Wednesday, October 28, 2015
The President and CEO of Etihad Airways, as well as Vice-Chairman of Air Serbia, James Hogan, has said 2015 will be another profitable year for Air Serbia. Speaking at the International Air Transport Authority (IATA) Aviation Day Middle East and Africa conference in Abu Dhabi yesterday, Mr Hogan noted that Air Serbia will attain its second consecutive year of profitability in 2015 and will be joined alongside India's Jet Airways, in which Etihad also owns a stake. with good results in the coming days. Air Serbia reported a net profit of 2.7 million euros in 2014. Mr Hogan said Etihad Airways’ successful partnership strategy could become a model for other players. He told the audience that partnerships and collaboration were the most tangible way to grow in today’s highly competitive business environment, providing consumers with greater choice and connectivity. “Ways of doing business globally have changed over the years and aviation, like many other industries, must adapt and change. In union there is strength and a shared vision. At Etihad Airways we have seen the results of working together which go well beyond commercial benefits", Mr Hogan said. He added, “Industry observers originally questioned our equity investment strategy. Three years on, we have proved the sceptics wrong. Our organic growth has been supported by successful codeshare partnerships, minority investments in selected airlines around the world, and deep commercial agreements with competitors and non-competitors - all to provide an enhanced global offering to the travelling public”.
Sure it is. Just an idiot would not make profitability if
ReplyDelete- state is giving you 70.000.000,00 EUR
- in same time you have huge discount in hub (paying almost nothing to BEG)!
"Air Serbia has had a huge catalytic impact on the broader economy, not to mention the value of its supply chain and how much money it has contributed to numerous local suppliers....The recent Oxford Economics impact study said its contribution was USD211M, as well as 8,700 jobs which rely on Air Serbia. These are not small figures, which only reinforces the importance of a national carrier to the national economy".
DeleteSo you agree that JU is not profitable but gets instead huge subversions paid by the state and BEG airport.
DeleteWhy are critics always dyslexic? Okay, one more time: unlike JAT, Air Serbia is getting more and more competitive and will have superior level of service in the region. Planned investment will run out in just over a year and company will strenghten it's position to be able to continue operating profitably beyond 2016. Now, was that so hard to remember? Oh, I also have to repeat this for you: temporary winter reductions are making company stronger, not weaker. There, covered it all!
DeleteThank you for agreeing that Hogan is lying and ASL is not profitable.
Deletewe are not talking about potentials, about benefits for global economy, about how important air traffic is. We are talking about sentence that "Air Serbia is profitable" and what more that came from Hogan himself! And it is not! It is highly subvent company and as I said every idiot can make profitable company on that way.
DeleteEven those idiots in Jat could do it. Jat never was even close to make 70 million debts per year, not even close (30 million was top, most of the years less than that) and they never had huge discount in Belgrade.
Yes, I agree it is good for Serbia. But is it so good to spent so much money? I thing there are much more important fields where Serbia can invest and which will make much more benefits for Serbia. But this project is personal promotional project of PM and it is not matter how expensive it is and are benefits even near to the costs of it or could that money be spent for something with more benefits to Serbia.
+1000
Delete@AnonymousOctober 28, 2015 at 3:18 PM
DeleteNot agreeing at all.
@ Anonymous 3:21 PM
DeleteJat was in bigger debt than what was reported and through improper accounting. The Jat debt was all financed from the budget, that is tax payers.
Everyone seems to have forgotten the period where Jat was the national carrier burden with scandals, strikes, unstable management, poor fleet, maintenance issues, poor planning and mass reductions in the timetables, poor service, no work moral etc etc.
Do we not remember:
- taxi service for pax with Jat tickets
- 572 telephones @ over 1.000 EUR each
- pilots flying without valid licences
- JP ac lease scandal
By no means do I think that Air Serbia is profitable, but I do think that Serbia has gained more from Air Serbia than it did with Jat.
- more employees
- more passengers
- more taxes payed to the state by employees and pax
- more jobs created at BEG
- more foreign cash flow (euro, dollars, pounds etc) spent in Serbia by foreigners be at BEG or in the city, as well as pax from foreign countries purchasing tickets
This is not to mention that the quality of air travel in Serbia has drastically increased since the formation of Air Serbia;
- onboard wifi
- newer ac
- drastic change to onboard product
- dedicated business class lounge and better access for frequent fliers
- better frequent flyer program
- online check in
- more destinations and frequencies
- more codeshare options
Air Serbia seems to show some future, where as Jat didn't.
As for other investments in Serbia, money is being mismanaged worse in other areas which drains the budget more without proper benefits to citizens ie Serbian Railways.
This conversations keeps coming up with the same arguments, but no body looks at the wider picture. Yes money is being spent, but on what and with what benefits.
The difference between Jat and Air Serbia is that Jat needed millions every month just to MAINTAIN the company and keep flying. Air Serbia is INVESTING millions so one day it can join all other world carriers and live without support.
DeleteLufthansa, Jetblue, and all other airlines require major investment just to set up. Luckily, it is completely worth it once the airline is set up. Having an airline hub in a region creates huge economic, social, cultural, and political gains.
The idea is a great one. Of course, it would be nice to have Air Serbia completely transparent and without political interference, but I guess that is too much to ask for.
Well developed countries and the established airlines within them such as Lufthansa and Delta wish that the current situation continues, where they can easily compete with destroyed airlines such as Jat. They are the ones whom are insisting that investment in airlines is unacceptable.
JATBEGMEL .... why do you and so many others say that Air Serbia is not profitable ? What will it take for you to be convinced of this ? KPMG audited and signed off on the accounts according to IFRS. If this isn;t good enough, then what is ?
DeleteI don't know who or what else on the planet can put this urban myth to bed ?
I don't think that anyone is claiming that ASL Isn't making a NET PROFIT, but most people will agree that Air Serbia is receiving investment and discounts which means that net profit doesn't mean much.
DeleteIt would be much more interesting to know operating profit. That is what actually matters right now. I haven't seen any figures anywhere.
Investments are a balance sheet item ie. equity - it has no impact on the P&L ie. net, gross or any other measure of profit
Deleteisn't one of the key points here, that unlike Jat, the govt doesn't have to cut a cheque to the tune of EUR20-30M every year from the state's bgt to finance the airline's operations ? Unlike Jat, Air Serbia is able to cover the cost of its operations by itself .... that is surely a better outcome for ALL taxpayers of Serbia than was the case with Jat, which relied on an annual handout just to survive from year to year.
DeleteMoreover, there has been significant investment in Air Serbia to address the needs of the business that were not and unable to be met over the past 20 years ....
After such significant one-off investments in recapitalising the business, they will not need to be made again and the airline will only get better and stronger with the passage of time.
Alot of progress has been made in only a very short period of time ....
Wouldn't investments in the form of discounted airport charges and fuel not affect profit? I don't know much about accounting because I managed to test out of the single accounting course I ever had to take.
DeleteDiscounts on airport charges or fuel, are not investments, rather, they are rebates or reductions in normal operating expenses. All airlines receive volume discounts from suppliers - be it for purchases of fuel, airport charges, catering, ground handling, aircraft purchases etc etc - the list is endless. You can go through the accounts of any airline and these are normal discounts/rebates obtained in the course of running their business.
DeleteWhat sort of discounts in airport charges do you think airlines such as Ryan Air, Easyjet or Wizz get ? Do they separate or separately account for these costs any differently to Air Serbia or any other airline ? Ofcourse not. Trade related discounts are offsets against normal operating costs incurred in running an airline.
So i'm not quite sure what point you are trying to make here ....
@ Aleksandar
Deletenicely said, however the last paragraph I tend to disagree a little. Funding an airline year after year without any results such as QR is not fair competition. Having said that, LH and DL are complaining the most without upgrading their product to better them for their customers.
@ anonymous 8:44pm
JU is being funded indirectly through many incentives such as fuel subsidies, which will stop from the end of next year. I am not against it, far from it, and I find it good that money spent has so far shown results, however it still is reliant on those subsidies to make them profitable.
Once JU stops being funded by the government, that is in the next 14 months, and shows a positive result then we can start talking about profitability of JU.
As Ive said, these subsidies are not bad however results need to be seen, which we do. Aleksandar above mentions it as an investment and I agree, a lot needed to be done with Jat to completely bring it back to life.
^^^ anonymous
DeleteInteresting view, its good to see finally a normal and healthy conversation.
I am sure somewhere it is mentioned that JU is enjoying 'better' discounts and that it will end next year.
I don't see how with all the change happening, new ac, lounge, drastic increase in flights, wifi installation, rebranding etc that it has all been funded from JU's profitability. There has to be something more. Maybe its just me being skeptical?
It hasn't been funded from profitability - these are all items of capital expenditure, which came from Etihad's equity investment of $40M. That goes to your earlier point, "its nice to see where the funds are being invested" ... It's cash flow, generated from sales, is what keeps it liquid and able to meet its day to day operating expenses. Discounts help with keeping the business liquid, as it minimises expenses in certain areas, to allow it to spend in other areas ...
Delete@JATBEGMEL,
DeleteI get what you are saying, but I am of the opinion that the western world was pushing for free trade, capitalism, and globalism when the rest of the world was only importing. Now that the second and third world is attempting to set up their own economy, everyone is complaining.
Yet American carriers have had huge benefits in the past, such as bailouts.
The MEB3 have valid business plans. They are accepting perks and benefits from their governments, but it is obvious that they are also expanding and providing huge benefits for their domestic economies.
@anon 9:37
DeleteThe discounts that Air Serbia is receiving are beyond the discounts that commercial enterprises offer. I think it is obvious that the GoS is using these discounts to help ASL expand.
Isn't any shareholder going to want to see its investment grow and expand ? That is what capitalism is about ... you invest, you grow and you hope to see a return ....
DeleteWhere's the problem with that ?
Great responses from anon. Every reasonable reader acting in a good faith would find your responses in line with previously published Air Serbia results. Yet those not reasonable or not acting in good faith will continue to repeat the myth and claim foul play.
DeleteMr Hogan....
ReplyDeleteProfitabilni dok je nas poreskih obveznika. Pa i JAT je bio tako profitabilan!
ReplyDeleteZapravo, JAT nije bio čak ni tako.
DeletePa onoliko novca koliko je pojela ASL u prosloj godini, JAT nije nikad za vremenski period od jedne godine. Pricamo od 71 milionu subvencija + popustima na aerodromu.
DeleteRealno je da je Air Serbia u 2014 godini bila 68 miliona eura u minusu
ASL je za ove dve godine samo na ime plata radnicima i poreza platio skoro 70 milona eura, jel racunamo i to?
DeleteKakve to veze ima sa svim ovim. I fiat autobmobili srbija, godisnje potrose na plate oko 120 miliona, ali su i dalje jako nepofitabilni i u debelom minusu...
DeletePlate su postojale i u JAT-u.
Iz ovog zapravo zaključujemo da je Republika Srbija platila poreze i plate za radnike Air Serbie.
DeleteSrbija plača plate i poreze
Aerodrom Beograd ne naplačuje svoje usluge
NIS daje popust na račun poreskih obveznika pa Air Serbia ima smešno nisku cenu kerozina
Deo aviona, imovine i slotova si nasledeo od stare firme čije dugove je preuzela Srbija.
Prvih par meseci poslovanja na sebe je preuzela država (onaj fantomski otpis 30 miliona u 2013. iako je Etihad već tada 5 meseci vodio firmu, a 2 meseca i de iure).
Pa kako možeš tako da ne budeš profitabilan?
Auto šovinizam je zeznuta bolest.
Delete"plača", " naplačuje", "nasledeo"
DeleteHahahahahah
Nema ovde auto šovinizma, samo loše maskirani čist šovinizam :)))
Ali "nasledeo", kakav penal komšije :)
"Smesno niska cena kerozina"... dragi zabrinuti komsija, da li mozete da nam kazete koliko je to u procentima? I kako je onda ASL sa tako "smesno niskom cenom" platila 2014 za gorivo 9,1 milijardu dinara a u 2013, poslednjoj Jat-ovoj godini, 5,8 milijardi dinara?
DeleteDobra sala !
ReplyDeleteŠteta po tebe što nije šala
DeleteThis year I hope they announce a bigger profit than €2.7M because even airlines that don't have help are making huge money.
ReplyDelete+1
DeleteWhat about the broader benefits that Air Serbia has delivered, especially in relation to the value of BEG airport ? Today, the airport is worth 3 times as much as it was 2 years ago ? This will be realised in any privatisation of the airport, without the arrival of Air Serbia, would never have occurred. The govt will therefore get alot of payola just on this score alone ...
ReplyDeletePeople, the word is SUBSIDY, not subventions
ReplyDelete