Zagreb Airport Approaches 5 Million Passengers: Expansion or Pleso?

It is still unclear whether the Zagreb International Airport (MZLZ), a company owned by an international consortium led by the French and Turks, which manages the Zagreb airport, will expand the terminal when it reaches five million passengers per year or if the old Pleso airport, which has a capacity of two million passengers per year, will be activated.

Although MZLZ has indeed made an effort to answer our questions, some of their responses were unclear. Furthermore, the silence from the Ministry of the Sea, Transport and Infrastructure suggests that something is being concealed. In any case, according to media estimates, the construction of a new terminal would be a substantial expense (estimates range from 30 to 70 million euros), so MZLZ’s management is clearly trying to make the best of their obligations under the concession agreement.

And that obligation to MZLZ as the concessionaire states, i.e., is written in the 2013 Agreement, that the works of the next phase of airport expansion (phase 2) are divided into three sub-phases (2A, 2B, and 2C). Works on phase 2A must begin no later than January 1, 2032, regardless of the number of passengers or if they reach five million passengers per year before that. In that case, the works must start no later than 90 days after the end of the year in which the number of passengers first reaches that figure.

Multiple Scenarios Are in Play

As we were told by MZLZ, last year the number of passengers reached 4.7 million, but they do not expect the magic number this year, but rather next year or perhaps even in 2028, provided that no major global disruptions in air traffic occur. And as we mentioned, the option of the old Pleso airport is also on the table, although there are opinions that this would be a circumvention of the concession agreement since it states that something will be built, not that the old airport will be refurbished and put into operation.

We are not far from that interpretation in Lider, as granting a concession implies a mutual interest between the concessionaire and the state: in this case, the concessionaire needs to expand the terminal, which will be owned by the state, and why would the state give Pleso as something it already uses for logistics if it can obtain a new terminal as part of a new airport?!

– In accordance with our long-term development strategy and master plan, and in cooperation with the concession provider, we are considering various scenarios to ensure optimal use of available capacities within the concession area. Our goal is to respond in a timely manner to the growing demand while maintaining high service standards for airlines and passengers. All activities are conducted in coordination with the concession provider to ensure full compliance with the concession agreement and national strategies, according to which Zagreb would continue to develop as a transport hub – MZLZ states, but it is unclear what will happen next.

We asked the Ministry, and there was not a word from them about this story. And when there is silence or unclear answers are given, speculation begins, which may not necessarily be true, but the responsibility primarily lies with the concessionaire and the concession provider – the state. However, MZLZ actually has little room for maneuvering since the current airport, opened in 2017, was built for a capacity of three and a half million passengers, so even the potential activation of the old airport would only temporarily delay what is inevitable.

Just a Misleading Impression?

Interestingly, airports in the region are announcing significant growth in new flights this year, while MZLZ, at least it seems, has no such announcements. Perhaps that is why there will not be a magic number of passengers. Nevertheless, it is encouraging that MZLZ’s largest partner, Croatia Airlines (CA), plans more than 19,290 flights in this summer’s flight schedule (six percent more than last year), offering more than 2,396,000 seats (nine percent more than in 2025).

– During this period, Croatia is planned to be connected to a total of 32 international destinations, or 33 European airports, with aircraft flying on 55 international regular routes – CA notes.

MZLZ assures us that our impression is incorrect, emphasizing that it is one of the EU airports that recovered the fastest after the pandemic, primarily due to good business strategies.

– Compared to the pre-pandemic period, the number of passengers has increased by 37 percent, and the number of destinations by 50 percent. Many regional airports have not yet fully recovered. Additional flights have been announced for this summer season, although the number of new destinations is currently limited. An exception is Tel Aviv, which the Israeli airline Sun d’Or announced a few weeks ago. Although it is too early to draw conclusions for 2026, it is important to emphasize that developing new routes takes time to achieve full sustainability and profitability for airlines. Nevertheless, MZLZ remains focused on expanding its destination network, further growth in air traffic, and continuously improving the passenger experience – they emphasize at MZLZ, but the impression remains that there are not many new flights, and the one to Tel Aviv is questionable due to the current war situation.

Costs Included in Revenue

The concession lasts for thirty years (until 2043), and in the first ten years, there was not much profit, which was expected. For example, the construction of the new airport cost around 330 million euros, and the pandemic unexpectedly swept through, jeopardizing airports worldwide. According to business data, the company has often operated at a loss in recent years, although there are indicators that everything is under the control of the Management, led by Hüseyin Bahadir Bedir. Specifically, as they responded, last year the company achieved total revenue of 87.6 million euros. However, it is interesting that they include construction revenue, as they stated, which according to Lider’s financial analyst Nikola Nikšić is in accordance with the laws but is very rarely applied.

– Revenues also include realized ‘construction revenues’, which are the result of additional investments in the new passenger terminal to improve service quality and upgrade capacity during the year – they explain in the company.

What is it really about? Namely, the company treats the investment in additional construction of the current terminal as an expense, and since it has not presented this additional construction as its long-term asset to be amortized, this expense is also presented as revenue. Although it sounds absurd at first glance, and even if it is about inflating revenue, this accounting technique is actually used by infrastructure concessionaires. The reason is that the concessionaire cannot record the highway or airport it is building as a long-term asset because the state is the owner, so it is resolved in a way that the value of the expense and revenue is the same, and the sum is always zero. For example, last year the revenue from construction was 2.2 million euros, and the year before it was 10.3 million euros, but as MZLZ rightly states, last year’s decline in ‘construction revenue’ does not reflect a decline in airport activity and does not affect the business result because construction revenues equal construction costs.

Thus, in fact, the actual revenue without ‘other revenues’ (revenue from construction) last year amounted to 85.4 million euros (other 2.3 million euros), and the highest amount of other revenues was recorded in 2022 – 21 million euros (actual revenue was 56.3 million euros). In fact, actual revenues have grown every year, and MZLZ states that the main reason is the ‘gradual but stable recovery of air traffic after the pandemic period’.

In Five Years, Three Years with Losses

However, since 2021, the company has operated at a loss three times. Last year it amounted to 1.9 million euros (operating profit 306 thousand euros), and these three losses in the company are explained by the pandemic and depreciation costs and financial costs, although operating profit was achieved. The pandemic was a serious reason, but it has since disappeared, and regarding depreciation, it is, according to Nikšić, the largest item in the cost structure. Its absolute amount has not significantly changed over four years, from 16.5 million euros to 16.9 million euros, and it mainly relates to the depreciation of the concession, which is the dominant intangible asset, valued at 292.7 million euros at the end of 2024 and accounted for 87.8 percent of total assets.

Our analyst was not impressed with the business data (‘the business and results of ‘tourist’, Mediterranean airports look much better’), but the company boasts an EBITDA of 36.8 million euros last year.

– It is a strong indicator of the stability of operations and the financial strength of the Company. The achieved EBITDA indicates sustainable profitability and creates a good basis for further growth, investments, and long-term financial stability of the Company – they state from the company.

Therefore, this year they expect the continuation of positive trends in business, primarily a continuous increase in the number of passengers (but they do not specify by how much), which should directly affect the growth of total revenue.

– Thanks to this development, we anticipate stable financial operations throughout the year. Consequently, we expect to achieve a positive business result and further strengthen financial sustainability. All the mentioned projections are based on the assumption of stable global conditions and uninterrupted air traffic – they add.

A Private 5G Network is Coming

In addition to the company’s leader Bedir (president since 2019, previously a member of the Management since 2018), the other members of the Management are David Gabelica (since 2013) and Nicholas Maurice Vladimir Duthilleul (since 2021). Currently, there are 237 employees, and in the last three years, they say, their structure has not changed. The average monthly net salary and allowances for 2024 were 1913 euros, significantly higher (222 euros) compared to the previous year.

– Along with the Management, the directors of organizational units play a key role in coordinating the most important processes, from operational and commercial activities to finance, maintenance, IT, human resources, legal affairs, and IMS – they state.

In addition to the terminal, the company has invested around 25 million euros since 2023 (e.g., 9.6 million euros in the reconstruction of runway F and the replacement of vertical signage in the maneuvering area, 2.7 million euros in phase 1B – new check-in lines…), but it has seriously recognized the value of artificial intelligence (AI), which it plans to apply in several areas of business.

– Current projects include the development of AI solutions for inspecting asphalt surfaces and detecting possible damage, monitoring operational surfaces for irregularities, managing biodiversity, and monitoring bird occurrences in protected areas and external security perimeters. Additional applications in daily operations are also being prepared, aimed at providing faster and easier access to key business information needed by employees to perform daily activities – they enumerate.

Together with the airports in Zadar and Pula, HT, the company Markoja, and the Faculty of Transport Sciences, MZLZ has begun the implementation of the 5G project EU CEF DIGITAL, under which HT will introduce a private 5G network that will serve as a foundation for the application of advanced AI and AR solutions (for example, ‘Pokémon’ is an AR solution).

Dependence on a Few Carriers

The strength of the company lies in the fact that it is the most important air hub in the country and achieves the highest passenger traffic among Croatian airports. In recent years, there has been a continuous increase in their number. The airport is well connected to numerous destinations, ensuring good accessibility to major European and global hubs. It has a modern passenger terminal that plays an important role in tourism and the economy, but something will need to be done with it, as we mentioned.

The weakness is that Zagreb has a limited local market compared to larger European metropolises, and in addition, it depends on a few main carriers. The seasonality of tourism is not particularly encouraging for the growth of flights, but further growth in tourism in Croatia is an opportunity, especially in the continental part. Opening new routes and airline bases could also be seen as an opportunity to try to develop intercontinental routes, although this now sounds a bit unrealistic, as suggested by the fact that no one has shown interest in investing in a hotel and a commercial-business center near the airport worth 40 million euros, especially since threats from the global crisis are current, and the potential emergence of a new virus sends chills down our spines. There may be an increase in operational costs, and competition – other airports in the region – are not sitting idly by.

In any case, MZLZ has withstood all previous business challenges, but perhaps the biggest one in recent years is yet to come – what if the state does not agree to reactivate Pleso?