Croatia Airlines has retained the profit it generated during the first half of the year and ended the first three quarters 7.1 million euros in the black. The Croatian carrier noted that the recent sale of its five Airbus A320-family aircraft to World Star Aviation is included in its overall cash flow. The airline yielded 22.1 million euros from the sale of its property over the nine-month period, as well as 12.5 million euros from the state. The carrier’s cash outflow increased considerably due to the pre-delivery payment of two instalments for the financial lease of Airbus A220 aircraft, as well as a 10% pre-delivery payment for an engine for the aircraft type.
The profit achieved by the airline is an improvement from a loss of 13.1 million euros during the same period in 2022 and an upturn from the pre-pandemic 2019 loss that amounted to 6.4 million euros. Other factors that contributed to the airline’s solid financial result was an increase in demand for travel, as well as lower fuel prices. Croatia Airlines has 97.9 million euros on its bank account, however, its debt amounts to 78.8 million euros. “Implementation of strategic initiatives as defined by the Post Covid Strategy, positive market trends, growth income, as well as lower fuel prices, contributed to a significantly improved balance sheet in the first nine months in 2023. Although the airline maintains a solid cash position, the burden of a substantial debt remains a notable aspect of its financial profile.”, Croatia Airlines said.
Croatia Airlines handled 1.350.237 passengers during the first nine months of the year, an increase of 24% on 2022 but still down 21% on 2019. The average cabin load factor stood at 65.9%, an improvement of 4.1 points on last year. The airline welcomed 313.426 travellers on domestic flights, 978.566 passengers on international services, and 58.245 customers on charters. The average cabin load factor on domestic flights stood at 59.9%, while it amounted to 65.5% on international services. During the January - September period, the Croatian flag carrier operated 19.999 flights, up 14% on last year. The airline counts 915 employees.
So they are running at 30million loss over 3 quarters lol
ReplyDeleteApart from the finances, their operational results are poor too. Passenger number are 21% BELOW 2019. That's really poor, especially for a small airline and especially for an airline operating on a market which has fully recovered on on 2019 levels.
DeleteAnd the load factor of 65.% will magically improve when they get A220 planes with larger capacity...
DeleteWhy comment if you cannot understand the basics of finance?
DeleteThe article does not say if they realised ANY profit on the sale of their property during 2023. The article says the income from that was 22.1 million euros. But whether there was any profit depends on the value of that property in the books of OU before the sale. If the value of that property in the books of OU was lower than 22.1 million euros, then there was profit on that sale, otherwise there was a loss on that sale.
Croatia Airlines will live for long time, no matter what other people wanted with t.. comments
DeleteStupid people don't understand the life can be spent as a prince, or can be spent as a bagger, or in this case, servant. They also don't understand that the people who talk about crime, corruption and incompetence in OU want OU to live for long time, but not as a bagger and as a servant, but as a decent and developed company which will not anymore fill LH planes in MUC and FRA as the main task.
DeleteAnd what would be the proper business concept for OU, if not as a feeder company? Not that everybody needs to do everything.
DeleteIncoming tourists are the domain of low cost carriers that are difficult to compete with, because of their lower cost base and ability to move planes around, specially during the dead winter season. At the same time Croatia is neither able nor willing to block carriers from other UE countries access to its market, because it is rightly more concerned with the growth of its tourism business than with the growth of its aviation business.
Building a hub in Croatia would be extremely difficult because of price sensitivity of the local pax and very limited PPDEW on most routes. Any long haul would have a POS on the other side of the pond, what would automatically put OU at a disadvantage.
Wow, what a genius!!! So you build hub for local pax only? You are not allowed to do codeshares "on the other side of the pond"? You can't take part of higher yielding tourists from LCC simply by offering them possibility to fly, which now you don't? Please don't make me lough. With "Croatia not able or willing" to do hundreds of things, I fully agree, but then again, it is not something it couldn't be change. Your post is only here to advocate status quo in OU, and political Mafia which controls it, and unsuccessful attempt to hide incompetence, crime and corruption which are preventing growth of OU on the biggest ex-yu market with enormous possibilities in transfer traffic, P2P traffic, tourist traffic, ethnic traffic and domestic traffic, in short haul and long haul.
DeleteYou "are allowed" to make codeshares on the other side of the pond, but nobody would be willing to do those codeshares with you. So forget about it. If OU started to fly longhaul, maybe it would be able to bring pax from NYC or ORD (if it flew to NYC and ORD), but not from multiple other places that now use US3 to go to Croatia and allow for these planes to be filled at decent prices. And what would be the cost of marketing to break into the long-haul market in the US with a brand that is not recognised at all and what would you do with the long-haul planes outside summer?
DeleteYes, in principle you need to have a solid basis with local pax paying well for direct flights, if you want to have a proper hub. You then add transfer pax to the mix, but they typically pay much less than what is needed to make a sustainable profit. This is unless their options are limited or unless you steal those pax from airports that are damn expensive if you wanted to go direct from those airports. But for that you would need a geographical location or scale of business that OU would never have. Transfer business is very competive and low yielding, unless your demand allows you to offer one-stop flights to places like San Diego, Phoenix or to some shitholes without other options (difficult to find nowadays, unless the route would be extremely thin), or to steal for example British pax that want to avoid BA prices at LHR and fly indirect with KLM at what are still pretty high prices.
Taking higher-yielding tourists from LCC by OU is not possible. If they are willing to pay more to fly to Croatia, they will typically go for local brands they know and trust, so for local legacies. Croatia indeed pays a lot to those legacies for them to fly to Croatia, so to open the market for more high-end pax and not only lcc clients.
Anything more from your side besides emotions?
There are no emotions at all on my side. Everything you say is your OPINION only. And your opinion is based on some kind of benefits you have from OU being feeder only. The best proof that your opinion is wrong is Air Serbia, which does the business on the market smaller than Croatia (11 compared to 7-8 million passengers), lower-yielding and more price sensitive, with almost NO tourists from Far East, Australia and North America, yet they do everything OU should have done minimum decade ago, and still can do. JU numbers are not my emotions, they are what OU numbers could be and should have already been. And please don't give me 7 airports and dispersed passengers story because it's just another part of your "let's keep quiet and let's keep status quo" aparatchik mindset.
DeleteAnon 17:06 +100
DeleteI have nothing to do with OU. I am anonymous, exactly like you are anonymous, so you have to trust me on this. But what would it change about my arguments if I were a CEO of OU? Nothing. Pls stop trying to undermine arguments because of who I supposedly am.
DeleteJU is a proof of nothing here. I know I may be attacked by JU fanboys, but what is it exactly that JU proved here?
+ Serbia has a bigger population and Belgrade is a bigger city. Different than in Croatia, BEG is the home airport for all this population, while in Croatia there are other significant airports (primarily DBV, SPU). It makes it more difficult to make ZAG a hub airport than in the case of BEG.
+ No hub airline in Europe is based on tourists. So deduct tourists from your count of 11 million pax in Croatia. Tourists from mature markets fly mostly direct (unless long-haul). If a certain destination is not available direct, they simply pick a different destination rather than going indirect on short-haul.
+ While charters are typically low yielding, JU has a practical monopoly on all charters between Serbia and countries outside EU, allowing it to charge Serbian tour organisers higher fares. The non-EU countries are more interested in getting tourists from Serbia than getting proper access to charter market with Serbia for their airlines. OU does not have that benefit, primarily because Croats spend time at home country.
+ JU since 2022 significantly benefits from the Russian market - a medium length segment, where very limited competition allows them to charge very high fares for flights via BEG and where they probably make more money than their entire profit figure, allowing them to cross-subsidise other routes. Congrats, but this would not be available to OU, just because of politics, and also this is not given to JU forever.
+ A competitive pressure from other airlines like LHG is temporarily much lower - after covid receded, the demand in their home markets is so big compared to their current offering, that they do not undercut prices offered to transfer pax from ex-Yu region to the same extent they did this in 2019 or before. This allows other airlines to also charge higher fares and benefits JU.
+ Despite all this, JU barely makes a profit in a year where airlines around the world report historical results. What will be when things come back to normal, ie no premium on Russian flights and back to significant pricing pressure from LHG and others?
So the jury is still out. Things need time to be validated. I wish them sucess, but saying OU should and could repeat the same scenario is not convincing. Proximity in geography does not mean the conditions are the same.
"JU barely makes a profit"
DeleteThey registered 22.5 million euros in profit from January to June. But ok, being an OU cheerleader these days is difficult. One most come up every excuse possible to cover their poor results, not only financial but operational too (65% load factor, 20% fewer flights). With the current management, I'm pretty sure OU would still be money loosing even if they operated under the same circumstances as JU, which, according to you just has pure luck in everything, has no competition and 1 airport (somehow that seems to impact positively on an airline).
"Proximity in geography does not mean the conditions are the same" Absolutely correct. Croatia has much better conditions to develop real hub in ZAG : Better geographical position with the entire Balkans "behind", Serbia included, Slovenia in its catchment area, enormous tourist potentials, no visa and/or freedom of movement with all major markets, EU Open Sky agreements with all important markets, and so on and so forth. And for the end : "you have to trust me on this" and "I have nothing to do with OU", sorry, but somehow it does not sound too convincing. Here I end discussion on this topic.
DeleteCroatia Airlines is like perpetual machine or gravity, simply can not die no matter what you do to it. So any kind of discussion about "how to change it" simply does not make sense no matter what. As is- Croatia Airlines is good to its shareholders- taxpayers, both political currents in Croatia and most important good to its own management. If ain't broke don't fix it ! On the other side, without OU Zagreb Airport is just going to be another Ljubljana Airport.
DeleteThey are in deep red without all these extra incomes.
ReplyDeleteFrom next year, Croatia Airlines is allowed to go through a new restructuring and get EU funds for it (since 10 years will pass from the last one). I have a strong feeling that will be happening.
DeleteAnd how do you know that?
DeleteThe market this year is such that it is possible that OU makes profit on operations this year even despite all its drawbacks (so excluding profit made on sale of property).
Airlines around the globe are ALL making EXTREMELY HIGH profits this year. How many airlines will not post their record profits this year?
I wouldn’t use the word “ALL”. There are little airlines that have cease operations.
DeleteHow much money does JU have in the bank?
DeleteAt the end of April this year they had 147 million euros.
DeleteTypically May-June is peak of cash at airlines. Many people prepay for their tickets for the summer by purchasing them earlier, so airlines are awash with cash. And costs of moving those people are still well ahead.
DeleteDebt of 78.8 million EUR!!! Crazy
ReplyDeleteThey have basically reached Jat Airways level of debt. Not a good sign.
DeleteThat is very little debt for a company the size of OU!
DeleteOU is a small company.
DeleteIt is huge debt for a dwarf like OU, especially taking into account how much money had been pumped in over 30 years of its existence
DeleteWhat accounting standards is OU applying? IAS/IFRS, or local, Croatian standards of accounting?
DeleteIf IAS/IFRS, they have to show the total value of aircrafts they lease, as their debt. If so, 78 million euros of debt is peanuts.
International Accounting standards are used and have been for many years.
DeleteBravo Hrvatska!
ReplyDeleteAre you serious? Have you actually read the article. Their finances are in an absolute mess.
Delete"The Croatian carrier noted that the recent sale of its five Airbus A320-family aircraft to World Star Aviation is included in its overall cash flow."
Delete"The airline yielded 22.1 million euros from the sale of its property over the nine-month period, as well as 12.5 million euros from the state. "
"he carrier’s cash outflow increased considerably due to the pre-delivery payment of two instalments for the financial lease of Airbus A220 aircraft, as well as a 10% pre-delivery payment for an engine for the aircraft type."
"Croatia Airlines has 97.9 million euros on its bank account, however, its debt amounts to 78.8 million euros."
Bravo indeed...
Unfortunately, nothing to celebrate this time. In fact this financial report shows how bad things are.
DeleteHe is bravoing to every move Kradeze makes in Croatia, despite every move represents further destroying, and no matter what it's about.
DeleteAnon 9:04:
DeleteCan you pls name any companies that have more cash on bank accounts than the amount of their debt, so that their "net financial debt" would actually be negative? Go and learn something before commenting.
After reading this, I can only conclude that the financial lease of these A220s is a financial nightmare. They sold the Airbus planes to cover two pre delivery payments and got some extra from the state.
ReplyDeleteI wonder what is the amount of money they paid for pre delivery payments?
DeleteAnyhow, they got 12.5 mil from country and 22.1 mil from property sales (together 34.6 mil), so if they reported "profit" of 7.1 mil it actually means they are 27.5 mil EUR in loss.
Anon 9.06:
DeleteSo if I purchase a plane from you for 22.1 million euros, you made 22.1 million euros PROFIT? Is it that simple?
And for example if you purchased that plane not long ago for 30 million euros? Still 22.1 million euros profit?
We are talking here about incomes which create balance sheet.
DeleteAnd 22.1 mil is income which they calculate when they speak about "profit".
To last anon.
DeleteI don't even know where to start. "Incomes", as you write, do not create balance sheet. Income is part of the profit and loss account, and not of the balance sheet. Give yourself some time and look at any balance sheet over the internet. Your desire to smear them is apparently bigger than anything.
Feel free to help yourself
Delete"Net income is the final calculation included on the income statement, showing how much profit or loss the business generated during the reporting period. Once you've prepared your income statement, you can use the net income figure to start creating your balance sheet."
https://www.freshbooks.com/hub/reports/sample-balance-sheet-and-income-statement-small-business
These are the facts no matter how strongly you wish to defend so terrible OU results.
If you really want to start to learn something, which is good, I advise you to avoid no-name sites, where you easely get misinformed.
DeleteThe only part of the income statement (profit and loss account), that you need for the balance sheet, is the net result of the financial year.
Freshbooks is a no-name site/company?! Dude…
DeleteI think you should start, for a beginning, learning what Freshbooks site is.
DeleteHope people will read beyond the headline.
ReplyDeleteMost won't and will celebrate this remarkable ' achievement'
DeleteI said a year ago the A220 would be a nail in OU's coffin and I fear that is exactly what is happening now. When the next pre delivery payments come along, there will be nothing to sell.
ReplyDeleteExactly my thoughts too.
DeleteThe sale of planes was basically to cover a few installment for the A220s.
ReplyDeleteIt is obvious they will need a serious financial injection in the next 2-3 years in order to pay for those A220's. There is no way they will be able to finance daily operations and regular payments for the new aircraft. How will they do it, considering there are strict rules in the EU regarding funding?
ReplyDeleteSomeone mentioned above. They will be eligible to get EU funds next year for large scale restructuring. This will probably involve cutting routes and costs even more.
DeleteWhy would they need state aid? They have a significant overliquidity!
DeleteAre you serious?
DeleteAccording to the article OU has 97.9 million euros on its bank account.
DeleteWhat is the yearly turnover of OU? 50 million euros? That would mean they have cash equivalent to almost two years of their income! Why would they need state aid then?
And of course they have debt, because they use leased aircrafts. Instalments on those leases form part of their costs every year.
They need state aid because the money they have on their account is the result of state aid. They openly said last year that the money they got from the state (in 2020, 2021 and 2022) was put on their bank account to avoid bankruptcy as their funds were completely depleted.
DeleteNow you are talking why they took state aid in the past. And the question was whether they need more state aid in the short/medium term.
DeleteAnd the money from the state was not taken to put it on the bank account and get 0% interest rate from it, but to use it in operations (pay for the costs of operations). Apparently now they have much more than they may need for it.
You ignore the fact that they have many loans taken out which need to be paid back. Not to mention that they actually have to pay back part of the aid, but this will be conveniently forgotten. The repayment of the aid has already been pushed back.
DeleteYou have to make up your mind: if the loans will be forgotten, then they do not have to repay these loans to the state. And if so, they have more cash than they may need for many years to come.
DeleteIf they will not be forgotten, but repaid to the state, then the state aid amounts actually go down and not up.
Loans from banks. Try reading their financial report. But I will just appease you now and tell you that Croatia Airlines is a financially sound business, generating outstanding profit and a pinnacle of a well managed business in the country. Hope it's ok now.
DeleteDo we know how much they earned from the sale of their Airbus planes? I am sure it was more than 7 million.
ReplyDelete"The airline yielded 22.1 million euros from the sale of its property over the nine-month period"
DeleteYes that's over a 9 month period but we don't know if they sold any other assets over that period of time.
DeleteWhat other assets do they have?
DeleteDire
ReplyDeleteThe worst thing about all of this is that Croatia Airlines won't actually own the new A220s.
ReplyDeleteBut they will pay huge money.
DeleteBut if they are taking them via financial lease, that means they will own them once leasing is fully paid!
DeleteNo. An arrangement can be made at the end for them to buy them if the owner is willing to sell them. The Dash 8s Croatia Airlines is using are all on financial lease and they won't own them. Once the leases end in the next 2 years they will return them to their owners.
DeleteNeither JU owns a single aircraft, yet they fly.
DeleteYes but they don't have 500 million euros to pay off for planes they won't own.
DeleteIs there a chance they will end the year in profit, even on paper?
ReplyDeleteProbably not. I expect a small loss. They perform poorly in Q4.
DeleteHow is the airline pumping all these subsidies legally to them?
ReplyDeleteSorry I meant the state
DeleteIt's through various subsidies like state owned Split airport paying them millions to advertise in their magazine and on the overhead bins. Truth be told, this is done throughout the EU.
DeleteCroatian airports/tourist boards are pumping money to all type of airlines. In my experience they are indifferent whether the airline is Croatian or foreign. They do it because they have an interest in attracting tourists, so that local businesses can make money on those tourists. They don't care about the good of the airline, but about themselves.
DeleteWould have been much smarter for them to have gone for Embraer planes, especially since they were being offered an amazing deal. Avoid delays in delivery due to engine issues, have much lower costs, have much better capacity that would actually fit your airline operations.
ReplyDelete+100
DeletePolitics won again.
DeleteI really wonder what was Embraer offering them
DeleteEmbraer’s offer to Croatia Airlines “hard to refuse”
https://www.exyuaviation.com/2022/09/embraers-offer-to-croatia-airlines-too.html
Profit and cash flow aren't the same thing, the sale of the airbus planes may have added 22.1m cash flow but it wouldn't have added much to the profit, it may have even decreased the profit. The profit contribution from the planes is what they sold them for minus the value they had for them on their book, wouldn't surprise me if they had them valued at more than 22.1m and hence it actually decreased their profit.
ReplyDeleteThat's not how it works, you are mixing up assets/liabilities and profit/loss. The valuation of the aircraft has nothing to do with operational profit.
DeleteAnon 9:50 is fully right. Still not many people are willing/able to comprehend this basic thing.
DeleteSo they are planning with just a single replacement engine? Risky business with the reliability of these PW engines.
ReplyDeleteWhy is the LF so low?
ReplyDeleteToo much capacity and not enough sold tickets. It will get worse when they start sending A220 on flights such as Zagreb-Mostar.
DeleteThe reason may be a big share of PSO flights with very low LFs, which is not an issue for the airline.
DeleteThe stat is an average LF. So if you have a A319 to FRA that is 100% full and a PSO flight on dash that has 10% LF, you get an average LF of 55%. Still in terms of % of "seats sold" versus "seats offered in general", you are probably around 90%.
Read the article. It tells you exactly what their LF is on international flights and it is equally as poor.
DeleteThey are presenting the A220s as their savior but I'm fearing it may prove as their downfall. Let's wait and see. Hope for the best though.
ReplyDeleteWhat are their most profitable routes?
ReplyDeletezero, zip, zilch, nada
DeleteYou must be very wrong. They make huuuuuge money on every single Minken and Vrankvurt they operate. Minken Vrankvurt, Vrankvurt Minken
DeleteI guess putting greater focus on Split is paying off
ReplyDeleteGood that there is some profit. LF is still poor though
ReplyDeleteAlmost all airlines in Europe have record profitability this year.
ReplyDeleteTrue dat. All airlines in Europe are printing money this year. Those well managed and those poorly managed. Those big and those small. Good year. Lets hope it continues into 2024 or otherwise many airlines may have a hard landing.
DeleteBut not all of them are selling property.
DeleteMany are selling. Sale and leaseback is a totally normal practise. Aircrafts are very expensive. You sell them to get cashflows and then pay year on year leasing instalments. Its cheaper than a bank loan.
Deleteit's good they managed to be profitable but it is expected of them at the end of the summer season.
ReplyDeleteYes, passenger number has decreased by 22% from 2019, but passenger income is around 2019 numbers (70.59 M€ in Q3 2023, 71.61 M€ in 2019). Load factor only considering Q3 is around 82% (93% was in 2019). So there are some room for improvement, reporting LF combined with YTD is silly and you might miss something. Let's all hope that passenger number can increase with more routes next summer thanks to the 10 new pilots added this year.
ReplyDeleteExcuse me why shouldn't YTD load factor be taken into consideration? When you look at annual load factors for airlines, do you ask for only the best quarter be reported as you are requesting for Croatia Airlines?
Deleteignore LF, miscalculated them
Delete64.9% in Q3 summer 2023
Absolutely fantastic news. Love how OU has a quiet and clever strategy. In 2024, OU will surprise everyone. BRAVO Hrvatska!
ReplyDeleteVery clever with almost 100 million euros of debt, sale of assets, one of the worst load factors in Europe, over 20% fewer passengers than in 2019 and ongoing state subsidies. Bravo, bravo.
DeleteI understand your commernt @11.29 comes out of misplaced patriotism, but by supporting the sorry state of the national airline and its mismanagement you are actually showing you dislike your country very much and do not wish it well.
DeleteThe guy is obviously a troll.
DeleteHahahahahahahaha, hahahahahahahaha, hahahahahahahaha, Jasmine, jesi'l ti to vec ispio kahvu? Hahahahahahahaha, can't stop laughing
Deletewithout the sale of aircraft and state aid, they would have been around 25 mil in red and analanon @11:29 is happy? What world you are living in? Now they have nothing else to sell - they sold everything including their pride.
DeleteBankruptcy coming soon
ReplyDeleteIn your dreams
DeleteFinancial acrobatics!
ReplyDeleteIn the near future we will have only news from Yugoslavia to 2006 😅
ReplyDeleteAt this point, Croatia is going to need a new airliner cause this one could soon file for bankruptcy. Some times I question why can't Croatia Airlines be like Air Serbia.
ReplyDeleteBecause Misetic surrendered the market and determined it to be the feeder for the position in Star Alliance Board of Directors. Because company controlled by him is double-leasing Q400. Because he was Chief of Staff of Franjo Tudjman (person) and he is untouchable. Because AP needs position in Brussels. Because Tenica is in Brussels already. Because they are deliberately placing "management" which is totally incompetent and obeying their orders. Kradeze created electoral system and managed to mainten mindset from 1950's which combined keep them in control of money flows with 20 % votes. Because not one single journalist ever tried to find out of crime and corruption which is happening in OU and to publish it, and national TV is speaking of OU in superlatives only. Because people who use their heads are leaving the country in hundreds of thousands and those staying hailing Bravo Hrvatska despite being robbed on every level on daily basis
Delete