airlines has huge privileges in SPU, DBV, ZAG, ZAD, PUY, RJK
4. Croatia pay for 2.500.000 per year for PSO for Trade air who is in Code share with OU
And Republic of Croatia did nothing?
And 1 mio eur State garante for OU on ZAG AP !
DeleteAgain? Jess!
ReplyDeleteWho's Jess?
DeleteI'm just getting the feeling that this government is not that interested in OU. Mianovic's was much more focused on OU. It is true that the tender did not succeed while they were in power but at least they tried to do something.
ReplyDeleteRemember they were the one that put Kucko in charge.
DeleteI know but I don't get why so many people here dislike Kucko. Ok yes he may be arrogant but the fact of the matter is OU has been profitable for 3 years under him and they have actually introduced new routes. Remember that they could not do much during restructuring. But as soon as that was over they started 4 routes from Zagreb.
DeleteBut they are profitable from selling their assets, not because they run a tight ship.
DeleteI really hope they find a buyer. It is getting harder and harder to compete each year.
ReplyDeleteIt will be interesting to see if Croatia Airlines can benefit from the arrival of Emirates and possibly a US company on the New York flights. That is, if they can scoop up connecting passengers to/from Zagreb to/from the coast from these flights.
DeleteIt all depends if the can get codeshares.
DeleteGood luck OU!
ReplyDeleteWhatever happened to that plan to open bases around the Balkans?
ReplyDelete... and regional fleet expansion?
DeleteWell let's wait and see. Hopefully there will be some good news in a few weeks.
DeleteThey missed all their opportunities, such a shame! Don't think anyone would wanna buy them, shame on the former and current government!
DeleteBravo Hrvatska!
ReplyDeleteBravo to what ? A process that already failed to find a buyer when the company was in much better standing than it will be in the future ?
DeleteAnd you're naive to get hooked on this guy that does the same thing on every post.
DeleteOT: currently QTR 744F @ ZAG operated by SW Italia, I-SWIA, leg was DOH-ZAG, flight# is usually used for DOH-AMS
ReplyDelete