Sunday, January 25, 2015

CEO: “Too late to save B&H Airlines”

B&H Airlines fighting for survival

The acting CEO of B&H Airlines, Amir Jažić, has painted a bleak prospect of the carrier’s chances for survival, stating he fears it’s “too late to save the company”. In a statement to the Al Jazeera Balkans network, Mr. Jažić notes that the airline is facing significant financial problems with debt owed to HETA and the Hypo Alpe Adria Bank for the financial lease of its two ATR 72 aircraft, as well Sarajevo Airport and other local and international suppliers. “We can’t get any funds from the government because they don’t have any. I fear it is too late to save the company. It is just a matter of whether we will be around to see the formation of the new government”. Three months on from the October general elections, the formation of new governments at different levels in Bosnia and Herzegovina is still ongoing. The CEO adds, “The minister [for Transport and Communication] probably can’t wait for the government to be formed so this situation can be resolved. I met with representatives from Sarajevo Airport a few days ago, after insisting on talks for two months. They offered us a new agreement for 2015 which is beyond logic since prices for services have increased and there are many new services which didn’t exist before. They want guarantees that we will be able to pay for these services but we cannot give them such assurances”.

B&H Airlines’ financial problems have been aggravated by a recent government order, made on January 7, for the carrier to repay the state over 800.000 euros in passenger taxes, which were initially intended for the airline and its development. Furthermore, one of B&H’s two ATR 72 aircraft is grounded in Germany where it was undergoing maintenance. However, B&H, whose accounts have now been frozen, does not have the required 200.000 euros to pay for the servicing of the aircraft. Recently, the trade union representing B&H Airlines employees said that many of the airline’s staff have not been paid in months and are holding the Minister for Transport and Communication, Enver Bijedić, personally accountable of neglect, lobbying in favour of competitors such as Wizz Air and Turkish Airlines, and unprofessionalism.

The President of B&H Airlines’ Supervisory Board, Goran Jovanović, says the situation at the carrier is “alarming”. “We are dealing with a thousand things at once. We pay the highest price for fuel in Europe and we have a complicated relationship with Sarajevo Airport, just to name a few. The current situation is incomprehensible and we will soon know how this story will end”, Mr. Jovanović says. He adds that B&H must continue flying because any stoppage would lead to bankruptcy. “We cannot stop flying until this situation is resolved, because we would immediately loose our license. It is a very complicated procedure. We are currently working on our summer season schedule. We have 200 charters planned over the summer but I don’t even know if I should approve them. The company is on life support”, Mr. Jovanović says.

B&H Airlines was initially founded as Air Bosna in 1994, but ceased operations in 2003 due to mounting debt. Two years later the Federation government revived the carrier and renamed it B&H Airlines. Turkish Airlines purchased a 49% stake in the carrier in 2008 with a promise to expand its fleet and operations. However, in 2012, it withdrew from B&H’s ownership structure, citing problems with the government.

44 comments:

  1. OT : BWA's first flight H3-2875 Sarajevo-Athens is going to be completed at about 08:50 UTC this morning. But BWA cancelled all its other scheduled flights till 15th of February. Curious ?

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    1. BWA's website says that ATH-SJJ today is sold out. Maybe nobody bought tickets to ARN... Are they going to fly to Malmö?

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  2. It's really sad to see an airline go. It will be interesting to see what path Bosnia will take, whether it will choose Macedonia's model.

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  3. Znaci i braca Turci digli ruke od B&H airlines, Mora da su utvrdili, da ne mogu da nista zarade i da budu zabijali lovu u nista ...steta

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    1. Turci su napustili BH Airlines long time ago... Došli su, vidjeli da ništa ne mogu iskoristit i otišli... Turkish je zapravo bio još jedan nail in the coffin BH Arilines-u

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    2. Turkish invested money and then GAVE BACK their share for nothing in return after realizing what impossible fools they were dealing with.

      Turkish didn't nail a nail into BH airlines coffin. All they did was give them money and get nothing in return.

      Leave it to a balkanian to interpret someone BUYING half their company, then GIVING it back for FREE as some sort of problem or reason for their failure.

      absolutely unbelievable.

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    3. I know this is not going to be received well by the nationalists, but the only way to have sustainable and profitable airline is to have some "JAT-like" airline as a flag carrier across all ex yu countries. Some will say Wizz is that airline, but that is not true, Wizz would not offer flights within ex yu airports like ZAG-DBV or BEG-TIV, they would never fly to LHR or FRA or CDG and would never have long haul, but that single airline could do all of this. Say what you want, but market would be large enough to sustain all of it.

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    4. Hmm ok but what would Serbia have to gain from it? JU already flies to all important cities in ex-YU from Belgrade so we are very well connected.

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    5. I think JU should buy them.

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    6. Why do they service them in Germany and not in Belgrade? I'm sure it would have been cheaper for them.

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    7. I think it's the lease agreement that obliges them to service them there.

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    8. JU will be Western Balkan's dominant carrier, it's just that it's quite clear it will keep shuttling every passenger to Belgrade and then further on. Legacies will be limited to key O&D destinations (like ZAG-VIE and similar) with JU taking everything else. If they keep expanding as rumored here (4xA319s and 2xATR72-600s in the order + transatlantic stuff) quite simply no carrier in Ex-Yugoslavia will be able to match them.

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    9. Except OU... once the restructuring period is over, of course.

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    10. Restructuring or not, they'll never make a hub in ZAG. If they didn't manage to do so while Jat was on it's knees, they sure won't do so while they're backed by Etihad and in rapid expansion. BEG is, geographically, the central place of the Balkans and quite simply JU's management and vision is far beyond anything OU has to offer. Even if they finish the expansion soon, all the markets will already get cornered by JU and long term, they won't be able to compete with BEG's superior position, cheap Arab funding and discount purchase A320 NEOs in any shape or form.

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    11. Some friends flew from Moscow, they said they were extremely surprised by the service, they say it's much better than Aeroflot. They were telling me they couldn't eat all the food that was on offer. Unfortunately Aeroflot has cut on its short-haul service recently.

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    12. * Who and what are you talking about?

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    13. I'm currently in the tourism business, more than 70% of people coming to Serbia are using Air Serbia, regardless of whether there is competition on the route or not. They are giving me very positive reviews. People are answering well to the product, i for sure expect double digit growth this year.

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    14. SU product isnt that hard to beat. The B738 is cramped, catering ok and alcohol no existent on their flights ex a couple destinations where they offer wine from a tetra pack. Crew professional but reserved. Ground staff in SVO is far from any help and their english is limited to say at best. Terminal D is ok, gate area is crap, Terminal E better but Terminal F where JU flies into should be demolised. The noise from the announcements drove me insane.

      I think the biggest looser in SJJ is JP who after the war could of taken over what JAT lost in the ex republics. OU didnt cement themselves into SJJ while they had the chance, and Purger has made excellent comments on the failure from OU to create a proper hub in ZAG. Lets see what JU will do, and with JA almost gone, they will loose the additional frequencies from SJJ. The ATR shortage is not doing any good either. I wonder what will be of the ATR's from the JA fleet once they stop flying.

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    15. I agree, JU is better than SU and TK, miles ahead of OU service as well. You can see middle east standards easily.

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    16. JU better then TK??

      Grohotom se smijem!

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    17. TK is 100 times better than JU, enough said!
      btw this is coming from Serbian so don't tell me I am a hating Croat.

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    18. If there is one thing JU/ASL really does not need, it is this insane worship by internet warriors who never boarded an aircraft in their life and yet consider themselves competent to judge on various airlines and their products.

      (signed by another Serb)

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    19. So long there were only JAT and Adria, in the former Yugoslavia, SJJ had no flights to foreign destinations except Bagdad and Tripolis. If one wanted to fly anywhere else - he had to go to either Belgrade or Zagreb. Thanks God that time is over!

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  4. Bosnia does not have any competant politicians to solve anything. The airline industry is on a very long list of mismanaged things in this country.

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  5. I kind of feel sorry for B&H Air :/

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  6. it is not too late look Adria Airways.....

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  7. They have competent politicians but they dont share the same vision for the republics best in many aspects...ordinary people suffers mostly because of that!

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  8. Neka im braca Janezi instaliraju jedan avion u Sarajevu i svima lepo.

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  9. Sramota je da JA bankrotira ali staces isti slucaj ko i sa Malevom.
    INN-NS

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    1. B&H bi mogla da sledi primer Madjarske ili Makedonije. Kada JA bankrotira, mogli bi da dovedu Wizz u SJJ kao sto su ga doveli u Tuzlu, mozda dodju i Ryan i Easy.
      Samo mi nekako jos uvek nije jasno kako u Bucharestu uapevaju da opstanu i TAROM, I BlueAir, i RyanAir i Wizz.

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    2. Zato sto su Rumuni sada glavni emigranti vise od Poljaka.

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  10. OT
    Prvi A320 SL je danas dobio livery od Eurowingsa i u pocetku ce leteti za 4U tako da ga mozeda vidimo u EX YU skoro.
    http://www.austrianaviation.net/news-regional/news-detail/datum/2015/01/25/erster-eurowings-a320-in-neuer-lackierung.html
    INN-NS

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  11. ASL should take over JA fleet once lease is over.

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  12. In Bosnia the problem is that everyone is pulling his own way.We all know there are people that want Bosnia to fail.So anything to get things going forward there is someone to block it.Thats why BH airlines is not going well like everything else.Like they say to many chiefs not enough indians.Very sad

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  13. I don't see the big deal. They are a tiny airline with a SINGLE ATR. The market has decided that they can't survive and they shouldn't be around. Others will pick up the slack and everyone will move on. Having a "national" airline is not a necessity in today's world. If they were smart, they would follow Macedonia's model.

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    1. Having a "national" airline is not a necessity in today's world. Really? Who said that, CEO of Lufthansa?

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    2. Wow, you are comparing Germany to Bosnia? Great analogy. Today's airline environment is all about the big three global alliances and the ME3 carriers. Sprinkle in some LCC airlines and you are done. Long gone are the days of having national airlines running prestige routes. That's how you go bankrupt!

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    3. Having a well run and competitive national flag carrier is nice, such as Singapore Airlines, but B&H is neither sustainable, nor prestigious. The money wasted on it could be used for other projects, and much more benefit could be had by attracting LCCs.

      In my opinion, Air Serbia still hasn't proven itself. I think they deserve five years to develop, and if they can't be sustainable after that, I would consider it a failed project and a waste of money.

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    4. @Anon at 4:04

      That's old thinking, global alliances are on way out. Adria and Croatia are members of big global alliance you mention, yet they are fighting for survival. LH group should be dissolved as national group of airlines and let EU LCCs, global airlines (ME3) and emerging trans-EU airlines (new Ryanair with business class, transfers and some long haul; and possibly Eurowings if done right) take over.

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    5. @Aleksandar

      I agree with you. That's why I think B&H should cease to exist. The tax payers have bled enough. Cut your losses and move on just like Turkish did.


      @ Anon 5:46PM

      If you think global alliances are going away, then I have some land on the Moon to sell you.

      Alliances are as strong as ever, but obviously some airlines are stronger partners than others. With all of the anti-trust immunity that they have on long-haul flights, the alliances are defacto individual airlines.

      Adria and Croatia are struggling due to lack of direction. They are basically "Lufthansa Regional" but obviously their cost structure, route network, and or equipment is not aligned for that purpose.

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    6. Agreed that alliances are defacto individual airlines but that works primarily for dominant airlines, for example LH in Europe. LH has all the benefits of "owning" OU and JP but without any of the risk. Alliances did not save Ansett or Varig, and same might be true for OU and JP.

      Where alliances are starting to show cracks are influence from EK (see Qantas working with Emirates instead of Oneworld's Qatar) or LCC's (no loyalty program at Walmart, rock bottom price wins loyalty). Alliances will over time transform from monolithic fortresses into more fluid, sometimes ad hoc interest-based relationships over time. Etihad extends across "party lines" with other alliances where it makes sense, for example.

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  14. On this blog, I constantly read comments about everything but not about the news indicated in the title.

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  15. As it goes on with the state-owned companies in Bosnia, BH Airlines has been top-heavy from the word go. Two small airliners couldn't have made enough money for more than 110 employees, many of which incompetent. Not only entirely slavish but also vile and lousy politicians and their companions, positioned in the managing boards of the state-owned companies, have their fingers in every pie so in the civil aviation as well. At any rate, very strong bribery and corruption have done the job and the company's had no any chances in succeeding against the very strong competition.

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