Croatia Airlines: Croatia Airlines grapples with costly A220 transition

Croatia Airlines expects to continue generating losses in the short-term as a result of its transition to an all-Airbus A220 fleet, which has seen its expenses balloon last year. However, the carrier is confident the shift will produce overall savings in the long run. It posted a net loss of nearly twenty million euros last year. The carrier has detailed how the arrival of its first two A220s in 2024, as well as the delay in their delivery, has financially impacted the company. "The investment cycle period for fleet replacement is marked by the operational and financial challenges of transition. Consequently, the company has forecasted negative financial outcomes for this period", it said.Outlining the challenges the company has faced, Croatia Airlines noted, "The arrival dates for the two new A220 aircraft, which were supposed to be delivered before the start of the 2024 summer season were repeatedly pushed back. This required adjustments to activities related to their handover. The first A220 aircraft began commercial flights on August 6, 2024, while the second commenced on December 27, 2024.. These delays necessitated the engagement of additional and significantly more expensive aircraft on a short-term wet-lease basis in order to maintain the planned flight schedule, preserve airport slots and retain passenger trust". It added, "Pilots training for the new type of aircraft had to be out of duty for two months. The first twenty pilots, including five instructors, faced even longer downtime due to repeated postponements. Training depended on pre-scheduled simulator slots and the availability of instructors at Airbus. Pilots had to repeat their simulator training because the delays in aircraft delivery prevented them from starting to fly within 21 days of completing their initial training, as regulations require".Croatia Airlines further added, "In 2024, significant increases were seen in hotel accommodation and daily allowances due to intense training. In 2024, more pilots were employed than operations required to ensure a larger number of pilots in anticipation of more aircraft arrivals in 2025. Due to the training of instructors, the new aircraft could not operate at full capacity as there were no available crews. Furthermore, there were costs associated with aircraft acquisition teams and other administrative expenses involved with the registration of the two aircraft". Croatia Airlines also incurred costs from training two groups of mechanics for the new aircraft type, adapting various operational IT systems for the A220s, as well as expenses for acquiring spare parts and the first spare engine for the new jets.Last year, the airline spent 10.9 million euros on the short-term wet-lease of two Airbus A320-family aircraft and 28.9 million euros for the spare A220 engine and parts. "In September and October 2023, the company received funds from the sale of its own Airbus aircraft that were nearing the end of their life cycle. These funds were specifically used in 2024 to finance the acquisition of a spare engine and spare parts for the new A220 aircraft. In 2024, the company made an advance payment for the purchase of a second spare engine for the A220 fleet amounting to 961.000 euros, security deposits before the arrival of two new aircraft in the fleet amounting to 559.000 euros, and a deposit for access to the parts pool for the new A220 amounting to 185.000 euros", Croatia Airlines said.EX-YU Aviation News