Tuesday, August 23, 2011

No interest for new Jat

Plan B for Jat
Over 20 days after the Serbian Government opened a tender to find a partner to create a successor national carrier to Jat Airways, not a single airline or investment group has even bought the tender documentation. With just over a month left until the tender deadline ends, most believe the process is destined for failure. Former Jat Airways CEO, Predrag Vujović, who helped get Jat back on its feet following the lifting of international sanctions, says that the new national carrier would be unable to inherit Jat’s lucrative landing slots at major European airports. Since Serbia is a part of the European Open Sky Agreement, any airline from the European Union can easily base an aircraft in Belgrade and begin operations. It does not need to own an airline in Serbia, together with the government, to do so.

The government, which seems to be aware of the impending tender failure, plans to professionalise the airline’s management after September 30 and leave Jat Airways as the national carrier. Currently, most CEOs of state owned companies in Serbia are named by the parties in the governing coalition. Most of those chosen have little knowledge on how to run a company and are purely chosen upon party lines, which more often than not leads to bad results and corruption. However, the government now plans to professionalise and depoliticise these positions, starting with Jat. Following the selection of a new CEO the government would give a guarantee for the airline to take out a loan and purchase several new aircraft.

Jat Airways has been reporting a strong increase in passenger numbers this year. However, the top management’s decision to push through constant promotional ticket sales, even during the high summer season, has led the airline to increase its losses this year.

31 comments:

  1. It's a fact, the vast majority of Jat's routes are making a profit! NOW, the problem at hand is that Support is shamelessly ripping them off. Naturally a company that pulls the baggage with tractors can not charge such expensive bills. This means that the money earned by Jat is used to sponsor someone's personal pocket via support.
    A story we could so well see in the old Olympic.

    As for the professionalization of Jat, that will just never happen. We have elections coming up in Serbia in just a couple of months. The ruling coalition doesn't have time to waste with something as unimportant for them as Jat. If Jat was more important for them then they would have done something by now.

    And as for these old-Jat experts, I love listening to them play smart. Jesus, if you were so smart and such a professional Jat would not be such a shit hole as it is today.

    He got Jat back on track? So he is the one who made these bad and shaky foundations on which Jat is resting today?

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  2. Absolutely agree with previous post. True words.

    @ex-yu wrote:
    "Jat Airways has been reporting a strong increase in passenger numbers this year. However, the top management’s decision to push through constant promotional ticket sales, even during the high summer season, has led the airline to increase its losses this year."

    I would like to see some numbers standing before this statement. Otherwise it's just he said she said....

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  3. Even more than Support, there is Tehnika with additional 1200 employees with semi-flat rate servicing agreements with Jat.

    For airline of Jat's size there is clearly no room for 1200 employees, and there's even less room for additional 1200 "maintenance" staff in Tehnika, basically still realising more than 70% of its incomes from Jat.

    In order to cut ennormeous fixed costs someone with vision should perform massive layoffs in ellection year, and only then it makes sense to further reduce variable costs with modern equipment introduction etc.

    Jat is one of the rare airlines having almost all of its airplanes in its own property (thus not having air rental costs), and still doing fairly bad. That only shows how big fixed costs mentioned actualy are.

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  4. OK city of gods, center of Balkans and universe, why noone does not want to invest in new company in Belgrade (because Jat fly just from Belgrade and 99% of air traffice is from there)? Why if BEG and Serbia have such a potential. For not so much money they can get slots, image, positive part of bussines (experiance, positions, maket...). Why than there is no interest?

    Maybe BEG is not center of universe?

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  5. Last anonymous,

    First of all, it's sad that you don't have a nickname, yet you come here and pretend to be smart.
    Second of all, the reason why no one is interested in Jat is because it's a small airline flying out of a relatively poor country.
    At least our government is doing something.

    Plus, there is still a whole month left until the tender closes so if I were you I would wait for the deadline to pass AND THEN be a dick... if the circumstances permit it of course.

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  6. @ Anonymous:
    starting your sentence with "ok city of gods' reveal your true intentions. Maybe you should go back to 90s...i've heard your kind is doing great there. And do come back without the attitude.

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  7. @Nemjee and William

    I am glad you two were able to respond to the last anonymous without the conversation getting dragged down into ethnicity and the like.

    As for Jat it is sad what has happened to a once (long ago) decent airline. The nationalism of the 90's brought Jat to its knees. The airline like the rest of Serbia is trying to dig itself out of the garbage that the politics of the 90's is. The biggest problem is that management is shoveling with the wrong end of the shovel.

    I fear that the promise of professional management is just a line politicians use as it has been every time in the past.

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  8. Is there a way for Jat to keep the landing slots and still somehow get sold? Also, does anyone have an estimate on profitability of replacing one of Jat's 737-300 with the leased new 737-700? Is the new bird so much more energy efficient and less maintenance intensive that it can warant a lease price tag?

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  9. RIP Jat Airways and corrupted money hungry employees and family-political connections.

    Warm welcome to something new!

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  10. If Jat had been of any importance for Serbian government they would have done something about it much earlier.

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  11. Grounding is the best solution.

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  12. Shame how they destroy company with 30 planes, longaul, so many lines and slots...

    All Yugoslavia pay for it, Serbia destroy it.

    Catastrophe.

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  13. SerbianCentricPerhapsAugust 23, 2011 at 10:47 PM

    Boring!

    How can you call this a news item? First 20 days, no interest. Are you going to report again in 5, 10, 15, 20, 25, 30, 35 days to let us know that nothing has happened?

    There are a lot more interesting developments to write about, such as Air Berlin dropping PRN but Germanwings picking up all of Air Berlin routes out of PRN. No news about the traffic figures for the Slovenian airport(s) for the first half of 2011. No traffic figures for Kosovar or Montenegrin airports in 2011.

    The reason why I am being critical is because I like this blog a lot and I know it can be better. It doesn't have to report about every single fart that comes of the aviation industry in Serbia. There are more interesting things to report.

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  14. *What a load of crap this article is. Typical ex-YU aviation propoganda.

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  15. ''All Yugoslavia pay for it, Serbia destroy it.''

    Please, do not write nonsense. First of all, we all know that JAT was what it was because it was kept on constant life support by having the government cover its loses.

    SECOND of all, looking at the airlines around ex-Yugoslavia none of the states would have done a better job.

    There is no airline based in Skopje, simply because whatever airlines from AvioImpex to MAT failed miserably.

    Montenegro has an airline that will battle the crisis and low passenger numbers by ordering more aircraft.

    Croatia is Lufthansa's pet and flies to Star hubs, and yet reports massive losses. Even if it faces pathetic competition at its home airport and has a considerable domestic market. Not to mention all the money they could make during summers when tourists flock the coast.

    Air B&H which is a special story. An airline that doesn't have where to deploy its smallest aircraft? They do not know what to do with a 66 seater, as if they were based in Heathrow. Not to mention their failure to make Vienna and Frankfurt work. Not necessarily because they are Star hubs but simply because both of these countries have a considerable Bosnian minority.

    Finally, there is Slovenia with Adria which has accumulated a debt of €150,000,000! Their core fleet consists of the most inefficient aircraft and only 4/31 routes is actually making a profit.

    So tell me, which other Ex-Yu country would have done a better job with Jat?

    No matter what Serbia has done in the past, no matter what it is doing today, Serbia is the legal heir of Yugoslavia. With it comes a lot of shit but with it came Jat as well. That was something that we couldn't refuse.

    It would be a welcomed change if you would stop your bashing of Serbia and got a life. Because I am sure no matter where you are from, that your airline is not far better than Jat.

    Поздрав из Београда.

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  16. But dear Sir not Croatia, not Montenegro, not B&H, not Macedonia did get fleet of 30 planes including longhaul, expencive slots, offices around World, hotels etc. They get all of this for free, giving by other Yugoslav Republic as well. All those ather like Montenegro, Croatia etc. had to pay for something you get from others.

    Serbia is the legal heir of Yugoslavia.

    This is your wish, but on what legal presedan or legal act you can say so?

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  17. If someone give me 30 planes, network, offices and slots I have to be wizard to just destroy it!

    Not wizard but...

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  18. ^ Croatia got all the hotels Jat built there, Dubrovnik airport which was built by Jat, Montenegro got Tivat airport also built by Jat and so on

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  19. P.S I think you have to wizard to manage for JU not to declare bankruptcy despite the fact that it could not fly anywhere for 10 years!

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  20. Good, so why don't you add on that list of things Jat got, the multimillion debt that had to be paid back...

    Also Jat inherited a nice fleet and offices and God knows what... but what you are forgetting is that Jat was flying out of a country living in seclusion from the rest of the world. So the fact that it survived the 90s when there was almost no air travel in Serbia shows something.

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  21. I wonder why there was no air travel... Innocent Serbian people got isolated from the world without a single reason. Fuj

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  22. P.S. the last comment was sarcastic

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  23. Hey Nem,

    Don't want to be caught up in the politics but all the Ex Yu republics were left to pay back Yugo's debt, not just Serbia (Do you really think Serbia would stand for that?) In fact earlier this year Croatia did pay back its share of Yugo's debt to France and the French actually asked Croatia if they would help Serbia pay its share. I will try to find the link.

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  24. Nemjee; ''Croatia is Lufthansa's pet and flies to Star hubs, and yet reports massive losses. Even if it faces pathetic competition at its home airport and has a considerable domestic market. Not to mention all the money they could make during summers when tourists flock the coast.''

    Be careful when using adjectives like 'massive' or wrong numbers such as 150 000 mil Eur debt for Adria (this site reported 100 mil). CA did not go into debt until 2008 when the world crisis hit and in 2009 when Island volcanoes stopped air traffic over much of Europe. It is making loses this year but these loses are getting smaller and it is still flying a lot more passengers than anybody else in former YU.

    Believe me, nobody in CA or Lufthansa would care about it or would stop their operations due to you 'humble' opinion of them.

    CA is a member of Star Alliance, it has excellent deals and code shares with United, SAS, Austrian, and other airlines, not just Lufthansa (who uses Pleso for the technical checkups or overhaul of its planes).
    I am sorry you are bothered by these facts and feel the need to disparage CA.

    With your comments you shoveling all the airlines into the same hole and that is simply not fair nor true.

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  25. Good then can you provide me with some financial results prior to 2008?

    Also, Adria was granted another €50 milion loan which when added to the €100 they owe now brings it to 150. Simple maths.

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  26. @ Nemjee

    In 2007, Croatia Airlines had an operating profit of 47.991.000 kn (cca 6.6 mil euros)

    By the same token, in 2008 it had an operating loss of 31 mil kn, or 4 mil euros

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  27. Addendum to Nemjee:

    Croatia Airlines total assets and equity at the end of 2010 were:

    EUR 214.792.000

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  28. 'Croatia pays off last debt to London Club
    Croatian Times

    Croatia has paid off 1.46 billion dollars to become the second former Yugoslav State after Slovenia to clear its debt to the London Club.

    Croatia has been paying off 29.9 per cent since 1996 following the collapse of the Yugoslav economy in the 1980s.

    In the middle of last year it paid off another 1.1 billion dollar debt to the Paris Club.

    Initially it was suggested that Croatia and Slovenia take on the entire debt of all the former states, but the idea was later dropped with other states receiving significant discounts and prolonged repayment periods, the portal Business writes.'

    http://croatiantimes.com/news/Business/2010-08-13/13041/%20Croatia_pays_off_last_debt_to_London_Club

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  29. As for Croatia Airline's debt here is a quote from company's public release:

    The recovery of the company it can be anticipated thru the achieved financial results
    for the last quarter of 2010. While in the fourth quarter of 2009. the realized loss was
    104.5 million HRK, during the last quarter of 2010 the loss was halved, and
    realized on the level of 50.3 million HRK.

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  30. Bosnia share = 13.2%
    Croatia = 28.49%
    Macedonia = 5.4%
    Slovenia = 16.39%
    What was the then still Yugoslavia Serbia, Montenegro and Kosovo) = 35.52%

    The IMF decided that this is how much each republic was responsible to pay back after the breakup of Yugo of the total Yugo international debt of around 16 billion US dollars.

    http://ejil.oxfordjournals.org/content/12/4/751.full.pdf

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