Etihad likely to extend Air Serbia deal


Etihad Airways is expected to extend its five-year management agreement with Air Serbia, which expires on January 1, 2019. The Serbian President, Aleksandar Vučić, said, "As far as I know Etihad will remain Air Serbia's partner. I haven't been informed otherwise. Air Serbia will post a profit this year, which is extremely difficult in such a business environment. I call upon Air Serbia to improve their service in the coming years, not just on their long haul flights but also on their remaining operations. This way, I'm certain they will have even more passengers and record even better results". He added, "The public should be aware that a significant number of airlines are going bankrupt, especially small flag carriers, while we are not only surviving we are doing good business".

Commenting on the 2013 order for ten Airbus A320neo aircraft secured as part of a major fleet order by its equity partner, Mr Vučić said he would "have to check" whether the aircraft will be delivered to the Serbian carrier. The delivery of the neos to Air Serbia has been slated in between late 2018 and 2020. Etihad Airways has until July 1 to inform the Serbian government whether it wishes to extend its partnership and retain its 49% stake in the Serbian airline. Under the deal, "The initial term shall be automatically extended by a further period of five years commencing on January 1, 2019 unless Etihad serves notice on the GoS (Government of Serbia) no later than six months prior to the expiration of the Initial Term that Etihad wishes to terminate this agreement". Etihad may also choose to withdraw from some of its obligations, while remaining committed to managing the company since a total of five separate agreements were signed between the two sides.

Meanwhile, Siniša Mali, the former Mayor of Belgrade, who also served as the Chairman of the Air Serbia Supervisory Board, and was involved in talks with Etihad during its takeover of Jat Airways, has resigned from his post at the airline. It comes so as to avoid conflict of interest after Mr Mali was endorsed by parliament to become Serbia's new Finance Minister. His replacement is yet to be named. The Supervisory Board consists of five members who are named by the government and four by Etihad Airways. The Emirati carrier has so far made no indication of its future plans for Air Serbia. The Serbian airline will transfer a number of jobs in its revenue management and network planning departments by the end of the year which are currently, for the most part, handled by Etihad in Abu Dhabi. However, this move has been planned for some time.

Comments

  1. "The Serbian airline will transfer a number of jobs in its revenue management and network planning departments by the end of the year which are currently, for the most part, handled by Etihad in Abu Dhabi. However, this move has been planned for some time."

    That is good- creating redundancies with a strong committed partner is always a good business thing to do (irony off)

    ReplyDelete
    Replies
    1. How are they creating redundancies if they are moving jobs back to Belgrade?

      Delete
  2. Air Serbia has seen some positive developments in recent months:

    1. Dane Kondic was fired.
    2. Sinisa Mali resigned from the board.
    3. Revenue management & sched. are coming back

    All these are extremely positive news. Let's hope Etihad's additional flights will further boost JU's loads from the region and beyond as many used to connect onto JU 800.

    Btw nice to see Etihad Cargo being a regular visitor to Belgrade. I think it will be two weekly from this month.

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  3. Seems the Sheikh decided to lend some money. EY are launching BCN in Nov 2018 and managed to secure extra flights to BEG this summer. Temporary, of course.

    Also why is JU's flight to SOF cancelled today?
    Is the route not doing well?

    ReplyDelete
    Replies
    1. They are also increasing Baku while Nairobi is being upgraded from A320 to A332.

      The route does well actually and it's one of the few destinations not to see seasonal reductions. This is a scheduled cancellation from a few months ago due to aircraft maintenance.

      Delete
    2. Thank you for the information. I see the 737 is being used on some routes. Is JU really on fleet shortage? Will JU use Aviolet aircraft?

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    3. As every summer, JU fleet is spread thin so the moment one aircraft goes tech Aviolet has to step in and save the day.

      There are a few destinations that have the 733 planned but that's only because of scheduled maintenance of the A319s.

      Delete
    4. I saw an Aviolet plane yesterday evening at VIE

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    5. SOF is actually one of JU's strongest routes. I fly this route often for business and the tickets are regularly 200 EUR and up, while the LF is at least 80% on most days.

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    6. Glad to hear this. So, do you think it's more O&D than transfer? I remember JU used to send A319 regularly to SOF last year.
      Sloavio and other Slovenian guys mentioned that LJU-SOF is also a strong route, which comes with a big surprise. For instance, today they will send the bigger CR9 instead of CR7. This just shows how Balkan capitals need to be connected to each other.

      Delete
    7. I don't think SOF is doing that great. If it was they wouldn't reduced it to 6 weekly.

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    8. I just checked their timetable and it will be reduced from daily to 6 (23 June - 25 August only). I think they will use the Saturday flight to leisure destinations to make more money.

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    9. SOF is doing quite well but they need the aircraft elsewhere during the busiest period of the year when JU introduces many seasonal routes.

      That Atr is probably redirected to DBV, SPU or PUY.

      Delete
    10. I hope they resume the 2 early morning flights they used to. The route was initially daily, then 9 weekly.

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    11. With some 300 one way flights weekly in the busiest part of summer and 17 aircrafts the fleet is not that stretched. Not counting 3 aviolet aircrafts.

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  4. just to remind. couple of weeks ago in serbian newspaper there was again one of the doomsayer articles foretelling etihad leaving

    https://www.vreme.com/cms/view.php?id=1597027

    I don't mind the rest of the article (which is mostly true), but this guy really didn't do a proper analysis of etihad engagement and used the opportunity to (again) stress the dire financial situation of JU. again this is the same guy who interviewed that demented ex-CEO of JAT who claimed that leasing A330 would cost 5mil usd /month (real figure is 10 times less).

    no mention of the facts that:
    1) JU fulfilled EY wish list,
    2) EY guys are running the company (CEO, COO) and
    3) EY doesn't face much cost staying in JU

    so everything is pointing to the fact that EY was staying, but was it that hard to mention these facts or should objective journalism nowadays should be about hitting vučić instead of being objective?

    ReplyDelete
    Replies
    1. Yes, the CEO basically failed in a few airlines so they sent him here. I guess Air Serbia is where Etihad Careers go to die.

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    2. Vreme hmm

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    3. Well, they obviously didn't want him back at their HQ , so they sent him to Air Serbia ... I have also heard from some insiders that the former Alitalia CEO is now also working on Air Serbia with frequent visits to Belgrade ... if this is EY's contribution to JU management - sending failures to run our airline - then they are better off not renewing the management agreement

      Delete
    4. Well Vreme is siding with the opposition so what do you expect.

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    5. @9:30
      it would be great to hear some balanced opinion, not this black and white bull crap all the time.

      i was briefly on twitter following US politics. if trump killed a person on street there would be millions conservatives defending that. again, if pelosi killed somebody, there would be millions of liberals defending it.
      cnn vs. fox
      still, my favourite is how sputnik and RT are commenting the events
      media bias is unbelievable nowadays. they are all no catering to certain audiences and bending the news so it would fit the viewer/reader/listener

      Delete
    6. Petar, Miskovic described his Centavia fiasco he tried with that guy you described as demented in his book. He also wrote some nonsense ideas about wanting to turn around Jat, and guess who was helping hand to promote the book - Misa Brkic. You are smart enough to connect the dots between those three and negative pieces about Air Serbia in Vreme and Danas where tycoon has influence. We should not be surprised if some of the negativity here could be traced back to jealous tycoon that failed to own Air Serbia.

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    7. Which anonymous is Miskovic? :)))

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    8. Mislim da bi ga Centavia dokusurila.

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    9. It is very rude to call somebody demented. That was a mere lapsus. Of course we all know that plane is 0.5 and not 5 mil a month. The man did quite a good job back in his times.

      Delete
    10. Rude it is, but that was Petar's assessment. However anyone who thinks he did a good job at Jat and Centavia has no clue. Even Miskovic thinks he did a lousy job:

      http://www.skyscrapercity.com/showpost.php?p=147374351&postcount=11810

      Delete
    11. Interesting read, but I have not seen anything bad about Vujevic.

      Delete
    12. oh yeah, let's not forget that mišković also bought dragoljub žarković of vreme a nice apartment in genex apartment

      Delete
    13. 8:14 PM
      what particulary gets me is that information about leasing costing 50mil USD was the centerpiece of that interview. headline, front page. all based on that claim, so i wouldn't call it a lapsus.

      also, let's remember that vujović also claimed that money lies in shorthauls, while transatlantic flight are there to fill the seats on shorthauls.

      Delete
    14. For JU actually money are not in a single transatlantic route with low yields and very few business passengers. Journalists maybe extracted that lapsus, of course it is 0.5 mil. Disclaimer, I have nothing to do with the guy.

      Delete
  5. Did he just say they will publish a profit?? How??

    ReplyDelete
    Replies
    1. With massive subsidies from the state, how else?

      Delete
    2. I think subsidies ended last year.

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    3. allegedly state aid was envisaged just for 2014-2016 period. There are no financial results for 2017. Every successful company would already publish them.

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    4. They are required by law, I think, to send their results to the Business Register Agency by June and then it takes them around 2-3 months to publish the report online. So we will know soon.

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    5. I think they would be out with the good result if there were any. Hopefully the loss is less than in 2016

      Delete
  6. I'm glad the president made that comment about service quality. I hope he is aware that you have to pay for a glass of water onboard now.

    ReplyDelete
    Replies
    1. Obviously he is aware.

      Delete
    2. The last time he went to New York he went on Lufthansa. I think even he avoids JU. lol

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    3. Not true. He went with JU business class in March.

      Delete
    4. But the president buys his own water anyway -_-

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    5. And the time before that? ;)

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    6. https://www.airserbia.com//en-DE/stopover-in-belgrade?_ga=2.136431351.678926451.1528101126-731260656.1519850563

      VERY COOL initiative!!!! I Didn´t Know This Existed.

      Delete
    7. Yep, good idea. Been around for a while

      http://www.exyuaviation.com/2016/10/air-serbia-introduces-paid-stopover.html

      Delete
    8. Anybody knows of European company who still offers paid stopovers?

      Delete
    9. There are several that still do:

      Finnair
      TAP
      Icelandair
      KLM
      WOW Air
      Turkish Airlines

      Delete
    10. Wow! Thanks for the info especially for KLM.

      Delete
  7. Was on a JU flight a couple of days ago to AMS. Packed but crew (which were extremely nice and polite) did not have change to give people when they gave bigger notes. Must say I was surprised by the amout of people that bought food and drinks.

    ReplyDelete
    Replies
    1. Do they accept cards now?

      Delete
    2. They have the best BoB service in Europe.

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    3. @9.41 yes

      Delete
    4. I highly doubt that offering a free hot meal like they used to produced so many losses and that they have now make massive savings with this BOB concepts. It degrades the company's image so much.

      Delete
    5. 2.6 million passangers, lets take a coservative estimate that production of a meal costs 1 euro(including workforce, materials, premises, and other operational costs) comes to 2.6mil or A320 lease for a year. What about drinks, sweets... That they used to give out for free, now making money instead. This is a huge amount for the companies of AS and CA size. It is a commercial reality and good business practice to behave in such a way although consumers might find this inconvenient they will not stop using the product as this contributes very little overall taking short european routes into account.

      Delete
    6. It should be also taken into account that by removing the free for all service they were able to cut the crew cost by 25 percent (there used to be four flight attendants on a 319 - now there are three)

      When it all adds up by reducing the service they save about 10 milion euros a year - and they earn another million from sales.

      Delete
    7. Lupetate, jer se ne vozite avionima. Niko zivi nista ne kupuje u AS avionu do dva sata leta tek onda popustaju od zedji. Usluga je sada tako jadna. Treba da dozive sudbinu Adrie.

      Delete
    8. Jadni su trolovi koji ne mogu da podnesu da Air Serbia radi pravu stvar. Leteo sam dva puta na letovima ispod 2 sata i jednom na letu od tri sata od kad je pocela naplata. Na oba leta do dva sata kupovala se najvise kafa i voda jer su bili jutarnji letovi, a na duzem letu voda i hrana. Uz to se placa za kofer, za izbor sedista i kad se sve sabere to je dodatni prihod. Placanje kreditnom karticom je prava stvar.

      Delete
    9. No surprise, everytime I go to Serbia there's always a problem with change. You would think an economy that still relies on cash wouldn't have this problem but nope

      Delete
    10. I had several JU flight since the new system is introduced. Confusion of first month is now over but rarely anybody buy sandwiches or sweets. The wraps included in this so called "red tariff" are terrible. Such a shameful decision, and they are loosing passengers more and more.

      Delete
    11. The best BoB I have experienced is, believe it or not, with Ryanair. Lots of food choices not limited only to sandwiches, but lasagna, ratattouile etc.

      https://www.ryanair.com/content/dam/ryanair/2017/inflight/inflight-magazine/Ryanair_Inflight_Magazine.pdf

      Delete
    12. Alen Šćuric Purger4 June 2018 at 21:11

      The best sandwich with crispy bacon I eat was in Ryanair. Hate the company but really like their food. And I am always happy to spent money there. Rather than to get distasteful soggy sandwich and tasteless coffee.

      Delete
    13. I recommend AirSerbia new sandwich with prosciutto. Very good! And of course delicious orasnica :)

      Delete
    14. @An.9:51 am "JU has Best bob in Europe"
      Ever flown Transavia? They give you opportunity to buy food on short flight as well, which JU does not. Their bob assortment is at least twice larger than the one of JU, and includes healthy food and allergenic-free and exotic snacks, so please...

      Delete
    15. I remember having tasty meal on board Transavia.

      Delete
  8. Although I don't believe a word that comes from the president's month I think genuanely has no clie if Etihad will stay or go.

    ReplyDelete
  9. EY has stuck to Air Seychelles and I believe they will with Air Serbia too. While Etihad has cut some routes this year it has substituted them as well. They just announced Barcelona. They launched Baku a month ago.

    ReplyDelete
    Replies
    1. They are finally focusing on their mainline business which is what they should have done all a long to avoid this mess. Everyone warned them they would end up like good old Swissair.

      Delete
  10. What is the likely scenario, in case the contract is not extended ?
    Will the fleet be renewed in 2019? And will they launch YYZ in June 2019?

    ReplyDelete
    Replies
    1. They will continue to pour money into it but I'm afraid they would run the airline even worse than Etihad but who knows. We will see.

      Delete
    2. Why wouldn't they renew the lease? Those are older plains apparently paid at the premium.

      Delete
  11. With or without Etihad , I hope everything will be alright for Air Serbia . Greetings from Athens .

    ReplyDelete
  12. I think EY will stay and that in 2019 we will see a start to Air Serbia's recovery.

    ReplyDelete
  13. I expect they will announce YYZ for next year by September

    ReplyDelete
  14. "which is extremely difficult in such a business environment."

    *all* markets grow in the double digits!

    if they find boom times difficult, what should we expect from them when grows slow down? or does he want to echo the lame excuses that are made in zagreb? as ju and ou seem to have the same world view, maybe they should merge...



    ReplyDelete
    Replies
    1. Exactly, FR made almost 1.5bn EUR profit last year, W6 275 mio EUR, EZY more than 350 mio EUR, ... But it is "difficult to make profit in this business environment.

      Delete
    2. Well the president was talking about national airlines.

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    3. Well, are they trying to run a business or a money pit for political points scoring? With the latter, there's no need to even aim for profit.

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    4. I thought he was meaning because of the reconstructure but mayby not

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    5. BA was profitable.
      LH group as a whole turn healthy profit in spite of restructuring.

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    6. Yes look how much BA cut service wise to become profitable. JU is doing the same.

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    7. Got it! So it is implementation of the BA model?

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    8. Actually if you look at what the president said he said SMALL national carriers are having problems (read last sentence first paragraph). I would put neither LH group or BA in that category.

      Delete
    9. LO and UIA are national airlines and low-costs.

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    10. LOТ and UIA are national airlines and low-costs.

      Delete
    11. Since when LOT is lowcost? I flew it a month ago, had connecting flight, free hold luggage, free check-in, free snacks and drinks, I don't use it by one can collect "miles and more", since when is that LCC?

      Delete
    12. Stuff people write :)

      Delete
    13. First post double copy

      Delete
  15. what happens if EY doesn't extend its agreement?

    ReplyDelete
    Replies
    1. They find another partner?

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    2. That's not going to be easy.

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    3. The government will just keep throwing money at it. Just like OU.

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    4. Sasa Vlaisavljevic could run the company.

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    5. He already did it once!! Don't let him do it again.

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    6. Yeah and what a job he did.... not

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    7. He is praised for his work at the airport. If he had the same money Etihad got from Serbian government he might have done more.

      Delete
  16. So if Vucic does not know anything about neos that means they are not coming.

    ReplyDelete
    Replies
    1. One to two new planes will come in November/December. But definitely not the entire 10 planned.

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    2. What engine type was selected for those two?

      Delete
    3. PW disaster after disaster

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    4. Wizz also ordered PW for NEO.

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  17. I don't see Etihad leaving. Why would they start this restructuring with their own man in charge if they plan to pick up and leave in a few months. It would make no sense.

    ReplyDelete
    Replies
    1. Like I said last time with Etihad starting a new cargo line to Belgrade, hiring people in Belgrade for their "Shared Services Center" it does not look as if they plan to leave any time soon.

      Delete
    2. And also increasing frequencies to BEG.

      Delete
  18. Would EY be required to find a substitute partner for JU like they did for Etihad Regional if they leave?

    ReplyDelete
    Replies
    1. No, neither shareolder in JU would have an obligation to each other.

      Delete
    2. Not true. If JU does not receive those neos, Etihad would need to return back the deposit Jat Airways paid to Airbus in 1998 which is 20 million USD. At the same time the Serbian government would have to repay the 40 million USD loan they got from Etihad.

      Delete
    3. @6.05 better that they don't. Adria didn't turn out to be the best of partners for Darwin.

      Delete
    4. Not exactly. 40$ mil was loan conversion to capital. Even if they do not want to manage the company they are still shareholders. What happened to 25$ mil deposit is unclear.

      Delete
    5. If Etihad leave:

      - Serbia must pay 40 million doesn't meter of reason for leaving

      - if Air Serbia will not pay fr 10 A320neos money stay on Etihad account till they pay all amount of money for 10 A320.

      Delete
    6. We actually have little clue what was put in that agreement, but 40 mil$ have been converted to shares so it is done. We might end up giving more than 40 mil for 49% stake in the company.
      25 mil deposit should be Airbus and potentially used for some other deal.

      Delete
  19. Does anyone know when Air Serbia will get a new CEO. The "interim" CEO has been there for 6 months already.

    ReplyDelete
    Replies
    1. Well I hear Hogan is looking for a job...

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    2. Hheehehhe

      Does interim CEO have Serbian citizenship?

      Delete
  20. Anybody saw that Hainan got cancelled today? Why?

    ReplyDelete
    Replies
    1. Seems like the plane had a technical problem and was flown back to PRG for maintenance. It landed there at 13.44 and hasn't left since.

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    2. I was on the plane. I will probably write an article and describe the experience of how Hainan treats its passengers and I hope it will be published here - this is the last time I am flying with them. As for the accident itself, the company had no official statement and its only representative told us nothing but there was a rumor that the landing gear was (seriously) damaged and they had to replace a part of it; they were waiting it to come from God knows where. In any case, seat belt signs were on throughout the short flight - we entered the hungarian airspace and then returned to belgrade. Interesting experience, overall.

      Delete
    3. Where's the plane actually, now?

      Delete

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