Topic Author
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Joined: Sun Dec 12, 2004 9:25 am

What Is The Real Issue With Croatia Airlines?

Tue Jun 18, 2013 9:53 pm

Is the issue mainly related to seasonality or something else? Can't seasonality be solved by wetleasing aircraft during the winter in North America?
Posts: 274
Joined: Wed Feb 16, 2005 6:30 pm

RE: What Is The Real Issue With Croatia Airlines?

Wed Jun 26, 2013 5:47 am

Hi there,

In my opinion there are many issues with Croatia Airlines. The biggest one is the business environment it finds itself in. One of the legacies a communist system in Central and Eastern Europe has left us is the lack of a reward for effort mentality or incentives to do good business because the government will always be there to bail you out. This problem exists with many major government owned and run companies and not just in Croatia but the region.

Another real problem is alleged corruption with the airline management one I am convinced is true. There was a story a few years back when the Dash 8 Q400's were introduced, the then CEO is alleged to have set up an intermediate leasing company for the aircraft. So if you imagine, the CEO where ever he is today still gets a cut out of the lease for the Q400s. So money just blatantly stolen from the airline.

A third problem is management lack of either ability or will to find new ways for the airline to grow and move forward. They seem to be obsessed with trying to be a full service carrier even though this does not fit the need for the market it serves. Even though the airline carries more passengers every year, this seems to be more of a result of Croatia's growing popularity as a tourist destination and the overall post war recovery of the country and not brought on by the airline itself. An example of this is how the number of aircraft operated by the airline has increased by only 4 aircraft in 15 years but at the same time the number of people who travel to Croatia by air has increased by around 500%

Management seems to be picked on a who you know not what you know basis. The current CEO is a former neighbour of the current Prime Minister and has a very limited aviation back round. This is again a major issue with government controlled companies in the region (central and Eastern Europe) and has been a real obstacle to growth for many local industries.

The only real fix for these types of businesses is privatisation and or becoming listed on a stock exchange where you will have a goal to be profitable and also an incentive need to grow. This should have happened years ago and for many reasons again mainly corruption this has not happened. Problem here now is that many of these local companies including airlines have been squandered and run into the ground so badly that especially in today's global business environment investors are very hard to come by.

In saying all this, Croatia Airlines has made many decent decisions in its 23 years of operation but the execution and inability to adjust to a changing environment plus government continued interference and alleged corruption has really put it in a bad state where next week it will no longer be able to enjoy or rely on government financial support due to EU anti competition laws.

I hope someone one day will do a full and independent audit of the airline, this way we will be able to answer your original question of what is the real issue with Croatia Airlines!
Once you have tasted flight, you will forever walk the earth with your eyes turned skyward, for there you long to return
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Joined: Thu Nov 06, 2008 3:36 am

RE: What Is The Real Issue With Croatia Airlines?

Wed Jun 26, 2013 1:04 pm

They (along with Adria) are just a regional for LH.
Posts: 274
Joined: Wed Feb 16, 2005 6:30 pm

RE: What Is The Real Issue With Croatia Airlines?

Wed Jun 26, 2013 3:15 pm

Quoting s4popo (Reply 2):

In most cases yes this is true and to be honest that would be fine if it resulted in profit and growth but clearly this is not the case and has not been for a few years now.

LH has been the winner here and really OU should grow a backbone and stick it to LH. Either LH buys a controlling stake or OU should have free rein to look after it's own interests like introducing flights to Dubai and Moscow, something which LH clearly does not want to happen.

Now that Croatia is all but in the EU I would even be as bold as looking at switching alliances from Star to Oneworld (we will see what happens with airberlin and Jat) or skyteam for example, which does not have a major presence in the region and could be more beneficial to Croatia Airlines in the longer term.
Once you have tasted flight, you will forever walk the earth with your eyes turned skyward, for there you long to return

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