|Public to foot bill for Jat Airways debt|
Over a year after Serbia’s national carrier Jat Airways was transformed into Air Serbia, the Serbian government is seeking parliamentary approval to take over and repay debt amassed by Jat over the years. Under the agreement signed between the Serbian government and Etihad Airways for the latter’s minority takeover of Jat, the government has to provide 33.5 million euros in cash payments and a further 32 million to cover debt towards local companies, 80% of which are state owned. However, according to the draft bill, the obligations now total a whopping 155.3 million euros. The debt, which will ultimately be reimbursed by Serbian taxpayers, is owed to Belgrade Airport, maintenance company Jat Tehnika, the Directorate of Civil Aviation, the Serbia and Montenegro Air Traffic Services Agency, the Petroleum Industry of Serbia and several state owned banks.
According to the draft bill, the government will make part of the payments directly to Air Serbia, since the airline has already covered outstanding debt owed towards several local companies. The agreement signed between Etihad Airways and the Serbian government has been criticised over the state’s obligation to take over all of Jat’s debts. However, defending the move, the Serbian Prime Minister, Aleksandar Vučić, has said, “Have we not taken these measures, Jat would have been shut down, which would have caused economic and social problems”. The proposed bill is being urgently ushered into parliament, meaning lawmakers will debate the proposed legislation during the next sitting of parliament.
During its last year of operation, Jat Airways, for the first ten months of 2013, and Air Serbia, for the last two months of the same year, recorded a loss of 73 million euros. The Serbian carrier accumulated an operational loss of 45 million euros during 2013, while the remaining 28 million came as a result of errors made in previous financial reports. In an earlier statement, Air Serbia’s CEO, Dane Kondić, said, “We now turn to the future and thanks to our partnership with Etihad Airways and the strong support from the Serbian government, Air Serbia now has a strategy for recovery as well as the foundations for creating a profitable and strong company”. In line with earlier reports, Air Serbia expects to end the year with a profit of at least one million euros. Full financial results will be made public in May 2015.