Croatia Airlines is seeking 92.7 million euros from the government in order to cover losses generated by the ongoing coronavirus Covid-19 pandemic and safeguard its future development, according to the "Jutarnji list" daily. The carrier, which has not confirmed the reports, estimates it will register a twenty million euro loss by year’s end, while it would use the remaining funds from the state to invest in its fleet. The airline has four Airbus A320neo aircraft on order, with deliveries due to commence from 2022 onwards. The Croatian carrier recorded a 14.6 million euro loss during the first quarter of the year. Its privatisation process has also been halted, as a result of the virus.
The Croatian government said it plans to assist its national carrier in overcoming the financial fallout of the ongoing Covid-19 pandemic. Dinko Staničić, the Director of the Civil Aviation Sector at the Ministry for Sea, Transport and Infrastructure, said, “It [assistance] depends on what we can negotiate with the European Commission and the Ministry for Finance. What we can do at this point is cover the airline’s losses. However, there have to be some limits to this because we do not have boundless means, and neither would that be approved. For now, we are negotiating with the Commission to see how we can help the airline”.
The carrier’s CEO, Jasmin Bajić, recently noted, “We are adjusting to the current situation and are doing our job to the best of our ability. All our costs have been reduced as much as possible. Me and my management team are confident that we can reach our 2019 figures by 2022. Personally, I would not be surprised to see Croatia Airlines’ figures reaching 2019 levels by the end of 2021, but we all agree that the recovery will be a long-lasting process during which we may again be exposed to another wave of the virus spread. Having said that, I also want to emphasise that, besides “U” shape and “V” shape scenarios, we need to be prepared for other scenarios too. This applies to many airlines around us as well. Many carriers will have to downsize for an unspecified time”.
Croatia Airlines is continuing to rebuild its network. After announcing the resumption of international flights from Split, the carrier will now reintroduce international services from Dubrovnik as well. Four weekly flights to Frankfurt will be reintroduced on June 29. As reported over a month ago, the carrier has shelved its seasonal flights from Zagreb to Stockholm, Oslo, Helsinki and Tel Aviv which will not be returning this year.
They generated over 14 million in losses in the first quarter and expect only 20 million by years end? Given that fall will probably be also terrible, I expect their loss will be closer to 30 million.
ReplyDeleteThey will lose probably more than 30 milion.
DeleteDont forget they significantly reduced costs left and right. -20 Million sounds rather realistic also taking into account the reduction or cancellation of loss making routes and ac leases.
DeleteThat's true, they did reduce various costs.
DeleteYeah but they will also take a hit from not having charters. Summer season won't happen before mid July or even August
DeleteCharters were only 2 or 3% of their business. Actually with less scheduled flights this year, that charter ratio will increase in 2020.
DeleteSays a lot about them if charters don't make more than 3% of their business.
DeleteI really hope that they will do something with that money and that a320neo will come in 2022.
ReplyDeleteI think they are dreaming if they only expect a 20 million euro loss this year.
ReplyDeleteWhat a dumpsterfire. So they want to expand in Slovenia, reduce flying from the coast, savagely decimate their ZAG network and on top of all that ask for €92 million on top of already getting €33 million and €100 million some years ago. What for? So that they can fly me five times per day to FRA and MUC? No thanks.
ReplyDeleteAnon @ 9.02am - they are struggling to survive and you really hope that they get their A320 NEO in 2022 .... are you for real ??? They need to do whatever they can to delay it at best, or defer delivery for at least 5 years !
DeleteThey have already started paying for them so... it would cost more to cancel them at this point.
DeleteSometimes you have to lose a leg or limb to save the body ....
DeleteThey are defering that order for almost 10 years. If they are going to take that money from taxpayers it will be very nice to see to use that money on expansion and not only on recovering loses. At least someting.
DeleteIts not very easy to cancel that order. If they cancel it they would need to pay some money to Airbus for canceling order. Its beter to get these aircraft and just make sale-lease back.
DeleteTragic
DeleteGetting brand new aircraft at these times, when there will be tons of aircraft on the market is insane. Especially with current fuel prices and given OU's financials.
DeleteA3 already receieved five NEOs and they placed their order less than two years ago.
DeleteSeeing their numbers Adria seem to be much better than them. But unfortunate their management was not part of the political leadership
DeleteThese are quite high amounts for such a small carrier and my guess here is, that Corona is being misused to get hidden government subventions.
ReplyDeleteIt is more than obvious.
DeleteHow is this any different to what JU or YM are asking from their respective govts ?
DeleteI don't know why you are mentioning JU or YM when we know that OU is only ex-Yu carrier now being in EU.
DeleteWhy do you feel this need to drag JU and YM each time into this discussion? For starters neither of the two countries are in the EU. Second of all, at least JU is trying to make something of itself and they are becoming useful to the country, OU isn't. They have been stagnating with minimal benefits for the Croatian economy, especially these days when they were destroyed on the coast. Don't forget that last year Turks got a winter contract for the coast and the year before that it was Aegean. Meanwhile OU planes were sitting parked, collecting dust in ZAG. So no, you can't comare the two. As a final note, JU's subsidies were getting smaller while OU's larger. Don't forget that so far OU will receive over €200 million!! What have they done with it?
Delete"What have they done with it?"
DeleteAsked for more.
Don't forget that JU and YM are NOT protected from LCC competition, OU is. Even with these privileges they are asking for hundreds of millions of Euros.
DeleteThe airline that faces the most competition on its market is Croatia Airlines. It competes against pretty much every low cost airline in Europe on its own market. So I don't know what you are going on about.
DeleteThey should cancel all intl routes from Pula, Rijeka, Zadar and left routes from SPU and DBV to FCO, CDG, VIE, MUC, FRA, ZRH and CPH. It has no sence to fly from every city on coast to international destinations. Nobody is doing that anymore. Aegean is flying international from only Larnaca, Athens and Thessaloniki and not from every greek island.
DeleteYou might want to check out the situation in ZAG. Are you aware that since EW suspended flights, Zagreb has been left with no air link with Berlin! Even INI and BNX have it.
DeleteYet Croatia does with numerous airlines from numerous cities.
DeleteOn a summer seasonal basis. However the capital city doesn't just like it lost its connection to Dusseldorf, just like it doesn't have non-stop flights to Rome or year-round flights to Milan or Stockholm. I am sorry but the aviation situation in ZAG is inexcusable. Let's also not forget that Zagreb is the only European capital city not to have an LCC link with London.
DeleteThis amount of money must be going to pay for the neos. I just don't understand why they would need such a huge amount otherwise.
ReplyDeleteForget the NEO's - they need to think about surviving until then, not planning for aircraft deliveries !
DeleteNo neos for now. Mainly this money will be going to Q400 fleet expansion as there are numerous ACMI requests due to Q400's low operating costs.
DeleteIt would be very nice to see A320neos in OUs fleet.
ReplyDeletewith what kind of engines should the NEOs come, PW or Leap?
DeleteP&W probably. They have partnership with LH Technik who is using P&W for its A320/321neos.
DeleteLH Technik has approvals for maintenance of both CFM Leap and PW1100G.
DeleteAnd last time I checked, they don't have any aircraft of their own.
I was thinking about LH itself.
DeleteWhy is anyone surprised by any of this? For 30 years now their main purpose was to feed LH Group hubs. Now that corona has grounded LH Group airlines, OU is left with few options. Unlike JU, they never built their own network to suit their needs. All they were doing is build their future around Germans. So what happens now? Their standalone network isn't enough to keep them going so they have to run to the government so as to steal millions from the purse of Croatian taxpayers. If the government was smart enough then they would have shut them down and made a deal with someone else like Eurowings or even Wizz Air. After all, Wizz Air isn't getting discounts in BEG so why would they need them in ZAG.
ReplyDeleteI am looking forward to hear from our friendly expert on how to reset Croatia Airlines now by shutting down the airline and then starting Croatia Airlines 2.0 from a clean slate. Every financial injection requires a reset, so why not for OU?
ReplyDeleteOU isn't carrying a massive debt like JU is - it needs to repay bondholders to the tune of $120m plus $40m to EY if EY exits - then it needs massive recapitalisation in addition to repaying this debt, not to mention the prior debt of Jat.
DeleteOU is a poorly managed business which loses money operationally. It isn't carrying anywhere near the debt of JU on it balance sheet
I guess they need to do what JU did with the funds its govt gave it - make sure that any injection of funds is tied to growth and network expansion to develop its own standalone network, which doesn't rely on feeding LH hubs. And, the Croatian Govt should ask for a plan on how they are going to develop routes to/from the Coast - which have been sorely lacking these past 10 years
DeleteAny reset should first start with replacing their useless management
DeleteNot gonna happen, how can politicians fire their friends, lovers, cousins, party buddies...
Delete@Anonymous 09:15 are you the same person that called for JU reset two days ago?
DeleteWhy doesn't Croatia do the same as Slovenia? Liquidate the company and lay-off people (flight and cabin crew will newer get a job anywhere, anyway due to the virus). Then, you can hope that other companies will replace what's been lost (actually, you have a MUCH, MUCH better chance to do that than Slovenia). Or (as smart Slovenians are thinking about), you can PAY someone to fly to your country.
ReplyDeleteIn return you will get a better health care system and higher pensions. NOT.
Because Croatia Airlines plays a much more vital role for the connectivity of Croatia then Adria. Who is going to fly to Croatia and the coast during winter if there is no Croatia Airlines?
DeleteYeah but that flying from the coast will cost the tax payers more than €120 million this year.
Delete"Why doesn't Croatia do the same as Slovenia? " ...LOL..slovenian commercial air transportation is completely ruined after the fall of JP ...after 9 months there are still hardly any connections from LJU especially in the peak morning hours..JP case just shows opposite, that you need to make much wider analysis before shutting down national carrier..if you paying others to fly, why not to pay similar amounts to your own airline and contribute to your own economy. of course all of that need to be done in the transparent way by hiring true experts and not some ruling political party peeps...
DeleteAnon 09.43 well the past two years Greeks and Turks have been flying from the coast in winter. Another sign of how the market has moved on from OU.
DeleteA tour operator got offered a better price by another airline. What is so fascinating about that? In some other markets, certain airlines are blocked or limited in their operations of charter flights to protect the national airline. It's not the case here.
DeleteIn some other countries you are referring to there are no limitations on EU airlines, there are from non-EU countries like Egypt and Turkey which have protectionist policies in place. As for Croatia, it's hilarious how OU couldn't offer a decent price and how they don't have good relations with local tour operators and hotels. I mean Aegean and Freebird beat them. Aegean I could understand but Freebird?
Delete@Anonymous 09:53:
DeleteMy initial comment was a sarcastic one. I completely agree with you.
Yes, Slovenia was either too foolish or was controlled by people with vested interests to commit a suicide by forcing adria to shutdown.
DeleteDead man walking.
ReplyDeleteSo is Air Serbia and other ex-yu airlines without respective government injections.
DeleteWrong.
DeleteThere is a big difference betwen Air Serbia and Croatia Airlines
the only difference is one must obey EU rules the other not. other then that both are in same deep ...
DeleteLol it totally obeys the rules.
DeleteAir Serbia is at least recovering and making something of itself, it has a chance at making it. Ou on the other hand... and don't argue with me on this as there are no good enough arguments to prove me wrong.
Deletereally? no one is to argue your point, interesting! I can say without any doubt OU and JU are run identically.... just that GoS does a better job at hiding financials, OU is not allowed!
DeleteThat's nonsense on an epic level. OU is basically LH's b**ch and all they do is feed their hubs with a few flights here and there. JU on the other hand is expanding into new markets, growing its fleet and reducing their losses and government subsidies. So no, they are not run identically but they are diametrically opposed.
DeleteIt's unfortunate OU didn't get privatized on time.
ReplyDeleteno hurry, better like this. We here in Croatia recognize OU as an imperative and as such are OK will government subsidizing them, we earn back that money on tourists they carry. Whats 20mil over 10bil euros in tourism, do the math.
Delete+1
DeleteAnd what is OU's share in that €10 billion? How much have they contributed? I think easyJet contributes more than OU does. Sorry.
DeleteSooner or later OU will have to be sold.
DeleteNobody wants to buy it
Delete"We here in Croatia recognize OU as an imperative and as such are OK will government subsidizing them, we earn back that money on tourists they carry."
DeleteSome people in Brussels would tend to disagree, and likely will once this crisis is over.
I would agree with you pre-corona, all bets are off after corona. ALL airlines are being injecting with oodles of money, and this will remain for at least the next 3 years. Not one EU government will allow their state airlines to fail, sorry for the disappointment. Do you really see Germany allowing Lufthansa to go bankrupt, please spare me.
DeleteCroatia is not Germany. Croatia Airlines is not Lufthansa.
DeleteNo, it's not Germany but both are members of the EU.
DeleteSo were Cyprus and Hungary yet they lost their national airlines. Croats think that being in the EU gives you some special status. It does not, just ask the Brits.
DeleteThey won't be deciding on any state aid until after the elction.
ReplyDeleteIts already all agreed upon....
DeleteNo it has not actually. OU has requested the money but the government has to approve it still.
DeleteSlovenia should step in. Airline should then rename to Air Adriatic or Adriatic Airlines/Airways or some even more creative and international name. Operation should be in english, announcements also in both slovene and croatian.
Deleteare you serious, please name me one goverment in Croatia in last 30 years, irrespective of party in power that denied OU anything it wanted? OU will never fail, proof is in all the injections (even when EU complained) govmt gave them. Sorry if this angers you, but OU will NEVER fail, and will never suffer the faith of Adria, especially now that EU turned a blind eye for all countries helping their airlines ;-)
DeleteOU was kept alive because they had assets to sell to keep them alive. As there are no assets left now there will be more and more debt which will put more and more pressure on the airline. You might not want to face it but in the next 5-10 years OU will be gone.
DeleteWith them needing this sort of money I just don't see Croatia Airlines setting up a base in Ljubljana.
ReplyDeleteOf course not.
DeleteSlovenia should step in into Croatia and do something like KLM/AF (Croatian/Adria Airways) but in a much smaller scale. Airline could also rename to AirAdriatic or similar more creative. Slovenia would get a hub in Ljubljana and/or Maribor for charter flights (I bet you can get a lot of people to drive from Graz to Maribor if the price is right) and announcements in Slovene when flying from Slovene territory. Imagine that.
ReplyDeleteKLM/AF is a dumpster fire, as every country is pushing what they think it's best for their own part of the group.
DeleteHaving hubs in LJU and ZAG for the same airline would be a disaster.
That is a huge amount of money.
ReplyDeleteAnd they just got 30 million a few months ago.
ReplyDeleteThat has to be paid back.
DeleteYeah, sure
DeleteFor those here advocating for Croatia Airlines' bankruptcy, they should remember that it would be extremely costly. Not only for Croatia's tourism industry but also for the fact that the government would then have to make payments to Zagreb Airport operator as stipulated in the concession agreement.
ReplyDeleteIt will be interesting to see what the conditions for this aid will be. Most countries have made certain requests from their airlines in return for aid.
ReplyDeleteGood. The government being its owner should care much more about what´s theirs.
ReplyDeleteI agree. It's good to see the government finally behind OU. More often than not they seem completely disinterested.
DeleteWhen the Italians and Germans can do so without any repercussions from the EU, then Croatia should do the same if they are firmly of the belief that they want a national carrier.
ReplyDeleteExactly. And not just Germans and Italians but almost all governments across the world.
Delete+100000
DeleteEU did not allow Italy to go on with their plan. One of the rule for helping companies is that they were not in red in December 2019.
DeleteGood luck.
ReplyDeleteunbelievable decision from the Croatian Government.
ReplyDeleteWhy?
DeleteHope they use the money wisely.
ReplyDeleteI wouldn't hold my breath.
DeleteMaybe now they will launch some new routes.
ReplyDeleteWhen they talk about fleet investment people should keep in mind that this probably involves paying for current aircraft leases as well, not just the A320neos.
ReplyDeletePost Covid19 recovery is going to be slow. I think it is going to be at least 5 years before we are going to see passenger numbers anywhere near last years numbers. The fallout has not really started yet and we could soon see the real economic shock which could see large international businesses and corporations go under. And there is also a real chance of a major military conflict just to top things off.
ReplyDeleteWho the winners or losers will be in the airplane game is anyone guess.
Personally I don't want to see OU get anymore money without some major structural change starting from party appointed management being replaced and a mandate for the new management that has a clear focus on growth a profitability.
+1
Delete"BTW, each time you inject any significant amount of capital into a company, it results in a significant reset."
ReplyDeleteHe said that for another airline from the region. Now that Croatia Airlines is looking for fat government subsidy he is nowhere to be found. Double standards.
Unfortunately that seems to happen quite often on here.
DeleteCroatia is about to borrow €2 billion on the international markets. I am sure a part of it will go to keep this corpse called OU on life support for a bit longer. :(
ReplyDelete