Friday, November 15, 2013

Hogan: Etihad with Air Serbia for the long haul

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.

56 comments:

  1. Well,they did it because of the preasure from U.A.E Government,whole Europe still are confused over the minority stake.good for Serbia now but after some years we will know why things happened.....

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    1. Why? Yes, JAT was a small airline for someone like Etihad, but if they kept all of its dept, all the employees and most of the problems, I would agree.
      But most of the crap went Serbia's way. So how can that be good for Serbia and bad for Etihad?
      It's Serbian tax payers who will pick up the bill, not UAE.

      Don't get me wrong, I think this is a good move as there just wasn't a way out and I hope it all works out for AirSERBIA.
      All I am saying is don't view this deal as a black and white thing as it's not. The fact that some people/analysts don't understand it doesn't necessary mean something is wrong ;)

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    2. I think the fact that the Serbian government took over the debt is a fair thing. After all, that debt came as a result of government's incompetence to efficiently run the airline.

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    3. Why you and others are obsessed with undecent words like "cr.p"?! Could you use more polite expressions, please. It will be understandbale also, don't worry, you will not be less macho. Thank you!! Хвала!

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    4. Its better that Serbia ends one for all debts made by Jat,from next year it will probably be no more minus in the register or emptying taxpayers pocket. At least people will have a work to go to for the next 5 years.

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    5. @anonymous
      the word "crap" doesn't always mean what you are thinking of especially to British English speaking world.
      Please let me enlighten you:
      http://www.oxforddictionaries.com/definition/english/crap

      And you are welcome ;)

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    6. Don't think I am against the deal with Etihad. I am not. I think its a wonderful thing.
      I was just saying that to me Etihad move makes financial sense (unlike few analysts as the op mentioned) as they got a clean slate. Government took over the dept, let them pick and chose who they keep and who they employ, let them run it for 5 year... why wouldn't you try with a small European carrier on those basis if you are Middle Eastern airline??

      Yes, I accept that all of this wouldn't have happened if there wasn't some political contacts with UAE Royal family bla bla bla, but it just don't seem like a favour like some would like to present it.

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    7. Well, Etihad took over Air Seychelles and they have managed to successfully turn them around. I would also like to remind you all that Seychelles represent a tiny market so no one should be surprised that they decided to take over Air Serbia, especially since Air Berlin keeps on struggling. For Etihad investing into Air Serbia makes sense for a few reasons:

      1. They have 49% of the shares while they have only 29% at Air Berlin.

      2. In Germany they have to abide by strict labour laws while in Serbia they can do whatever they want.

      3. Air Serbia does not face any serious competition in the geographical zone spreading from Istanbul to Munich. Air Berlin has to share the German market with Lufthansa which is anything but easy to compete against. Not to mention that it's first neighbour to the west is KLM.

      And the list goes on. So who cares what we had to do in order to bring Etihad to Serbia. The most important thing is that they are here and they are doing a fine job. I for one, as a Serbian tax payer, don't care at all that I will have to pay back Jat/JAT debt because what we got in return is pretty cool!

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  2. Do we know when the third A319 is supposed to join the fleet?

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  3. LH routes should be: New York, Chicago, L.A, Toronto, Rio de Janeiro, Bangkok, Singapour, Beijing, Sydney and maybe Tokyo :D

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    1. You omitted Delhi, Shanghai, Johannesburg, Sao Paulo, Buenos Aires, Havana and Caracas.
      :-P

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    2. lol, sorry, but these ones could start first year, and later also Phoenix, Detroit, Miami, Hong Kong, Perth, Vancouver.. :P Can u imagine?

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    3. You guys are so funny, I guess you were blessed with an extra chromosome.

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    4. @ AnonymousNovember 15, 2013 at 11:38 AM

      An extra chromosome? That was a mean and completely unnecessary remark to the two of us, we were clearly joking.

      Biological errors you mentioned lead to miscarriages in the first trimester of the pregnancy, severe brain injuries for the baby and if by any chance baby survives, life with the Down syndrome.

      Please, express your "wits" on genetics somewhere else.

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    5. Has anyone noticed it has been written that LH (Lufthansa) routes should be?
      Was it meant JU instead of LH I don't know...

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    6. I am well aware of what it means to have an extra chromosome, your jokes were more than retarded. And just for the record, you were not joking, you were mocking. There is a clear difference, learn it. However, you seem frustrated, so go and vent some place else.

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    7. anonymous 1:25 you are not nice person, and yes we were joking, but luckily Eight understood it. I really feel sorry for you. and for the end, what do you think about belgrade-lima direct flight? could it work? i ask u cause u sound as an expert ;)
      and for anonymous 12:50 LH in this case means Lost Head.. not lufthansa

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    8. Of course Eight understood it, aren't you familiar with the saying: birds of a feather flock together. ;)

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    9. My god you all have serious problems...

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  4. Air Serbia started off its thrid discount offer. I wonder if they are doing well or they are having some hard time? They almost never had a period without promotional prices. What do you people think?

    (P.S. Wizz wont fly from INI, like you couldn't assume that, lol)

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    1. IMHO, they are only trying to attract passengers, lure them to try the new JU, raise awareness of the new timetable, product, possible connections and all that. Prices are lower, but they are still not rock bottom, so in my mind, the times are not harder than they used to be. November has always been the low season. Same as February. Just normal business practice.

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    2. Exactly, it has to do with brand awareness.

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    3. Unfortinatly wizz is not going to fly from INI, but they made new hub in Craiova!?! I mean, CRA airport had almost the same passeneger number as INI had in last few years. I dont know, sometimes I think that wizz managers do not know many things. They doubt in exyu region, but SKP for example proved to be the right thing for wizz. And please look where ryanair put OTP on the map.. Hahahaha.. And about AS, I know its low season and its november, but I am still kind of worried.. We will see. Hogan says AS will earn some money. Lets hope!

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    4. For the promo fare in economy its just 12-15 seats the rest .....they also have promo fares for business class 350-400euros from nov to march which is a really good deal:)!

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    5. To me personally, their standard tickets are much better deal because you can get flexible ticket (25E change fee) for the same price you pay for non-change-able, non-refundable ticket from StarAlliance on the same route.
      Have you noticed the prices of connecting flights through BEG? The ones from ZRH to Greece and Turkey are very competitive (e.g. 186E ZRH-BEG-SAW)

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    6. It's simply because INI is too much close to "matured" airports such are PRN, SOF and SKP. That is the only reason. Wizz wont invest into new airport and take pax away from Skopje, Sofia and Pristina, they would rather help frequences from those routes increase. Just tactics.

      I think some legacy carrier can help INI get going. For example, why not loosen up Wiena route and let INI have a piece of cake. 36 weekly departures from BEG can be split up easily!

      And I am sure at least 30% of passengers that use that route would be really glad if there is VIE-INI route! That regioun is poor, but its certainly not (much) poorer than Kosovo or Bulgaria or Macedonia.

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    7. Why should Wizz Air care about Pristina? It's not like they fly there.

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    8. I was wrong about PRN, it was a "lapsus" but Belgrade is not far, and already having decrease in frequencies.

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  5. Seeing the headline of this article I thought Hogan was about to announce joint JU/EY long-haul flights to the US :)

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  6. It seems the second A319 has a different interior. I have to say I prefer the darker seats to the blue leather ones.

    https://fbcdn-sphotos-c-a.akamaihd.net/hphotos-ak-ash3/548473_1432403783640387_271259851_n.png

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    Replies
    1. No, that's just the B737-300. They put pillows and blankets across the entire fleet now.

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    2. These are actually used Lufthansa's Recaros in B733, with Air Serbia paper headrest. But they indeed look good.

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    3. Thanks guys, I had completely forgotten about the Lufthansa recaro seats.

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  7. Haha!
    When i red the header i thought"oh god,no more discussions about long-haul flights".

    What i really hate is people complaining that Serbia has to pay the whole debt alone and Etihad gets the profits.
    Etihad was never responsible for the debt but the government!Why should anybody suffer for the mistakes of some other?
    This will never happen.
    And who says that Etihad gets the whole profits?
    First Air Serbia has to be profitable or nobody gets anything.Second the profits if there will be any will be shared by Etihad and the Serbian government.
    Etihad is still investing a lot of money and really has to
    get AS work.
    Something the government never cared about.

    The deal with Etihad is the best thing that could happen.
    People who do not understand this are either ignorants or simply do not have knowledge about economics.

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  8. The pilot and the flight attendants!
    Hmmmh...they are so hot and sexy looking!
    I also like their elegant attire ,,,
    Well done!

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    Replies
    1. They are not the actual cabin crew, they are models from a Belgrade based agency who did their promotional material. But yes, they are hot.

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  9. “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.


    HaHAHA!!!

    Very funny attempt at denial, sadly not buying it, of course UAE government had ordered Ethiad to take share in JAT, its a agricultural land deal, UAE gets some cheap agricultural leand, Serbia gets $50 million investment.

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    Replies
    1. Love the expert analysis ;)
      Now we know what's really going on.
      Cheers

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    2. So, where is the land they got? Where are those secret sites where agricultural products are packed and then secretly flown to UAE with unregistered flights?

      Even if your obsessive theory was correct - which is not - a deal is a deal, whatever behind it. Accept it and you may suffer less.

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  10. ^ Yeah,the Arabs do it to get Serbian virgins,how could we forget this ...
    Facepalm.

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  11. Today all B&H flights from Sarajevo seem to be cancelled.
    Does anybody know the reasons why?

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    1. I also do not understand why hasn't B&H Airlines uploaded their Belgrade flights into the system, for the love of God the flights are scheduled to begin in roughly two weeks.

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  12. It seems that YU-APC is not flying today, A6-SAA seems to be the only A319 flying around. Could it be that it is grounded due to a technical problem?

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    1. YU-APC did fly today, i see Podgorica and Dusseldorf and Amsterdam with it today.

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    2. But beg.aero says Amsterdam was a B737-300...

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  13. Alitalia will also send its A319 to Belgrade tomorrow, nice to see that there is demand for more than a simple E-175. These days I have also noticed that they have been sending the E-190. Shame they do not codeshare any longer with Air Serbia/Jat.

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  14. BBC article on AirSERBIA

    http://www.bbc.co.uk/news/business-24915846

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  15. Etihad made quite a few orders at DubaiAirShow today:
    - 25 777X and 30 787-10 (+1 777F)
    - 50 A350XWB and 36 A320neo (26 A321neo + 10 A320neo) (+1 A332F)
    It would be awesome if these A320neos are meant for JU and if some of the A359 (or A358) end up at JU serving east coast in 2017-2018 timeframe.
    Also, Etihad bought 33% of Darwin and wants to rebrand it Etihad Regional. This is very curious move IMO since Etihad to CH consists of a daily flight to GVA.
    I might be completely clueless, but I hope we can see soon GVA-BEG daily...

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    1. It looks like I was wrong: Etihad plans to make ZRH a hub and will start A333 daily in 2014. I hope this won't affect BEG-ZRH frequencies...

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  16. Abu Dhabi's Etihad Airways on Sunday said it had bought a 33.3 percent stake in Swiss carrier Darwin Airline, adding to the company's portfolio of minority stakes in global airlines.

    Etihad said following completion of the deal, Darwin will be rebranded as Etihad Regional, the companies said in a joint statement at the Dubai Airshow.

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  17. I think its because they expect Alitalia to go bancrupt...
    As Switzerland like Serbia is not part of EU they can base an alternative airline there which also cooperates with Air Serbia.

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  18. Jao kako su svi lepi! Ponos naš!
    Bravo za Air Serbia!
    :)

    ReplyDelete

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