Sunday, September 18, 2011

Jat sale a priority

Time running out for Jat partner
With just over 10 days to go until the tender to find a strategic partner for Jat Airways ends, the Serbian Government says that the Jat sale is its highest priority. The government is offering for an airline to become a strategic partner to Jat and together with the state create a successor national airline by June 2012. It is still unclear whether airBaltic, from Latvia, has purchased the tender documentation as some media reported during the week. The Tender Commission does not want to reveal whether the Latvian carrier has purchased the documents which amount to 10.000 Euros. If it has, it would be the only airline to do so. “The tender is still ongoing. We expect interest from other companies as the privatisation of the national carrier is one of our highest priorities this year”, the State Secretary in the Ministry of Finance said.

Experts believe that the tender will fail. They argue that other than slots and a big diaspora, Jat has nothing to offer. The government invited over 60 airlines to participate in the tender before issuing an open call to all interested parties. Despite the fact that the government assured that Turkish Airlines was a sure bet to buy Jat, the Turkish carrier has categorically denied any interest, especially without the possibility of getting the chance to run Belgrade Airport.

If the tender, which began on August 1, fails it will be the second time that an attempt to privatise Jat ended unsuccessfully. Back in 2008, at the height of the global financial and aviation crisis, the government tried to sell Jat. The only ones profiting from the numerous sale attempts are privatisation advisers such a Deloitte who have been paid thousands of Euros each time to prepare the airline for sale. It is believed that certain political parties in power are affiliated with these corporations.


  1. 1. The government has the sale of Jat as their top priority because they :

    1.a. are broke
    1.b need something to brag about during the upcoming elections.

    2. There should be an investigation launched to as why did the government spend so much money on paying Deloitte when they have not done absolutely anything. It's worth mentioning that Deloitte in Belgrade is not the actual Deloitte but just a franchise.

    Каква држава, такав Јат. Туга, очај и жива пропаст.

  2. @ Nemjee, you can ad option 1c to the list, individuals profiteering from the sale are in desperate need of cash.
    Get people who know aviation and let them do their thing. Jat 'seems' to be going okay with total incompetents now, just imagine what alittle professionalism would do.

  3. Recycling previous articles. No news here

  4. Throw the airport into the deal.

    No one wants a bankrupt company.

  5. The BEG Airport is a cash cow for the government. They are not selling that one while it's making them money.

  6. @Nemjee

    Deloitte won a public tender, outperforming Bane&Co and PwC. The fee is a joke baring in mind engagement complexity and projected duration (1 year), and is 3-4 times lower than fee Rotschield got 3 years ago.

    The other thing - of course DTT is not a McDonnalds like franchise, they are set up as a LLP globally, basically in the same way as all the other major consultancies or audit firms.

    What makes you think they did absolutely nothing (cause my opinion is quite the opposite)?

  7. Well the sheer fact that the tender failed shows the failure of Deloitte. If you pay someone to consult you and that consulting ends in a disaster then yeah, you get the picture...

    If they are as professional as that then they would have told them from the very start 'Do not go into privatization now, the economic climate is still bad and no airline will buy you'. But no, they took the job, took the money and here is the result.

    They should have simply refused because if they knew anything about aviation then they would have known that there was NOT going to be an airline interested. Aeroflot was forced by the government of Russia to take over 6 Russian carriers, meaning that they have their hands full. Turkish Airlines which reported its first operational loss in several years has also expressed its lack of interest in Jat. Kotil has even said so himself. Just because tey have purchased Air B&H doesn't mean that they are going to get all the ex-Yu airlines! The main difference between JU and JA is that the purchase of one is driven by business and the other one by politics. Plus, even the Serbian government has said that they wouldn't be too happy if TK bought Jat due to the EU regulations.

    So who else is left? Alitalia? No. Lufthansa? Why should they? There is absolutely no reason for them to even consider Jat.

    I guess that in Serbia every consulting firm believes that they can do aviation consulting! I guess that comes with being the chosen people!

  8. First of all why do you think that tender failed - there is still ample time for airlines interested to apply (in most cases applications to bid arrive in the last few days), and even more time for bid submissions (I presume that bid dedaline would not coincide with application deadline).

    Then again, the Govmnt. decided on agenda for JAT and made a public call for consulting services in implementation of that predefined agenda. Deloitte applied, won, and has arguably done a far more comprehensive job in attracting potential investors than back in 2008 (I was following with interest both developments back then and now).

    There can be a debate over timing, but since airlines are being increasingly pressured over years due to mounting oil prices and periods of economic recessions year 2011 is a fairly good candidate as airline industry managed to recover from major setback in 2009. Arguably, year 2008 was even better, and period immediately after 2000 was perhaps the optimal period as JAT was in a far better shape back then.

  9. @ Sam

    I know it's a cash cow. That's why they need to throw it into the deal.

    No one is going to want to buy jat. it's worthless, it's nothing but a liability. It's worse than worthless. They need to add something to the deal that's worth something to make this less-than-worthless thing worth something.

    Serbia can either choose to keep the airport and use it as a cash cow, or sell it along with JAT, getting rid of a major problem and the airport can still be a cash cow with taxes and fees.

    Then, say Turkish Airlines buys the airport/jat and takes over it's administration, they can (presuming they'd want to) establish some kind of low-cost trans-atlantic hub in Belgrade.

    That's the best hope for Belgrade airport - to establish itself as some sort of low-cost trans-altantic hub. Turkish airlines is the best partner for this venture.

    Successful airport-running companies should be running airports, not corrupt politicians.

  10. Again, JAT is not being sold, tender is for partnership in forming a new airline where SOME of the assets and employees will be transferred, so this is actually a very welcoming business proposal since the business itself has very good prospects, growth rates, etc.

    So, there is no need to add airport or something else to the offer, as in my view the offer is currently nearing a break even point where the other equally favorable option would be a forming of a new airline by the government without a strategic partner.

  11. Turkish airlines the best partner to make Belgrade a transatlantic hub
    ...haha ...and not Istanbul ?!
    Now Doot can laugh about his own jokes !
    BEG should stay independent and open ..for Wizz as for Mongolian ,Peru ..
    or whatever airlines.
    Imagine BEg as Turkish airport...
    with a single connection to Istanbul !
    From BEG to ZAG or Lju via Istanbul...magnificent !


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