Etihad CEO expects a profitable Air Serbia by the end of next year
The CEO of Etihad Airways, James Hogan, says he expects to see Air Serbia operating with a profit by the end of next year and denies speculation the Emirati national carrier was pressured into buying a minority stake in Jat Airways and rebranding the airline. “We believe we can bring Air Serbia back to profitability in 2014. If I didn’t think we could move this airline to profitability I wouldn’t be here. If it can’t be worked commercially we won’t do it and I have not been under any pressure from the Abu Dhabi government to do this deal”, Mr. Hogan says.
Etihad Airways, which after Air Serbia has its largest controlling stake in Air Seychelles (40%), managed to turnaround the loss making airline in exactly a year’s time by posting a one million dollar profit in 2012. The successful result is attributed to leveraging the economies of scale and synergies arising from the equity alliance with Etihad. This entailed the renegotiation of contracts for catering, ground handling and in-flight entertainment, as well as the conclusion of joint contracts for fuel, uniforms and stationery supplies, all of which improved service and significantly reduced costs. Etihad Airways and Air Serbia have signed similar agreements with concrete results to be visible to the public in January 2014 when Etihad Airways officially takes over its 49% stake in Air Serbia.
Mr. Hogan says Etihad is the mothership in the Air Serbia scenario and has a clear commercial plan for the airline. “They are legacy carriers set up by the government and didn’t have a clear commercial plan. The Serbian government has absorbed the previous debt. We are not here to manage someone’s problems from the past. What we can’t risk is Etihad’s performance being dragged down by somebody else”, he says defiantly. “Etihad is here in this carrier for the long haul. As I have always said, we look at equity partnership as a commercial opportunity and an investment opportunity”, Mr. Hogan concludes. Under the current agreement with the Serbian government, Etihad Airways will have a 49% stake in Air Serbia until January 1, 2019.