Greece’s Aegean Airlines has said it is interested in acquiring more carriers in Southeastern Europe, among which is Croatia Airlines. Aegean’s Vice President, Eftychios Vassilakis, said this week that on a broader scale, the carrier aims to strengthen its regional role in Southeast Europe through possible new acquisitions. The airline purchased a 51% stake in Romania’s Animawings in October of last year. Aegean Airlines is on track to end 2022 in profit and is operationally expected to see a full recovery from the coronavirus pandemic with a record summer.
Aegean Airlines has said it is continuing to look into opportunities of aligning itself closer with Croatia Airlines, which could potentially lead to a strategic partnership between the two Star Alliance members. Just prior to the outbreak of Covid-19, Aegean confirmed it had submitted a non-binding bid for the acquisition of Croatia’s national carrier. The next phase was to include direct talks between the Greek airline and the Croatian government. However, the process was halted in March as the global health emergency hit the aviation and tourism sectors. Last September, the Croatian Prime Minister, Andrej Plenković, noted that negotiations between the two carriers over a strategic partnership agreement would be renewed, although this is yet to occur.
Aegean Airlines participated in the previous attempt to privatise Croatia Airlines as well, back in 2015. It entered into the second round of talks with then privatisation advisor International Finance Corporation, however, a change in government in Croatia put an end to the company’s privatisation drive. As an airline registered in the European Union, Aegean can purchase a majority stake in its Croatian counterpart. The two carriers share a similar fleet structure, with both operating Airbus A320-family jets and Dash 8 turboprops. Furthermore, both navigate in similar and competitive seasonal environments.
The similarities between the two mostly end there. Aegean has been continuously profitable since 2013 up until the Covid crisis, registering a record 79.5-million-euro profit in 2019. It employed some 2.900 people that year, carried fifteen million passengers and registered an average cabin load factor of 84.8% across a fleet of 64 aircraft at the time. On the other hand, Croatia Airlines registered a loss of over ten million euros in 2019, had 1.000 employees on the books, carried 2.1 million passengers on twelve aircraft with an average annual cabin load factor of 73.6%. Aegean has been exemplified as an airline that makes effective use of tourism growth in its home country, which the Croatian carrier is perceived to be missing. Croatia’s Minister for Sea, Transport and Infrastructure, Oleg Butković, said earlier this month that the country’s national carrier will have to undergo restructuring and a fresh attempt will be made at privatising the airline once the effects of the coronavirus pandemic have subsided. Mr Butković said, “Croatia Airlines had issues even before Covid. Prior to the health emergency, the airline was in the final stages of securing a strategic partner. We had two very serious offers, but the pandemic halted all activities. We expect that with the return to normality, Croatia Airlines’ business will stabilise but not in its entirety. The challenge remains finding a strategic partner. If we fail to succeed, the state will be responsible”.
The best future for OU would be under Lufthansa ownership, but that will never happen with the corrupt unions in OU!
ReplyDeleteCorrupt unions? How about "management"? How about politicians? Why would LH pay for something they are getting for free for long years now? But yes, in Uhljeb's eyes, unions are always the biggest threat
DeleteThey are both equally corrupted.
DeleteNot equally. Riba always smrdi od glave.
DeleteI hope Aegean aquires OU ASAP and brings profitability, professionalism and Aegean well known hospitality to CA. New management and ownership would finally look into OU interest and provide passangers high quaility service
DeleteAnonymous 20:29, smrdi prijatelju i od glave i od repa. Ako si mi kolega tamo znaš o čemu pričam
DeleteCroatian coast-Greek islands will be a huge market. They can further improve the connectivity.
ReplyDeleteAnimawings on the other hand seems to be doing well in Romania.
Huge market during three months of the year.
DeleteCroatia should also try becoming a year round destination. Dubrovnik and Istria could easily become new hotspots in Europe
DeleteTo do exactly what in the off season? Sit on the riva and enjoy the view?
DeleteTheres more to year round tourism than just the riva. Developing resorts, golf courses, events etc.
Delete@anon12:38 and what's wrong with sitting on the riva and enjoying the view?
DeleteNothing. I enjoy Istria most in February, Rovinj during Sretenje holiday is splendid. But there is huge issue with Dubrovnik seasonality cause winters are more rainy, but with event tourism it can be changed to some level.
DeleteFunny yet sad how many staff OU have
ReplyDelete+1
DeleteAre the two airlines comparable in terms of what services they have in-house vs. outsourced? I'm thinking of ground handling, maintenance etc.
DeleteSell it for 1 euro (with certain parameters) + get the money back from airbus
ReplyDeleteIn the end the government will hand over OU to someone for free and good riddance.
DeleteIt isn't good riddance. The state should leave the corrupt EU and keep OU and make sure it gets proper investment. It's better to invest in the national Airline then squander money to Brussels for them to waste.
DeleteIt would be the ideal airline to invest in OU and turn it around into something successful.
ReplyDeleteWhat do you people think Aegean would do with OU if it becomes majority owner?
ReplyDeleteFirst they would probably halve the workforce at OU.
Deleteadministrative workforce and "management", to be more precise
DeleteLight at the end of the tunnel for OU?
ReplyDeleteWhile I hope this happens I'm very sceptical.
DeleteHopefully that light is not a speeding train...
DeleteAnimawings, WTF is that?
ReplyDeleteRomanian charter airline
DeleteAnimawings started as a Romanian charter airline for Memento Group with only an Aegean Airlines A320, but during the busy summer season they leased up to 4 A320ceos and A321ceos, even the A321neos for the long haul flights. Last year Aegean increased its stake in the airline from 25% to 51% and they now acquired a second Aegean A320 and fly regularly to a handful of leisure dests as well as charter flights to leisure dests.
DeleteOn a call with LH call-center. The LH agent on noticing an OU flight in the booking: "OU? What's OU? Cru... Cra... Croatia Airlines? I don't think we have an interline agreement with them..." 🤏
DeleteWhat makes OU interesting to them?
ReplyDeleteMaybe they see as an opportunity to make money. They operate in a similar, competitive and seasonal environment just like Croatia Airlines.
DeleteThey'd probably get them for the staff and would focus on the coastal market. This is what A3 knows best. They tried to create mini hubs in LCA and SKG but both ventures failed.
DeleteThey are doing rather well with summer seasonal operations out of HER and RHO. I don't see Aegean building any form of hub in ZAG.
I'm guessing economies of scale. Croatia Airlines suffers from being a small airline. With the two fleets merged, they can achieve synergies. Better bargaining power when making purchases etc.
DeleteAlso, Croatia has lower labour costs than Greece, so they can maybe save on doing maintenance in Croatia and even make use of other staff categories from Croatia, including crew if they merge the AOC:s.
Not sure about Croatia having lower labour costs than Greece. Net salaries are more or less the same, but taxes and other fees imposed on salaries in Croatia are among the highest in Europe and are suffocating croatian economy in general, especially aviation which has higher salaries than average, with higher taxation
DeleteAccording to Eurostat, the average hourly cost in Greece is ~50% higher than in Croatia:
Deletehttps://ec.europa.eu/eurostat/statistics-explained/index.php?title=Wages_and_labour_costs
Statistics is the best way to show anything you want. Aviation salaries are not average. Not clear from your post is average hourly cost higher than in Croatia before or after taxation. Greece generally is cheaper than Croatia which is another indicator my claims might be correct. I agree with everything else you said, just don't believe labour costs would be one of the things to make Aegean go for CTN
DeleteGreece is cheaper than Cro, US is cheaper than Greece implies US has lowest payed workers…Balkanishe mentalitat and caffe’s ceo all around
Delete"Aviation salaries are not average."
DeleteDo the salaries differ vastly in their relation to the average in Croatia vs. Greece? If not, I don't see how the 50% average labour cost difference can vanish.
"Not clear from your post is average hourly cost higher than in Croatia before or after taxation."
It's the total cost for the employer. What share of that cost is net salary for the employee, tax, pension fees etc. is irrelevant.
"Greece generally is cheaper than Croatia which is another indicator my claims might be correct."
I disagree with that statement. First of all, Greece is without a doubt a more expensive country to live in than Croatia. Secondly, cost of living is by no means an indicator of labour cost. As you pointed out earlier, the average net salary in both countries is similar. With the higher cost of living, the average Greek has a lower purchasing power than the average Croat, as shown in IMF's PPP adjusted statistics quoted on Wikipedia.
Still, you may be very right in that the lower labour cost is not a reason for A3's interest in OU. But if the merger would happen, I can imagine that some Greeks working in admin may lose their jobs because they keep the cheaper Croats, rather than the other way around.
Consumer Prices in Zagreb are 14.69% lower than in Athens (without rent)
DeleteConsumer Prices Including Rent in Zagreb are 13.38% lower than in Athens
Rent Prices in Zagreb are 8.46% lower than in Athens
Restaurant Prices in Zagreb are 26.12% lower than in Athens
Groceries Prices in Zagreb are 8.47% lower than in Athens
Rent Prices in Dubrovnik are 52.47% lower than in Mykonos (Mikonos)
Restaurant Prices in Dubrovnik are 34.12% lower than in Mykonos (Mikonos)
This would be a very positive development for Croatia Airlines. I hope for the best.
ReplyDeleteWhat I find interesting is that these two airlines have absolutely no form of cooperation. They have no codeshare, they compete on the same routes...
ReplyDeleteIt's odd. On top of that they codeshre with JU on Croatian routes.
DeleteI'm pretty sure A3 would codeshare with OU on the ZAG/BEG route if OU operated it. Why doesn't it? Does it (maybe) have something to do with OU being way politicised and the management being too scared not to fall out of favour with the gov't? Who knows...
DeleteIt would be nice to reshape OU into something successful.
ReplyDeleteCouldn't agree more and keep fingers crossed to happen
DeleteWould be great if it was ever to happen. But the fact that the airline is so heavily unionised and politicised, will kill this. It is DOA
ReplyDeleteThe answer of why would Aegean do this is tourism related. They do wonders in Greece due to it being closely linked to Greece itself and sell seats due to being Greece's number 1 airline to fly to there. Now, get that in line with Croatia and its untapped similar ethos - it's "Croatian Airlines", after all.
ReplyDeleteAnd about that Romanian purchase - lots of leisure traffic. Romania is a huge market.
This has been going on since 2015. At this point it's nothing more than Jatovanje.
ReplyDeleteI hope we will see the same story as with JU. We really need national carriers.
ReplyDeleteWell in Croatia there is no political will to find a solution to OU like there was in Serbia regarding JU back in 2013. Politicians in Croatia don't care and ZAG has moved on and is focusing on FR and others. OU already retreated to the coast this summer and we will see what kind of network they will have in winter.
DeleteAegean is a well managed private airline, while OU is a political project (nation building), completely run by incompetent cronies and a sinkhole for taxpayers money! Nothing to win there for A3!
ReplyDelete"Restructuring" is almost a swear word in Croatia. I'm sure that a truly restructured OU would be a good score for A3. Because A3 is a well-managed private company, I'm sure they did their due diligence and found that buying OU would make them money in the long run. They're not buying what OU is right now, they're buying the potential of what OU could be were it professionally managed.
DeleteGood luck A3 dealing with the Croatian government
ReplyDeleteTrust me, Greek government isn't much different.
Delete@ anon 14:46 what Aegean airlines has got to do with the Greek government ? They are private owned , they do not need their approval for anything they want to do.
DeleteBut if Aegean buys OU, than OU will be privately owned and Aegean will not have to deal with HR govt. That's what should have happened looooong ago. But ok, we waited for 10 years for LCC to get access to ZAG, maybe it's time for politics to withdraw from OU. If only...
DeleteThe Greek government has no input in the running of Aegean. That is why they succeeded.
DeleteThey learned how stupid it is for government appointees to try running an airline from Olympic Airways.
They need to sell OU ASAP.
ReplyDeleteThey? Who is they?
DeleteIf you mean the Croatian gov't, they don't want to sell OU as, in their minds, it's a national status symbol. Doesn't go well with voters selling national symbols.
If you mean A3, they can't sell it as they don't own it yet. And when they will own it, why would they sell a stake in a profitable, well-managed company OU will be under A3 management?
This would be the best option for Croatia Airlines' survival.
ReplyDeleteAnd LH will just stay on the side and look? Yeah, right!
ReplyDeleteThey didn't seem to care about Adria even though everyone said they would.
DeleteThey did, it was LH that shut down Adria, and now they're in full control of SLO market
DeleteLH couldn't care less if Adria shut down or not. SLO market is too small and irrelevant.
DeleteYes! I'm sure LH will match the A3 offer, nay, offer double and buy OU right under the A3's nose! LH will not let those pesky Greeks snatch their PreciOUs! Just you wait and see... Any minute now they will...
DeleteAegean is most likely interested in the Croatian coast.
ReplyDeleteBest choice , maybe we will see a Croatia Airlines airbus a321 from A3 that would be great.
ReplyDeleteDoes anyone know what happened with the OU Heathrow slots? Is there a way they can rebuy them from Delta? If Aegean ever buy OU, they can consider reintroducing ZAG-LHR or at least LGW, which is also a quite important airport in London.
ReplyDeleteReintroducing? Do you know OU still operates LHR-ZAG?
DeleteMy mistake, sorry. I was referring to the 9 weekly old slots.
DeleteCroatia Airlines nothing more than the iceberg on which the Aegean Titanic will sink !
ReplyDeleteA true greek tragedy ...
Aegean will not buy OU they do pretty good with the greek tourism they don't want any Croatian drama.
DeleteOU has a fleet problem among other issues. Replacing existing fleet with new generation regional jets like A220 will be costly. If OU orders a dozen of A220s A3 will have to carry that financial responsibility in case they purchase OU.
ReplyDeleteOr OU can lease this aircraft and be responsible as an entity for them.
DeleteIf things do not work out A3 can simply close the airline or sell their stake and avoid any financial damage.
Or they can send some A220s in Greece. OU with A220 is more interesting for purchase, those planes will be "miraz" to this marriage.
Delete