Tuesday, June 16, 2009

Airbus and Jat – round 2

Soon in Jat's fleet?
The European aircraft manufacturer Airbus has accepted another round of talks with the Serbian government after last week’s negotiations in Belgrade. The government wants to settle the agreement the national carrier Jat Airways, the Serbian Government and Airbus signed in 1998. The damaging order for 8 Airbus A319s will now be discussed under “new principles”, according to Airbus. The Serbian government has vowed that it will fund Jat’s new fleet. The funding will be provided through Serbian exports, according to the government. The government will reset talks with Airbus regarding the A319 order although the order is still in force. The Serbian government will head the negotiations with the line of argument that the order from 1998 is “damaging to Serbia and that it must be adjusted to the new economic and international circumstances”. Due to the fact that Jat has Airbus aircraft on order it will hold talks with the European manufacturer first however says it will talk to other manufacturers as well regarding its 2010 fleet renewal. Airbus last week accepted the terms of the Serbian government. It will not allow Jat to cancel the multi million Euro 1998 order however it will allow for it to be adapted. The government has said if an agreement with Airbus is not found it will turn to its traditional partner Boeing.

Jat has sent a delegation to the Paris Air Show where it is hunting down regional jets. All manufacturers are in play especially Bombardier, Embarer and the Russian Sukhoi which secured an order from Malev yesterday. You can read about last week’s meeting between the Serbian government and Airbus here. There, you can also find more about the 1998 order. Jat should receive up to 4 aircraft in 2010 as part of its fleet renewal. The airline currently operates 10 Boeing B737-300 aircraft (although one is leased to Air Ivorie), 5 ATR72s, 1 Boeing B737-400 and 1 Boeing B737-200, a gift from Aviogenex for the decades of debt owed to Jat. Jat has struggled this year with a fleet shortage. The airline’s dominance at Belgrade Airport has, as a result, declined dramatically. From a 75% share in 2003 to 42% today. The airline’s services to Montenegro have strugled the most due to the reduced capacity. Jat has handed over most of its passengers to competitor Montenegro Airlines on lines to Tivat and Podgorica. Jat is operating 3 daily flights to Montenegro from Belgrade this summer compared to 7 daily flights by Montenegro Airlines.


  1. Jat should stick to its traditional Boeing aircraft, it's what makes the airline distinctive, Jat Tehnika already has many Boeing spare parts for the planes and Belgrade could become a regional Boeing centre!

    But what should Jat do about the Airbus orders then? Why did Jat even order them in the first place?

  2. It wasn’t Jat who ordered the aircraft it was the then government for political purposes.

  3. @ ex yu

    But why for political purposes? What would only the government do with that many aircraft?

  4. @ Bosnian and whoever can comment on this.....

    Does Jat holding many spares for Boeing aircraft make a difference since if Jat buys Boeing the they will definitely be 700 or 800 models 737's? Therefore the parts they hold for the current fleet of 737's would be obsolete.

    Anyway, I can see Jat going Airbus even though I like the 737 it seems the Airbus must just be the better choice of aircraft for the region.

  5. @Q400

    Jat Tehnika can become a regional Boeing centre, and it can hold onto the spare parts, because airlines such as B&H Airlines, Ukraine International and many other European airlines can come to Belgrade and service their fleet with the parts Jat Tehnika might already have. An example is the recent MAT front wheel replacement.

  6. JAT Tehnika's current strength (servicing Boeing 737s) is irrelevant to purchasing new aircraft. To survive (as with any business in the real world), they need to adapt to the conditions which they face. If their home airline changes fleet, they should adapt to what's there to ensure they continue to receive govt funding, and ultimately, work through their hangar doors.

    What would stop JAT from signing a deal for A318s as their 100-odd seater jets, leaving plenty of room for a deal with Boeing for 737-800s? Sure, they cost a little more than Sukhois, but they are a proven success story in the region (eg TAROM).

    The timing is adventageous for both JAT and Airbus. Airlines get better deals for new planes in an economic downturn, and Airbus needs orders on its books to keep its staff on. JAT could actually walk away from this with a much better deal on 4 or 5 planes (or possibly more) than both Adria and Croatia have recently gotten on their 319s.

    The main question is whether Boeing has anything up its sleeve now, and how much it is willing to invest in this partnership that some on this forum believe is so strong between JAT and Boeing. If they do, we only have to wait a few days...

    And Malev signing 30 Sukhois at Paris is bit of overkill - they'll never need that many unless they have ambition to buy up another neighbouring regional airline, expand enormously into Serbia and Croatia, or intend on selling off their newly-acquired Qs or 737s...

  7. ^
    "Airbus A318 a success" HAHAHAHAHA!


    The A318 has been a disaster, fortunately it didn't cost Airbus that much to develop. The secondhand market for them is zero, LAN Chile are getting rid of there A318s and some are not even 2 years old!

    You're treading on thin ice - I don't know who your sources are, but I'd be careful if I were you!!!!

  8. @Anonymous: The source for this news story is "Politika" (from June 15, 2009)

  9. @frequentflyer

    I still think that Jat should stick to Boeing. It suits them well, and the current livery, lets just say is alright!

  10. @ Anonymous

    Both the Boeing -600 and the A318 have sold poorly. Why? They're competing against:
    1) similar-sized aircraft (CRJs/E-Jets) which are cheaper to buy
    2) similar-sized aircraft which often have lower landing fees as they are incorrectly (and unfairly) classified alongside their respected larger siblings - the difference between a -600/-900 or a 318/321 is just staggering...

    Both aircraft are still in production (albeit low) BUT there is a market out there for them. Pilot commonality is a huge selling feature for both.

    Your reference of LAN shows your knowledge of that airline's strategy and of S.American aviation generally is minimal. For an airline who has effectively built up from a base of patheticness in a region where service was extremely poor and accessibility was atrocious (both $$ and airports/routes served), the small fuel-efficient 318 was successful for them, and now they've simply outgrown them. The parallels that could be drawn between S.Am and exYU are enormous when you look at route structure, fares, development, airline politics etc.

    Much has been made on this forum of past incompotencies (stagnation, over-ambition, broken promises) by JAT management. Airbus wouldn't be so actively pursuing the airline if something wasn't in the pipeline. Tell us, then, what will be the eventuation of this Airbus deal with JAT!?


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