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Croatia Airlines Sees 1st Positive Monthly Financial Result Since COVID

Croatia Airlines’ financial results for the first half of the year are out, and there is some positive news in them. For the first time since the outbreak of the pandemic, the Croatian flag carrier has recorded a positive monthly financial result: it turned a profit in June. However, the rest of the results are far from positive.

Croatia Airlines records its first monthly profit since 2019

Total losses for Croatia Airlines in H1 of 2022 are 164.1 million HRK ($22.4 million), which is a disappointingly high amount for an airline of its size.

Things are looking up compared to 2021: revenue has almost doubled compared to H1 of 2021, and advance bookings for the remainder of the year are up as a result of less uncertainty surrounding COVID-19. Croatia has abolished all pandemic-era entry requirements.

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Perhaps most worryingly for the airline, its load factor stood at just 56.2%. This is 10.9 percentage points higher than the load factor for H1 of 2021, but it remains a concerning figure and a significant explanatory factor for the airline’s financial loss. Unsurprisingly, fuel costs are also up, by as much as 70%.

Passenger figures are still down 40% compared to 2019. Photo: Croatia Airlines

Furthermore, Croatia Airlines is still handling far fewer passengers than it handled pre-pandemic: the passenger figure for H1 of 2022 is 558,146, which is over 40% lower than the 2019 H1 figure of 960,620. However, it is actually 2.7 times higher than the 2021 H1 figure.

On the positive side, for the first time in two and a half years, Croatia Airlines made an operating profit in the month of June this year. It is likely that this will also happen in July, August, and September when its flight capacity is filled with passengers from its Star Alliance codeshare partners heading to the Adriatic coast via Frankfurt (FRA), Munich (MUC), Paris (CDG), Zurich (ZRH), and Amsterdam (AMS), among others.

The airline is shifting capacity to other Croatian airports in response to Ryanair’s arrival. Photo: Croatia Airlines

Ryanair is an existential threat for Croatia Airlines

Croatia Airlines has historically always struggled to turn a profit outside of the summer holiday season. It routinely makes losses outside of the summer months, including steep losses between mid-January and Easter each year.

However, these losses have now become even wider, both due to a dent in demand following COVID-19 and due to the arrival of Ryanair in its home territory.

Ryanair opened a Lauda Europe base in Zagreb Airport, Croatia Airlines’ home base, in June 2021. It then launched a staggering 24 brand new routes within just seven months. As a result, Croatia Airlines started shifting its focus away from Zagreb as it looked for ways in which it could profitably deploy its aircraft capacity.

Ryanair has launched a variety of routes out of Zagreb to construct a network that caters for the diaspora, city break, and leisure passengers. Many of them are in direct competition with Croatia Airlines’ routes, even if they are not routes with the same airport pairs. Simple Flying analyzed how Ryanair uses secondary airports to compete with Croatia Airlines in April this year.

What do you think of Croatia Airlines’ positive financial performance in June 2022? Let us know what you think of this story in the comments below.

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