Business

Croatia Airlines Gets 5th Interim CEO in Two Years

By 5 November 2018

On Wednesday, the government again appointed an interim six-month CEO of Croatia Airlines. This is the fifth time in a row that has happened. “The Government proposes the appointment of Jasmin Bajić as a member of the management board – the managing director of Croatia Airlines d.d. – until the procedure for the appointment of the permanent management board is completed, and for a maximum period of six months,” said the government in its decision, reports Jutarnji List on November 5, 2018.

This has been going on for more than two years. The public competition for the position of CEO of Croatia Airlines was first launched in April 2017, while interim CEOs have been appointed since August 2016 when the government, after his full term expired, appointed Krešimir Kučko as the first interim CEO. Since then, the government has been trying to conclude the longest-running competition for the CEO of a state-owned company.

Kučko resigned before the end of his third six-month interim term and later became the CEO of Gulf Air. In November 2017, Jasmin Bajić was appointed to his position, and his term was now extended for the second time. Over the past year, the government has returned the company to the list of strategically-important companies and has launched another, third competition for board chairman and members. The selection procedure has been completed, but no decision has been announced.

The pressure on the government to finally choose the CEO was made over the summer by the trade unions as well, but with no results. Experts say that this approach to running a company is inexcusable because the temporary CEO is in no position to make long-term strategic decisions. The latest competition was published by the Ministry of State Property and the candidates who have sent their applications are Ranko Ilić, Zdravko Delić, Boško Matković and Jasmin Bajić. The selection procedure has been completed and a proposal has been sent to the government, but according to unofficial information, Prime Minister Andrej Plenković has not yet made the decision.

It is not entirely clear why the government is refusing to finally appoint the CEO. Interestingly, the government has agreed to extend the term of Jasmin Bajić, who has also applied for the full term. It obviously considers him to be a good six-month solution, but not a long-term one.

In the meantime, Transportation Minister Oleg Butković has announced that Croatia Airlines cannot survive in the future without a strategic partner and that the company is going to search for a financial advisor which will help it find a strategic partner. According to sources, Deloitte, Ernst & Young and PricewaterhouseCoopers have applied to the international tender.

At the same time, it has never been revealed which strategic partners were found by the World Bank advisers, which were selected by the then government in 2015, which paid two million kuna for their services.

The company's latest financial report reveals that the selection of the strategic partner is still in the distant future. “By the end of 2018, initial activities related to the creation of a recapitalisation model and the identification and verification of potential investors with consultants-financial advisors are foreseen.” In other words, the search for the strategic partner will take at least another year. And it seems that the selection of the CEO will not happen any sooner.

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