Turkish plans majority takeover

Turkish Airlines plans complete control over B&H
According to sources close to B&H Airlines, EX-YU Aviation News can exclusively reveal that Turkish Airlines is planning to take complete control over the national carrier of Bosnia and Herzegovina. Turkish, which already owns 49% of the carrier, plans to become a majority shareholder by the end of 2011. This move would ease managerial problem the airline is currently experiencing. The sell out decision might come under scrutiny sometime in the future since Bosnia and Herzegovina aspires to become a member of the European Union. European Union regulation states that a flag carrier cannot be in majority ownership of another airline or business that comes from a country not part of the EU.

Meanwhile, the race is on for B&H’s new CEO. The long list of candidates stems from former Prime Ministers, government ministers, airport and airline employees. B&H anticipates a sharp rise in passenger numbers from December 15, as the country’s citizens have been granted visa free travel to countries of the Schengen zone. It remains to be seen whether there will be a sharp rise in competition as well.

Comments

  1. "European Union regulation states that a flag carrier cannot be in majority ownership of another airline or business that comes from a country not part of the EU."

    So, what would happen if the airline stops being a 'flag carrier' of Bosnia and Herzegovina? Could it not be 'an airline' based in Sarajevo International Airport?

    Is the root of the issue the fact that Turkish Airlines is state-owned? If so, wouldn't JAT have the same issues if it were purchases by either Turkish or Aeroflot? Also, El Al would face the same hurdle if it ever wanted to take over Montenegro Airlines as it is a lot less appealing to be a minority stakeholder.

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  2. Anonymous12:44

    No it is not question would be based in Sarajevo, it is question in obtaining commercial rights according ECAA as BH carrier if it is not owned by 50% plus one share by BH majority capital. If it is owned by EU capital then it would be European carrier, if it is outside EU, then airline would not be able to enjoy full rights according ECAA. (free market access after second phase of agreement).

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  3. "The long list of candidates stems from former Prime Ministers, government ministers..."

    To me, it looks like a long list of incompetent people, who have no clue about airline industry. They get the job just becasue their political party has won the elections and have to be somehow awarded. I hope Turkish takes over the majority ownership and dusts out those imbecils.

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  4. Jeebusman20:09

    @Visit Kosovo

    Good question. My guess is that there will have to be another airline setup (most likely a dirt-cheap charter airline) that consists of one small plane and one destination just to fill the necessary requirements to becoming a flag carrier. Or, there will be no flag carrier...is that possible?


    But I still don't understand why Turkish wants B&H Airlines majority, but not Montenegro Airlines? They are obviously trying to have a majority in JAT as well, so why not include Montenegro? It seems to me like that is a more profitable airline than B&H with more potential...no offense.

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  5. Anonymous21:19

    Offense taken. Just kidding.

    How do we know Montenegro Airlines is more profitable when they are not open with their books?

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  6. Anonymous22:09

    And how do we know Montenegro Airlines has potential? Because of Budva? Dude, Budva is gonna become like Dubrovnik in some years. Do you think Turkish wants to compete with dosen of LCC? Naah...

    Montenegros main hub (Podgorica) hasn't as much potential as Sarajevo. Come on dude, the area of Sarajevo has more people than the whole Montenegro.

    As a matter of fact, I don't see any potential in that company except summer charter flights...

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  7. frequentflyer23:15

    This move would ease managerial problem the airline is currently experiencing.

    This is the sentence we all need to be discussing the repercussions of. What is this 'managerial problem' being faced by the airline?

    Is it:
    - dealing with less competent staff from the previous airline administration?
    - dealing with government authorities (remembering BiH has too many layers of bureaucracy)?
    - lack of local staff with industry 'know how'?
    - lack of ability to implement staff reforms?
    - lack of ability to implement wide-scale route and fleet restructuring?

    Personally, the current setup of three parties involved in the airline (Vlada BiH, Energoinvest & TK) is good, but the balance needs to change: Energoinvest should hold 2% as the true balance of power.

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  8. Jeebusman23:53

    @Anonymous 1

    Simply because they have a larger tourist industry. And even though Bosnia has a larger population, more people prefer to fly to Bosnia with other carriers. B&H is for the majority, a last choice.

    @Anonymous 2

    Montenegro's airports are different than the airline. Bosnia has Sarajevo which will always have more passengers than Podgorica. I don't know about Tivat though. If they do become like Dubrovnik, they will be an extremely competitive airport. But when you look at the airports put together, they will most likely have more passengers than Sarajevo. I'm just analyzing this objectively. Montenegro Airlines already has 16 destinations and 8 aircraft. B&H has 9 destinations and 4 aircraft. Although if Bosnia re-establishes a good winter tourism, then maybe I can say that Bosnia has a great perspective as well. But as it stands...

    @frequentflyer

    I do not know enough detailed info on B&H's management. But quite frankly, all Ex-Yu carriers except Adria have shitty management. At this point, it doesn't matter which company privatizes the airlines as long as someone does.

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  9. Zrak14:34

    @Jebusman

    " I'm just analyzing this objectively. Montenegro Airlines already has 16 destinations and 8 aircraft. B&H has 9 destinations and 4 aircraft."

    Heh, this is exactly what makes B&H Airlines such a opportunity. Although having 4 millions people BiH has only one fully functioning airport which is only at 600k passengers / year. Hence the great potentical for growth.

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  10. Bawznian00:05

    @ Jeebusman

    Please don't forget that we are getting the visa liberalization as of this December (unlike Montenegro who got it last year), which will most probably increase signficantly the number of passangers from Sarajevo Airport and BHairlines passenger. ;)

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  11. I'm not very old but old enough to remember times when TK was lousy low profile airline which was to be avoided whenever possible.

    In relatively short period of time, TK became extremely serious and very good airline, not only in terms of its size, but in quality of its services, and in business results, too.

    Such an airline as major shareholder, can only contribute to development of JA, and I keep my fingers crossed for TK as major in JA, as for one bigger and better ex-Yu airline.

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  12. Jeebusman02:00

    @Zarko

    I'm not saying that it's not possible. B&H will definitely have excellent short-term outcomes in investment. But in the long-term, I just don't see it being as profitable as Montenegro, or any other Ex-Yu carrier except the new Macedonian airline.

    @Bawznian

    Lets hope so! Although Belgrade got an award for attracting so many airlines, Montenegro and Macedonia were in a similar position and barely got anything from it (as far as new airlines are concerned). Like I said to Zarko, my opinion is that it will be a great short-term investment, but I don't really see potential in the long-term unless Sarajevo or Bosnia in general starts to attract big business.

    @PozdravIzRijeke

    I have a similar view. But I think you will agree with me when I say that as of today, the Ex-Yu airlines are in such a state that they are desperate for any kind of privatization. I prefer Turkish over Aeroflot when JAT comes into question, but if there is someone who made me somewhat not so confident. They said that Turkish is trying to buy majority of JAT for its slots at different airports. What do you think about that?

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  13. Jeebusman02:01

    @Bawznian

    Btw sweet name dude ;)

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  14. Zelenizub10:05

    Dear all,

    It’s not pessimistic if I say that time of profitable airlines is gone. All exyu airlines will struggle until they are gone, or taken by bigger carrier.

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  15. Anonymous15:07

    @Jebusman

    " I'm just analyzing this objectively. Montenegro Airlines already has 16 destinations and 8 aircraft. B&H has 9 destinations and 4 aircraft."

    That's why B&H has potential if Turkish Airlines take over. Dude, Motenenegro Airlines can be profitable in the summer months (tourism etc.) but what are they gonna do in the winter? Sarajevo has much better potential for the whole year round passengers and that is something what Podgorica and Montenegro will never have.

    And one more thing, Tivat and Podgorica can't be treated as one airport since they're not physically connected and attracts different types of passengers.

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  16. @ Jeebusman

    First of all, apologies accepted. I apologize, too, if I was too harsh on you.

    Second, concerning your question:

    I think that LH, which already controls JP and OU, will take control over all other ex-Yu "flag carriers", directly, or through Star Alliance "partners" (TK), where some partners are "more equal" then others. I would be happier if it would be any of two other alliances to take control over "ex-Yu flag carrier space" then "Star", but I think we can consider it done already.

    Of course, privatisation and much much needed changes in ALL ex-Yu flag carriers (including OU and JP), as consequence of "Star" take-overs/control, will bring plenty of good things : higher work productivity, better load factors, cutting of expenses, profitable operations, more one-stop code-shared destinations, and so on...

    However, I dislike the idea of all ex-Yu carriers being only feeders for bigger Star Alliance airlines. I think, too, that any of this existing flag-carriers separately, is not, and will ever not be able to start long-haul.

    On the other hand, I think that ex-Yu market (maybie with BG and AL included), with its tourism industry, diaspora, and geographical position, is large and competitive enough to have one carrier which will operate long-haul, but on totally different bases, and in completely different way then existing "flag carriers"-for example as a hybrid of low cost, scheduled charter and medium-sized convertible/adjustable privately-owned airlines. It's not something that does not exist- let's just see Eurofly/Meridiana in Italy or ex-LTU/Air Berlin in Germany.

    That's why I think the idea of Dalmatian.hr is good one, and might be succesful, and will not affect market segment operated by ex-Yu flag-carriers,especially OU.

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  17. Jeebusman19:29

    @Anonymous

    That's why I stated that if Bosnia is able to reinvigorate its winter tourism, then B&H has extreme potential in the long-run. As of now, Turkish will have excellent short-term payoffs from this investment when they increase the fleet, buy new planes, start new routes, etc. But that will be temporary and not permanent.

    @PozdravIzRijeke

    Don't worry, its fair criticism and not harsh. But thank you.

    I would like nothing more than for Lufthansa to take over JAT. Such a prestigious airline can do so much for JAT and all the other carriers. I don't think that they have ownership over Adria and Croatia though. But for them, the Star Alliance is technically giving them ownership in a way (maybe that' what you mean).

    However, I am contemplating the merging of all Ex-Yu airlines. JAT already controls MAT, Montenegro and Adria have considered the possibility, and B&H is taken over by Turkish so that's not known what they'll do, but Croatia said no. Still, I can't help but think if the old JAT was recreated. Do you think that that will be good for the Ex-Yu airlines...if they merged together to form an Ex-Yu airlines that operated like JAT once did?

    I have to admit that I support any Ex-Yu long-haul flight. But due to Emirates commencing long-haul flights from Belgrade, that may limit the amount of flights Ex-Yu carriers can make. But I admit I would like to see JAT compete with Emirates for USA flights...

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  18. Anonymous08:36

    @Anonymous

    That's why I stated that if Bosnia is able to reinvigorate its winter tourism, then B&H has extreme potential in the long-run. As of now, Turkish will have excellent short-term payoffs from this investment when they increase the fleet, buy new planes, start new routes, etc. But that will be temporary and not permanent.

    That has nothing to do with winter tourism man! It's the market, the potential passengers and diaspora.

    ''But due to Emirates commencing long-haul flights from Belgrade, that may limit the amount of flights Ex-Yu carriers can make.''

    Emirates flying long-haul out of BEG?! Huh? Are you insane? :)

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  19. Jeebusman06:03

    @Anonymous

    First off, tourism is not everything in a competitive market you're right. But what does Bosnia have to offer that will attract passengers? It's diaspora would come back but that's not sufficient. It has no tourist industry that can help it gain people. Businesses move to Serbia, Croatia, and Slovenia and leave Bosnia out of it...so no offense to Bosnia, but what do they have left other than winter tourism to offer? If they can give incentives to people to come, that brings them passengers and visitors, and hence a larger market. But as of now, it has a bleak future. The only thing Bosnia has left, is to re-stabilize its once-excellent winter tourism. I mean the olympics were hosted there for Pete's sake.

    And no I am not crazy about flights from Belgrade to USA via Emirates. They have on numerous news sites stated that 1) Flights WILL commence from Belgrade to North America, Asia, and possibly Australia. That is what THEY said not me. 2) The reason for a delay in inaugurating such flights is due to the financial crisis and they want to wait for the Serbian market to stabilize. Again this is what THEY said. And if you didn't know this, Serbia and UAE signed an open skies agreement so such flights could take place. So no I am not insane, I am a believer.

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