Air Serbia will undertake wide-ranging restructuring in an attempt to boost its key performance indicators, as it struggles to keep a lid on costs, growing competition, an over-inflated workforce and the winding down of state subsidies. According to the daily "Danas", the company's interim CEO, Duncan Naysmith, has told employees in an internal memo that focus will be put on "net profit, the new fare structure, in-flight sales, additional services that bring in ancillary revenues, as well as other initiatives to boost efficiency". The so-called transformation will be managed by the executive management with the support of a newly established Transformation Office. As a result, the carrier will evaluate the success of all of its projects, programs, products and other initiatives.
The development comes several months after Air Serbia's part-owner, Etihad Airways, ordered the company to restructure and mirrors similar policies being put in place at both the Emirati carrier and another one of its equity partners Air Seychelles. Although there have been suggestions Etihad will disinvest from the Serbian carrier, the Abu Dhabi-based airline is expected to stay put at least until January 1, 2019 when its five-year investment and management agreement expires. Serbia's President, Aleksandar Vučić, recently held talks with the Crown Prince of Abu Dhabi and its de-facto ruler, Mohammed bin Zayed Al Nahyan, during which the two reviewed the expansion and diversification of the partnership, as well as its continuation. Prime Minister Ana Brnabić recently said the Emirati carrier would retain its 49% stake in Air Serbia, despite the ongoing cost cutting taking place at both airlines. A final decision on the partnership will likely rest on the success of the restructuring process taking place.
Air Serbia has remained silent on its operational and financial results for the previous year. The airline has taken steps towards restructuring its business by reducing its workforce in late 2017, with further layoffs expected this year, transforming into a hybrid carrier, consolidating its destination network, putting on sale non-airworthy general aviation aircraft and the retiring some of its ageing Boeing jets. Further changes to the fleet are expected in the coming months. Mr Naysmith said last week, "Since our first flight, our business has undergone many changes, but one thing has remained the same - our willingness to adapt, grow and innovate. It's through this spirit that we have recently launched our new fare structure, representing a fundamental shift in the way travellers can now personalise and tailor their journey with Air Serbia".
It will be up to the carrier's new CEO, to be named during the second quarter of 2018, as well as two of Air Serbia's shareholders to navigate the carrier's transformation just four years since its relaunch.
Comments
'As a result, the carrier will evaluate the success of all of its projects, programs, products and other initiatives.'
And what will happen if the results show that moving onto the hybrid model did not solve the airline's problems? That it didn't generate enough revenue to justify the switch? Will they just move onto a new model as was the case in the past or will someone be held responsible?
I will repeat what I said in the past. Air Serbia's cost is not its main problem. Lack of sales and healthy revenue is. In stead of cutting costs left and right, invest in marketing to actually have more customers.
It's nice to see their billboards in the city but what happens when a potential customer (or are we still calling them guests?) goes to check a White Fare to Paris and sees 30.000 RSD? Or 27.000 to LCA? It will have the opposite effect.
Anyhow they made good money in AS so no reason to go unless the HQ decides to leave all partner airlines (not bankrupt yet).
The airline has alienated itself from the market, became a cold mess with so many term and conditions that buying a flat is a piece of cake in contrast.
They need to get some real professionals in, sort out their image and public perception, simplify the very dealing with the company - and the revenue will come in.
Nemjee is totally right. Cost-cutting will not cut it here! Their compass is stuck.
From leasing planes and providing HQ services to AS? Or from the one daily feeding flight, which is history now
Anyhow, they are making good money for management of AS and it would make sense for them to leave only if that is the part of global strategy to to go out of all Etihad partners.
I can't imagine many people wanting to go to the airport right after their Christmas dinner or even worse, on Christmas day as the last flight left Belgrade on the 7th at 23.55. It's these small mistakes that are present everywhere so when you add them up you get a mess.
That said, Wizz Air is celebrating. They are charging crazy money to LCA and their flights are packed, including the one yesterday that barely had an empty seat.
Business ad economic logic once again were stronger than idiotic plans like "boutique airline", "new wings of Europe", expensive investments in things like a new business class, Wi-Fly, new luxurious lounge that 99.9% of passengers were not willing to pay extra for.
All, I am saying - keep what you have, and be happy that someone there is trying to turn your national airline into a profitable airline. You won't loose that many pax (perhaps a few %), and you could bounce back in 2 to 3 years and grow organically. But, please - get real. To me, it's silly to expect ASL to endlessly continue what it has done in 2013-15, because for that you need the market dynamics to back that growth up.
Cheer up - and good luck with restructuring. It'd be nice to see you back healthy and recovered in a while !
Cheers from Zagreb.
Luxuries that the market does not want to buy and instead is laser focused on the price.
They acted and spent money as if ASL was based in LHR and was competing with BA for business travelers to global megacities.
SMFH!
AB was bleeding money left and right and the EY group was pumping hundreds of millions of Euros every year to keep it functioning.
You are comparing apples to oranges.
Especially after the disastrous job he had already done at Gulf Air...
What were they thinking?
Indeed, you can make profit from as a parent company in number pf ways. As you said, by leasing planes and providing HQ services, to providing high interest rate loans, etc...
Anyway I personally don't think that either OU's or JP's restructuring were great successes. And remember JP went through another restructuring last year after it went through another one 2-3 years ago.
Iskreno ja jos i ekstra. Kada znamo da je Beogradskom aerodromu bilo potrebno 50 godina da sa njega leti 5 miliona putnika, verujem da ce Er Srbija imati pet miliona putnika kroz pet godina. Ako bude volje, odlucnosti i odgovornosti. Vlada Srbije odlucuje. Nase je da letim.
Rodney kod zaklopljenog do sada aerodroma Morava kraljevo.
Thanks for any info.
https://www.bloomberg.com/research/stocks/private/person.asp?personId=275231990&privcapId=22019776&previousCapId=22019776&previousTitle=Air%20Serbia
But he still enjoys his position.
Anyone doubting was called a hater.
Now that the truth comes out they are nowhere to be seen.
CSA/Travel Services and LOT as well.
btw, i have read miša brkić article in danas. as situation is always with miša, about 30% is right and then he goes into some wild assumptions and allegations. it's a pity there aren't many good business newsmen who could actually present more useful facts and opinions to serbian public.
Managements incompetence has nothing to do with Purger or any other poster.
+100
These guys were nowhere just a few years ago.
The airport will no longer be able/willing to subsidize JU over all the other airlines.
He is doing exactly what he was hired for.
ASL is primarily a political project and his job is to keep the party happy. ;)
And that's it. When you know your customer, its location, habit and behavior you'll know how to address him/her.
https://www.danas.rs/nedelja/er-srbija-u-tranziciji/
Do you mean LCA? Aegean's cheapest fare is around €104 one way so €208 return. However, given that LCA is Aegean's top selling destination in the network cheap fares are hard to come by.
Tarom offers some connections for €248 if someone needs flexibility.
JU-A3 code-share to LCA is around €400 or more.
Last time I combined W6 and A3 and the total ticket came out to be around €190 without luggage. Air Serbia did not fly at that time.
Thank you for the info. Do you think that maybe one of the new airline based in Cyprus could start flights to our region any time soon?
And now we are seeing the results of that plan.
JU went through restructuring earlier than JP and OU, it just failed epicly at it!
It would have required further investment and I guess the money just ran out but I think that if it was a money problem than it caught up to them at the worst possible time.
Lufthansa's business plan has nothing to do with ASL's new boutique airline concept. LH charges for bags, has actual customers willing to pay for its business class, is based in FRA and MUC instead of BEG market and has a large LCC subsidiary to compete at the low end of the market with the LCCs. It has one two of the worlds best hub operations and thus it is profitable with zero government subsidies.
I forgot to mention that is a member of a global alliance too unlike JU.
You are not comparing apples and oranges. You are comparing chairs and tomatoes!
What happened is that they were losing huge amounts of money trying to offer boutique service in a market that will buy an airplane ticket only if it isn't much more expensive than a gastarbeiter bus!
They behaved as if we are Hong Kong or Singapore and the average flyer is interested in metal cutlery and wine selection at the lounge...
That's what actually happened!
+1000
You say that '' Air Serbia had decent marketing (social media, great value deals etc.) and it worked as long as the fares were low and connectivity high. What lacks is the destination product/general demand.""
Precisely, it HAD decent marketing and it does not have product or destination campaign marketing outside of efforts in Serbia. This is at the end of the day all marketing, which when successful helps commercial achieve its goals.
To cement a continuous market demand - which you rightfully say takes years and cash, you need consistency both in messaging and product, non of which were retaind by Air Serbia. Hey I for one would love for this airline to continue growing and expanding, but the core foundations and approach is rotten. I highlighted marketing, and it would be great if that was the only problem, but unfortunately it is much deeper and wider. Yesteryear tails are still attached, the main strategy has swung faster then a pendulum and the people who could make this work are simply not there.
That is not stagnation.
Nor is it the increases in the fleet and the expansion of the tourist season in Spring and Autumn months.
Otherwise theres not much left to cut. They already moved their head office to the airport, closed or shrinked physical branches etc. Soon they might reach efficiency levels of Wizz Air with much higher fares. The muchgreater problem is failing to profile a "target customer". You can not base a boutique airlinr in such a weak economy. Just look at ATL and Delta in the US or Frankfurt. They are not the largest just because its the airline base, but these cities also host major corporations from other industries. In Atlanta you have Coca-Cola, Bank of America, CNN etc, Frankfurt has a plethora of banks and insurance companies, as well as a lot of biotech companies in cities around. They all fill Business and First class which are the only lucrative sector for large airlines. Belgrade has only subsidiaries of subsidiaries of large corporations. In many cases even corporate inspections take the infamous Ferihegy+Ground way to reach Belgrade. I personally know the cases.
https://tangosix.rs/2018/06/02/kolumna-alena-scurica-neovisne-avio-kompanije-mogu-li-prezivjeti-kako-posluju-sto-nam-porucuju/
Ajde nazdravlje, iskrene čestitke na priviđenjima. Molio bih da mi se ne stavljaju u usta riječi koje nisam napisao, niti mislim tako.
Čak štoviše jasno sam napisao u nekoliko članaka prošle godine da Air Serbija mora smanjiti broj operacija (i još niz toga) ako želi preživjeti, da je ovo što rade nužno i nema alternative, i da moraju razmisliti je li sustav sa 4 vala održiv, tj. ima li smisla konektiranost, posebno zimi.
As for my Split flight, I still don't know whether it will be operated or not this July...I got another answer from their Facebook account's service....I was advised to call their info center :D They don't know their timetable? :) Funny
Maybe One World but they are mainly an alliance of high class and large airlines.
Loved the fact that subsidy was classified as operating revenue.
JU lovers can't argue this one and are mostly quiet.
You are just paying the same money as before for the white fare tickets WITHOUT having a free bag!
Simple enough to understand?
People complaining are not haters of ASL, they just don't like the talk about "enhanced options" and other marketing BS coming from the company.
+1
As for OneWorld, Malev was also belonged to it as a small carrier
number biznis putnika. To jednostavno za njih nije tacno.
Ovo što ste napisali nije istina. Ja sam rekao da:
1. Sustav huba i 4 vala predumijeva veliku frekvenciju letova (optimalno 14 letova tjedno, minimalno 7, iznimno 3-4)
2. Evidentno je da Air Serbija takav sustav više ne može ostvarivati, poglavito tijekom zime.
3. Obzirom na to i na velika rezanja frekvencija (već 3 puta do sada, a prema pisanju exYU desit će se i 4. rezanje ovog ljeta) sustav više nije održiv i Air Serbija ga mora mijenjati (ili postati P2P prijevoznik, ili smaniti broj valova, ili smanjiti broj feeding destinacija u manjem broju valova, ili samo neke dane u tjednu napraviti u 4 vala, a ostale u 2) jer ovako nema dovoljnu konektiranost i donosi daleko veći gubitak forsiranjem neodrživog sustava valova.
4. Možebitna opcija je promjena strategije flote, tj. prebacivanje sa A320 obitelji na 100-seatere, no za to se mora nekako "rješiti" narudžba A320neo, postojeći leasing ugovori, nabaviti takva flota, rješiti operacije i školovanje posada, a sve to nije moguće napraviti brzo.
Ovo je moj stav koji sam nekoliko puta napisao, još više puta javno iznosio, nisam ga mijenjao, niti sam igdje i ikada zagovarao išta drugo.
A vi slobodno i dalje živite u uvjerenju da je drugačije. Tu vam ja ne mogu pomoći.
Možebitna opcija je promjena strategije flote, tj. prebacivanje sa A320 obitelji na 100-seatere, no za to se mora nekako "rješiti" narudžba A320neo, postojeći leasing ugovori, nabaviti takva flota, rješiti operacije i školovanje posada, a sve to nije moguće napraviti brzo.
O 100 sedistarcima govori OU godinama ne AS. I ne moraju se resiti A320neo njih kupuje Etihad.
- Many competant Jat staff were replaced with new cadre who had no idea on what theyre doing. From downsizing in Jat, which had roughly 1.200 employees in 2013, to Air Serbia that had 2.600!!!
- JU had a very inconsistant product from
day 1. They intially made many changes, however kept some things from Jat, changed onboard product they introduced in Air Serbia. Im sure reconfiguring 10 aircraft after 3 years wasnt cheap either.
- The hub system is not a bad idea, however that didnt last long, they struggled to fill
seats, cut frequencies which snowballed from
there.
- BEG has to be one of the worst staffed airports I have travelled to. The arrogance, rudeness and lazyness just evokes rage in people. This, sadly is the only consistant thing they have kept. ASGS was mostly great while it lasted!
- Fleet doesnt really fit their needs/intentions. Too little ATR’s and too many A319/A320’s with nothing in between. This is very noticeable with their constant changes every season. They lost out to LOT on WAW, who is again increasing frequencies to BEG for example.
- Poor sales and marketing, evident that JU couldnt fill IST, yet was replaced with KK that operates A320/A321 while Turkish tourists has been on the rise to Belgrade. TLV is another example. While the Balkans has the past couple of years been a massive hit in the Middle East, theyve dropped AUH and failed to capitalise on the travel boom considering their massive advantage, while FZ this summer will operate 3 x daily to SJJ on top of daily BEG, a few days weekly to TIV, DBV, SKP, EK daily to ZAG, not to mention Air Arabia, Kuwait Airways, Jazeera and others who have too launched SJJ.
- The lease of the A330 has been a disaster. Poor planning has left it parked more in front of the hangar in BEG rather than flying most of the year.
More can be sadly said, and I dont see things improving soon. Their 5 year plans they constantly talk about is a joke when they make the sudden, horrid changes they do every season, with incomplete and temporary products, flights and services. Flag carrier to boutique to low cost, throw in Aviolet and charter airline on top and its Air Berlin all over again, and we know how that went! Sure, what JU is doing might be the trend in other airlines such as LH, however theyve established a name, brand and pax know what to expect. Travelling LH you know you will have a reliable, efficient and friendly service however average it is, where as JU is still defining itself with poor, decreasing frequencies from a horrible inefficient hub.
Dakle, ja nisam rekao da je to planirala ili obznanila Air Serbia nego da bi to mogli biti jedno ili dio rjesenja. Stoga iduci puta bolje citajte.
Jednako tako bilo bi dobro da si uzmete par sati vremena i procitate Ugovor Vlade RS i Etihada vezano uz Air Serbiju pa cete tamo nauciti koliko ce to A320neo kostati JU ako odustane od njih. Ako vam je to puno citanja onda procitajte moj clanak o tome. Do tada ne pricajte stvari koje ne znate.
Glad that you are not disputing other subsidies.
http://www.croatiaairlines.com/hr/O-nama/Financijske-informacije/Izvjesca-o-poslovanju
PDF file - izvjesce o poslovanju.
Airline had few issues, and selling off some of the assets was perhaps too rash.
Heathrow slots could have been kept, OU had 9, now it has 4. However, Runway 3 is under construction, OU will be able to get 5 slots back cheaply, at least this is the theory, morning flights weren't doing well to start with. OU kept mid-day slots cause these are always packing. Business travel between Zagreb and London isn't doing so well as leisure travel.
However, preliminary indications are, OU had a turnover of around $325/€270 million in 2017, profits were in the region of 100 million kuna. Airline carried 2.125 million passengers.
In 2018 OU, I expect will carry around 2.25 million passengers, 2000 tons of cargo and have a revenue in the region of $370 million. OU is no longer helped by the state, due to strict EU rules, so it must make profits.
And problem is, in Croatia there's little talent when it comes to running an airline.
For that you need vision and idea where the airline is heading.
Hopefully OU will get new management in 2018, one with more vision and ideas what they really want to achieve. Ideally OU needs to expand its network and keep 12 aircraft busy in winter months too.
OU should be flying in winters (summers) to:
Amsterdam Netherlands x7 (12)
Athens Greece x3 (4)
Barcelona Spain x3 (5)
Berlin Germany x6 (12)
Brussels Belgium x 10 (12)
Bucharest Romania x2 (4)
Budapest Hungary x 4 (6)
Copenhagen Denmark x6 (12)
Dublin Ireland x3 (5)
Dubrovnik Croatia x 30 (56)
Dusseldorf Germany x3 (6)
Frankfurt Germany x 21 (30)
Hamburg Germany x3 (6)
Helsinki Finland x3 (5)
Istanbul Turkey x3 (6)
Lisbon Portugal x3 (5)
London United Kingdom x4 (4)
London United Kingdom x5 (8)
Lyon France x3 (6)
Madrid Spain x3 (5)
Manchester United Kingdom x3 (5)
Milan Italy x5 (8)
Mostar Bosnia and Herzegovina x4 (6)
Munich Germany x21 (28)
Nice France x3 (6)
Osijek Croatia x6 (12)
Oslo Norway x3 (6)
Prague Czech Republic x3 (6)
Pristina Kosovo x14 (21)
Pula Croatia x6 (12)
Riga Latvia x2 (5)
Rijeka Croatia x4 (7)
Rome Italy x10 (14)
Saint Petersburg Russia x2 (4)
Sarajevo Bosnia and Herzegovina x21 (28)
Skopje Republic of Macedonia x16 (20)
Split Croatia x 35 (56)
Stockholm Sweden x 5 (8)
Stuttgart Germany x 3 (5)
Tel Aviv Israel x 2 (3)
Venice Italy x 3 (5)
Vienna Austria x 21 (24)
Warsaw Poland x3 (6)
Zadar Croatia x 8 (14)
Zagreb Croatia x 252 (336)
Zürich Switzerland
total of 45 destinations.
That should keep OU quite busy even in winter months.
Most of the year Wizz Air has two weekly flights operated by the high density A320.
They are dominating in terms of the number of passengers that fly between Belgrade and Larnaca.
no, i dalje ne vidim u cem je problem za obicna putnika namjernika?
koga nema, bez njega se moze i hoce. uvijek ima netko tko ce popuniti novonastalu prazninu.
2.600 employees for JU's size of operations is just insane!
The JU logo and brand still make it a prestigious airline, at least with a 90 year old history!
People, you tell me, which other airline covers ALL Balkan capitals and which other airline connects NYC to the Balkans almost daily?
JU might have changed their model but that does not mean they are going down!
At least it still hasn't sold its Heathrow slots unlike other airlines, or failed with its investors such as others.
I am sorry to disappoint you, but JU will forever remain.
Good luck with the transition and back to profit soon JU!
Prihodi od donacija (milioni):
2013 EUR 3
2014 EUR 69
2015 EUR 49
2016 EUR 40
2017 ???
Otpis duga aerodroma (milioni)
2014 EUR 12.3
2015 EUR 19
Total 2013-2016: EUR 192.3m
This was an article on OU so you came up with this comment?! :)
Unfortunately, this turns to be non sustainable. I’m afraid that current changes will not make any turnaround - the prices are huge, a tariff change is a clear cheat of passangers (same price, less products), connections are less atractive, FF programme is downgrading all the time for JU flights (Etihad guest Silver is practically worthless with no lounge access), the management is completely changed - no vision whatsoever.
All in all, let’s say it’s a bad luck, as so often in an airline business.
Maybe you were lucky because AS now needs to compete with Easy on the route. Prices have stayed the same for the majority of routes, we just don't have checked bag anymore. This is not how you keep customers.
Why are you outraged by negative comments? Serbian citizens/tax payers have all the right to be angry - money are being thrown into the company and it underperforming.
Vidim i da se u komentarima javlja mnogo stručnjaka sa dosta informacija.
Ne bih dalje da smetam sa komentarom, ali ću sigurno da čitam. (mada 150+ komentara je neki put malo previše za pročitati, zar ne?)
Smanji dozuvljaj.
A krhki ego negdje drugdje jacaj.
from acquisition of YM by JU to JU is a mess a year or so later. and from JU has a wave system just as i have envisioned to JU should cut
there is really no position or firm opinion, just a large number of theories from which it would be said "as i wrote/said..."
particulary i like this latest "lufthansa is behind it" theme
You would know if you went to one. But since you didn't feel free to dispense your advice on how to run an airline. No one cares. BTW Air Serbia will outlive all other airlines in the region despite your efforts.