EX-YU airlines silent on 2016 financial performance

The national carriers from the former Yugoslavia have been noticeably silent on forecasting their profit margins for 2016, in contrast to previous years, raising questions about the health of their respective businesses.

Air Serbia, which posted a 3.9 million euro net profit in 2015 and talked up its positive business trends and annual profit margins as early as October 2015, has made no mention of its financial outlook for 2016. During the year, the airline launched long haul flights to New York, which undoubtedly had an impact on its business. While the carrier has been encouraged by better than expected passenger demand and revenue from cargo on the route, the Serbian Prime Minister has said that the service would likely generate losses during the first two years of operations. On the other hand, Air Serbia's reduced 2014/15 winter schedule is said to have increased profits, the average load factor and revenues according to CEO Dane Kondić. Under a takeover agreement between Etihad Airways and the Serbian government, Air Serbia had been exempt from paying for a number of services at Belgrade Nikola Tesla Airport. However, these subsidies ended on January 27, 2016, after which the carrier began making payments.

Croatia Airlines has also been cautious in forecasting its 2016 financial results, unlike the year before. Through its own admission, the Croatian carrier has said that, due to the seasonal nature of the local market, the third quarter is the only profitable one for the company, covering losses from the first, second and fourth quarters. Croatia Airlines posted a net profit of 1.9 million euros in 2015. However, during the first three quarters of 2016, the Croatian carrier’s consolidated net profit fell by 33% to 609.600 euros, down on 2015's 910.260 euros, and well below 2014's 5.6 million euro profit. Critics have said that the airline propped up its 2015 result by selling its subsidies and property, however, the company has denied such claims. Plans to sell slots at London's Heathrow Airport will not have had an impact on its financial performance in 2016 as a transaction has not taken place yet. Croatia Airlines said it was confident in posting a profit in 2015 as early as September of that year. No similar predictions have been made in 2016.

Adria Airways kept quiet on its 2015 net loss of 9.2 million euros for nine months. In spite of this, the Slovenian carrier's new management vowed to swing the company back to profit within a year through cost reductions, including cuts to unnecessary passenger services and aircraft handling services. Adria's CEO, Arno Schuster, previously said, "Under new ownership, the company enhanced its capital and launched intensive restructuring that will lead to an improvement in results in the business years to come". During 2016, the Slovenian airline sold a Bombardier CRJ200 aircraft but also saw its commercial cooperation agreement with Estonia's Nordica terminated. It has never been disclosed how much of a financial incentive Adria received for its partnership with Nordica, which was negotiated by the carrier while it was still in state hands. According to unverified reports from the Slovenian media, Adria recorded a three million euro loss during the first three quarters of 2016, which is only slightly lower than the year before. It has also been suggested that the airline has sold its 55-year-old brand name and is now renting it instead.

Montenegro Airlines was the worst performer out of the national carriers in 2015, recording a historic net loss of 10.4 million euros, while its debts totalled sixty million euros. Last week, the carrier said its consolidation measures throughout 2016 have reduced its long-term liabilities from 81 to 37 million euros. Through network reductions and a better average cabin load factor, the airline generated 3.2 million euros in savings. Lower fuel prices also contributed to the airline lowering its expenses. During 2016, Montenegro Airlines terminated the lease of an Embraer E190 jet. The carrier said the move would produce three million euros in savings. Over the past years, the Montenegrin government covered the leasing costs for the jet, however, since January 2016, the airline has been obliged to do so alone, following protests from the European Commission that further assistance would breach strict European Union rules on state aid.