Thursday, August 23, 2012

Jat to stay in state hands

New strategy or no strategy for Jat?
Milutin Mrkonjić, Serbia’s Minister for Transport, has announced that there are several ways in which the state carrier’s problems could be solved and says Jat Airways will not be privatised in the foreseeable future. Earlier in the year, Mrkonjić, who served as the Minister for Infrastructure in the previous government, proposed for the carrier to be bought by local businessmen who would invest in a new fleet and brand. However, the minister is now singing a different tune, “The entire story with businessmen buying Jat won’t materialise. My proposal is for us to keep our national airline and for it to stay in state hands. However, restructuring and the purchase of new aircraft would be necessary”.

The Serbian national carrier is burdened by debt, an aging fleet, a decade old order for Airbus aircraft and too many employees. Two previous privatisation attempts, one in 2008 and the other only last year, have failed. Many are now waiting to see how the new government will deal with the abovementioned problems. A new CEO for the airline is expected to be named. However, according to internal sources, not a single party within the Serbian government has put up their hand to take control of Jat and name a new CEO. “Offcourse things will be difficult and we won’t be able to solve all of the problems straight away”, Mrkonjić admits.

Meanwhile, Jat’s employees are still hoping that a plan they drafted for the government just prior to the May elections will be taken into consideration. In the report, the independent union of Jat Airways pilots says that the Serbian carrier can be stabilised if the right decisions are made. “The public has the wrong idea that Jat is a loss making business financed by tax payers”, the union says. It adds that the government is to blame for intentionally cutting bits and pieces from the airline such as its technical, catering, and agriculture divisions. Furthermore, the union notes that Jat has 50 million euros worth of property in Croatia. They include apartments in Pula and various office space taken over by Croatia Airlines. They claim that this property should be returned to Jat and that legal action should be taken. Employees have also drawn attention to the large scale competition the airline faces from its hub. It notes that despite Serbia being only in the first phase of implementing the Open Skies Agreement, the Serbian Civil Aviation Directorate is issuing licenses to any airline wishing to fly to Serbia, as a result hurting the national carrier and national interests.

18 comments:

  1. As always, the employees have their noses deep in everything but their own jobs. The solution to Jat's problems is in suing for 50 million worth of property in Croatia and stopping airlines from creating competition?! Seriously?! Downsize the number of employees at once if you want any chance of making Jat profitable.

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    1. Way to go Vlada! Additionally, union can say whatever just to keep their well-payed jobs but Jat is loss making business financed by tax payers. Why doesn't the union state that 100 million EUR was financed by tax payers solely in last three years. I agree state is also to blame but Open Sky?! Hallo, thanx to Open Sky HG is now more expensive that JU to VIE! Very unprofessional and slander claim. I'd rather say that the employees deeply regret loosing market monopoly (72% market share in 2001!)
      Jat should stay state-owned flag carrier with significantly renewed fleet, less employees and strategy how to make (if they can't profit then) losses up to 2-3 million EUR per annum. Hard? Roll up your sleeves and do something useful!

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  2. I think the worst problem is that Jats fleet is very old and they have been if anything minimizing it over time while many new airlines with new airplanes and routes have been entering the market. Fleet problems are number 1, so solve them! Jat promised new airplanes by 2012 or at least an order, are we even close to that? But yes money is another big burden.

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    1. Although concurring that fleet and radical employee reduction are the top priorities, would not agree that other airlines flying to BEG offer drastically better "plane product", truth being that vast majority of aircraft used by other companies here are also very old (perhaps not as JU's 733s, but still old).

      It is absurd, but WizzAir's A320s are radically newer than all other landing in BEG; Montenegro's E195s are also new. E.g. LH, LX and OS fly mostly very old and "unattractive" planes to BEG.

      The fact that Qatar Airways's A320s will be the first planes serving BEG that have in flight entertainment system installed tells a lot...

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    2. LH is flying A319, A320, A321, CRJ700, CRJ900 and Embraer 195 to BEG.
      Swiss does with A319, A320, A321 and yep two older versions which will last another 2-3 years: Fokker 100 and RJ100.
      Airbus fleet is difficult to judge as some of LHs are over 20 years old, LX got first Airbuses in Mid 90s, some of them are new from 2011/2012 and more are to come.
      Agree with u that Fokker 100 and RJ100 are shit planes. Unfortunately Swiss only will replace them by 2014 when C Series of Bombardier enters the fleet.

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  3. Concerning property in Croatia.
    Just getting ready to finalize a compensation claim for devasted and looted Zadar and Dubrovnik Airports, beside other demages.

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  4. Just checked QR fare BEG to DXB via DOH. RT staring from 449 Euros, all taxes and fees included. Can't wait to see response from FZ/EK or even TK

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  5. What a joke trying to reclaim property. Just look at the damage caused in Dubrovnik and Zadar counties. Bet all Serbs forget about this aggression.

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  6. More importantly Skywork will increase service to Zagreb, Rijeka and Split next summer and strat a line to Zadar.

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  7. da l ste vi ljudi normalni?! :)

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  8. Koja agresija? Samo se sjećam obrane naše SFRJ od strane domaćih izdajnika!

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    1. Ma naravno, a u silnoj "obrani" srušiše cijele gradove, 3 zracne luke do temelja, opljackase kompletno cijelu opremu zrancih luka... Baš se to lijepo tako brani.

      Uzgled, od cega su oni to branili Hrvatsku? Od Hrvata? Od cijelog naroda? Što tako i Češi nisu branili Čehoslovačku od unutarnjeg neprijatelja, ili Rusi SSSR?

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    2. SR: Докле више да гледамо ове бесмислене политичке коментаре?
      EN: Till when we have to look at such meaningless polliticaly driven comments?!

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  9. The best peace of news in this story is that no political party want to control Jat! If only someone took a hint and hired a proffesional CEO with experience in the airline business. That person will likely do what we all agree on: cut the unneccessary expenses and renew the fleet (not because planes are old but because their running cost are too high). Or even better: get the new planes and keep older 733s for charters and backup.
    Stories about lost property and crying about competition are just a waste of time.

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    1. But you cannot just fire people - in Serbia labor law stipulates that you have to pay them compensations, and that alone is quite expensive and Gov. would have to agree to find money just for that! It is a multy million amount...

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    2. Not if the company ceases to exist, and I believe exactly that is the plan. Shut down Jat Airways, establish Jat Airways 2 or whatever, and take only those who are necessary. No compensations, no lenghty processes...

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    3. Labor issues are easy to fix: get more planes, fly more and there will be work for everyone :)

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  10. Oh no, not this saga again! If the government *IS* to keep the airline, then they need to get their hands on some newer aircraft, and fast.

    So the real question, replace the 733s with like-sized jets (73Gs or 319s - much cheaper 2nd hand or leased; or can they get a good deal on the next-generation planes MAX/NEO etc), upscale to larger size, or downsize?? Sukhoi is desperate for some credibile non-Soviet business...

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