Serbia's Finance Minister, Siniša Mali, has said the country's national carrier has operated with a profit over the past year and has not been a recipient of state subsidies. "Air Serbia has not been receiving subsidies for the past two years, and that is not down to me or the government but the European Commission which monitors state support", Mr Mali said, which is contrary to previous statements. Air Serbia's financial results for last year are expected to be made public in late June or early July by the Serbian Business Registers Agency, if the airline itself does not publicise its data beforehand.
Air Serbia has posted a profit since 2014 but has also received state funds. In 2014, the carrier's net profit stood at 2.7 million euros, which was followed by a 3.7 million euro profit in 2015. In 2016, upon launching its first long haul service, the airline's figures declined 77% with Air Serbia managing a 990.000 euro profit. However, in 2017 its profit soared to sixteen million euros. Those record results were achieved in part due to a significant reduction in expenditures and an increase in revenue. Furthermore, the state provided a twenty million euro subsidy, which is half of what the company used to receive from its majority shareholder, although the carrier was also granted twelve million euros for the "development of tourism". Late last year, Mr Mali said that the payment credited under tourism development is primarily for the support of the carrier's long haul service to New York. "As part of our tourism development strategy until 2025, the Serbian government has decided to extend its support to whatever contributes to tourism growth. In this case, it is flights to North America. Without that support there would be no service to the US. However, Air Serbia's financial performance would remain unchanged", Mr Mali said.
Air Serbia has been listed as one of several companies which will receive subsidies from the state budget this year as well, however, the Finance Minister noted this is in relation to debt accumulated by the airline's predecessor Jat Airways. "We did not have 380 million dollars to pay off the debt straight away. Instead, we will be making payments over a ten-year period. We process the loan a debt repayments either through Air Serbia or directly. However, none of the money goes into Air Serbia itself", Mr Mali said last week.
The Serbian Prime Minister, Ana Brnabić, recently noted, "The government of Serbia will maintain its strong support for Air Serbia. This support will be in line with European Union regulations, as it has been so far, however, no one can prevent us or limit our support for Air Serbia". The PM added, "Air Serbia plays an important role in the development of tourism, improves our economic ties with numerous countries and strengthens our country's brand. It has been an important driver of economic growth and I am certain that we will see even better results ahead since there are good prospects for further growth".
I don't mind that they keep support. I mind that for that financial support service levels have gone down while ticket prices have stayed the same.
ReplyDeleteSeems like the consolidation measures worked. JU is growing again this year and we will probably get second long haul route in winter.
ReplyDeleteToronto?
DeleteYes
DeleteSo if they get a second long haul route more subventions will be needed to "support" it.
DeleteGot it!
^Yes, most probably.
DeleteIs there a question mark over their current A330 now that Jet Airways might completely go bust?
DeleteIt all depends on who owns the aircraft, if it's a lessor then nothing changes if it's Jet then who knows.
DeleteI do wonder how much the profit will be in 2018. Will it be over 16 mill or less?
ReplyDeleteMe too. With all the savings they made you would expect a bigger profit.
DeleteOil prices and currency fluctuations won't help so I thinknit will be below 16 million.
DeleteWithout state support, Air Serbia would go bust.
ReplyDeleteIt would. But it has state support to keep it afloat and that is good.
DeleteAt least state support is transparent in Serbia not covered under million different funds which have the same purpose just another name
DeleteWords transparent and Serbia usually don't belong in the same sentence.
DeleteWhy cant they just run the airline without subsidies, run the airline properly and you wont need subsidies. -_-
DeleteLOL, sure it did!
ReplyDeleteIt's beyond me how Jat managed to make EUR380 million in debt!
ReplyDeleteBecause it was getting loans which were then (the money) taken by the government. It also didn't have control over it finances so cash shortages were extremely common so borrowing was the only way out. Over time that number reached 380 million.
DeleteThe only issue here is that Etihad did not invest a single penny and it never contributed to improving Air Serbia's liquidity.
With the same mentality we hear from PM: "no one can prevent us or limit our support for Air Serbia"!
DeleteLike with many things in Serbia, the problem is structural. They are throwing money at JU while its management is still clueless. With the money they got so far they could get five E75 for longer and thinner routes like STR, CPH, BRU... all of them could be operated daily in winter which would be better for connections. But noooo they would rather fly half empty 144 seat A319.
DeleteA 09:16, so this reconfirms the theory of the prestige obsession, right?
DeleteWhy would you fly a half empty A319 and lose money than leasing it to another warmer country in need just like many other European airlines do?
I don't think it has anything to do with prestige otherwise they would still be flying 114 seat A319s. It has more to do with incompetence.
DeleteThe money that is being thrown are paying the debts from jat era, it sats in the artikel that it Will be payed of Over a period of app. 10 years... 380m isnt little.
DeleteThe initial success of ASL was a result of a large investment from its shareholders. Unfortunately, this turns to be non sustainable.
DeleteAnd this year they will get subsidies from the Nis flights.
ReplyDeleteI think it's obvious by now that most of INI flights will go to Wizz Air.
DeleteYes, that's 5 million euros per year for 5 years.
DeleteIt's three years not five
DeleteAnd it's highly doubtful Air Serbia will even apply. I don't see them flying to Friedrichshafen.
DeleteDoes OU receive PSO for ALL domestic flights?
DeleteIt receives PSO funds for:
DeleteZagreb-Split, Zagreb-Zadar-Pula, Zagreb-Brač, Zagreb-Dubrovnik, Osijek-Split, Osijek-Dubrovnik.
Yes all of them. Around 7.5 million per year. Will be increased next year when current PSO contract runs out.
Thank you very much.
DeleteIt is also way of financial support allowed by EU.
On the same way direcy financial support to JU by GoS is also legal as EU is not the member of EU. As we all know membership in EU has many advantages but also non membership could be good.
All in all, there is actually no difference between financial help OU received through PSO and financial help done by GoS to JU for tourism promotion
As Serbia is not the member of EU...
DeleteLet's not forget the welfare queen, Adria, and their own subsidies for LJU-BRU.
DeleteAnd what's worse they are 100% private.
DeleteBig difference is what OU gets is an earmarked fund to explicitly help operating domestic routes where most of the routes would not be sustainable on its own. Of course if OU i.e. should manage to spend only 6 million on these routes then they'd "earn" 1.5 million, doubt they'd pay back a difference. Nevertheless there are rules for PSO in EU and the 7.5 mill will be audited/approved by the respective EU authority otherwise any airline could operate pseudo PSOs and earn unlimited amounts in EU.
DeleteIt would be a disaster if they weren't profitable.
ReplyDeleteThey admit that they subsidize JU for thew JFK flights and "tourism development" but at the same time they say they do not give subsidies and the airline is actually profitable!
ReplyDeleteLOL, the absolute example of politicians telling us the biggest and most obvious lies with a straight face...
This is of course not just the Balkan way of politics, it is like that all over the world.
We just tend to be more obvious about it.
+1000
Deletehappy balkan taxpayer, this is all legal according to EC. just because you started paying taxes in the balkans, it does not mean you get to decide how to use it.
DeleteHow much money did they get for the A330 Serbia branding? Oh wait, that's not a subsidy. And this is just one of the many instances of state subsidies. But who are we to say that - just ignorant bystanders.
ReplyDelete+1
Deleteof course it wasn't a subsidy. That atrocious livery is the flying ad of our PM's wet dream pet project.
DeleteSo SNS paid for it? ;)
DeleteIt certainly didn't go into JU's pockets. The livery had to be painted and paid for... in Abu Dhabi no less.
DeleteThat is what all airlines across Europe are doing. Getting hidden incentives from their governments, airports, tourist boards, regions etc. I don't know if you people know that Airbus regularly gets a grants from the EU for the development of new aircraft programs. Even if the program goes bust like the A340 they do not require to return any of it. The US is complaining about it now since it is a hidden subsidy and unfair competition to Boeing.
ReplyDeleteWell said
DeleteYeah and the US is doing better with Boeing?... LMFAO
DeleteLast year Serbia had the second highest tourism growth in Europe. I'm sure JU contributed to this.
ReplyDeletehttps://i.postimg.cc/vHNLxs6v/screenshot-205.png
easy to get a crude calculation. What was the growth in passengers of Air Serbia in 2018? What was the growth in tourists?
DeleteJU last year stagnated and flew less pax than it did in 2017?
DeleteHow exactly did they contributed to tourism growth?
If anything with the 7% cut in the number of flights they sabotaged tourism.
Ok, they confirm JU is not receiving any aid but in the same time the government "strongly supports" them. There is a slight contradiction here. I am not sure if the EC can impose its rules on Serbia yet as it is still not an EU member.
ReplyDeleteBy EU law it is forbidden to directly subsidise an airline, similar to what happened to Malév, back in 2012:
http://europa.eu/rapid/press-release_IP-12-7_en.htm
Oh please, everyone gets support either directly or indirectly. OU receives 7.4 million EUR each year just for PSO routes, according to EU. And that doesn't include all the "joint advertising" funds, city authorities like Dubrovnik buying out seats on planes etc.
DeleteHad no clue about OU, thanks. I think airlines are finding their ways in grabbing those sweet subsidies. Either way, I don't know why this EU law is still applied where every airline can easily skip it and find another alternative way.
DeleteIt's applied so EU can kill airlines. Like they killed Malev to make way for Wizz to develop.
DeleteWhat goes around comes around. Now LO is in bed with the Hungarian government and no one knows if they are getting subsidies or not. All the while the mayor of Budapest is pushing for LCCs to be moved to Kecskemet so Wizz might be packing its bags soon.
DeleteAnd Serbia is not yet in EU.
DeleteTbh, Malév was a brilliant airline. The biggest mistake was to give it to the Russians from Vnesheconombank with Ambramovic and Co. involved (currently EU sanctioned) in 2009. They surly muddled the airline.
DeleteBut hey, József Váradi managed to escape the fiasco and cunningly took over W6.
Anon 9h16 - you are comparing apples and oranges!
DeleteSo what would be the alternative? Finance Wizz Air in Hungary or let foreign airlines come in who have no intention of registering in Serbia, no intention of paying taxes in Serbia and who only look after their own interests which are in no way related to Serbia.
ReplyDelete+1
DeleteHow much has JU paid in tax in Serbia in the last 5 years or so compared to the subsidies?
DeleteThe return on investment is worth it.
ReplyDeleteIt is OK if they really learned to do it in a way which do not offend EU regulators.
ReplyDeleteYM is doing the same
DeleteI do not mind state aid at all, on the contrary, I support it since when looking at the greater picture Air Serbia is indeed contributing a lot to Serbian economy. The money they get is nothing compared to what Serbia is getting in return.
ReplyDeleteI find it interesting that in Serbia people get peeved about subsidies for Air Serbia but not to the dozen of other state owned dinosaurs who get the same assistance or even more.
ReplyDeleteProbably because they were made to believe that after Etihad takes over there would be no more need for state assistance.
DeleteExactly anon 10.07
DeleteJU's subsidies are nothing compared to what they give foreign investors or other failing government businesses.
Not a single word can be trusted what this Mali guy says.
ReplyDeleteCongratulations Air Serbia.
ReplyDeleteOn what?
DeleteIt's a question of how did they cook the books in 2018.
ReplyDeleteYes I'm sure creative accounting is being done by a world renowned auditing firm (KPMG).
DeleteOh yes KPMG and other auditing companies always do things by the book ;)
Deletehttps://www.google.com/amp/s/amp.economist.com/finance-and-economics/2018/08/30/kpmg-is-caught-up-in-scandals-but-its-woes-are-not-existential
DeleteMuch of the Serbian economy operates on subsidies. Much of the foreign investment in Serbia is attracted by subsidies which are provided for several years. Same as in Macedonia.
ReplyDeletenot really
Deletewizz air no longer receives subsidies from the n mac government. all routes are 100% operative.
You might have missed that Wizz Air is opening eight new routes thanks to new state subsidies.
Deletehttps://www.exyuaviation.com/2018/12/wizz-air-to-launch-new-macedonia-flights.html
And I was not referring just to the aviation sector but the economy as a whole.
DeleteAir Serbia is trolling everyone :D
ReplyDeleteI will never understand why do people criticize Government for helping Air Serbia. I really think they did A LOT to improve aviation in Serbia. As it was mentioned before, JFK route is indeed important and when you have a look at the big picture, those flights are (indirectly) profitable. I would not mind state aid for Toronto route.
ReplyDeleteCongratulations to JU. Seems like things are looking up .
ReplyDeleteI don't understand webby they don't release their results instead we have to wait for APR to publish them. I mean since they are going to post a profit, wouldn't it be good PR to publicize it?
ReplyDeleteThey don't want to draw top much attention so people wouldn't start asking questions.
DeleteAPR results are much better because it gives you a detailed look into how much money they made and how much they received.
DeleteInteresting that state aid halved.
ReplyDeleteThe state subsidies are going down. They still made a loss in 2017 (4 million without subsidies) but everything is looking they made an actual profit in 2018 when state subsidies are removed. Good work Air Serbia.
DeleteBravo Serbia!
ReplyDeleteReally???
DeleteCare to read the article attentively?
I don't know why are people so upset by the government's aid. It's ok when it's given to Wizz or other LCC, but it's wrong when it's given to a national carrier which employs 2500 people in Serbia. I for one am happy my tax money goes to support a Serbian business and not a Hungarian registered, Swiss based company.
ReplyDeleteAmen.
DeleteBut that Hungarian company actually gives people the chance to go somewhere as their prices are actually affordable.
DeleteYes it gives gastos the chance to fly home cheap.
DeleteWizz Air prices are anything but affordable unless you think paying 300 Euros with no luggage to Beauvais is affordable?
DeleteThank goodness the government supports it otherwise it would have been the 5th failed Etihad project, now that Jet Airways is gone.
ReplyDeleteEtihad had nothing to do with Jet's collapse and they were not a major shareholder. As far as I can see Alitalia is still flying while Darwin collapsed while under Adria's ownership. Air Berlin's demise is Etihad's doing.
DeleteI suggest you read up on the Jet Airways, Alitalia and WOW cases here: https://wolfstreet.com/2019/04/17/more-airlines-collapse-jet-airways-india-alitalia-wow/
DeleteThey write, among others:
'Last year, Jet Airways “suddenly” discovered serious financial issues, which led to a highly dramatic rescue effort by the main creditors (chiefly state-owned State Bank of India and private-sector ICICI Bank) and minority shareholder Etihad under the new Sashakt legislation introduced by the Indian government to deal with the chronic “sudden liquidity problems” of the giant Indian economy.'
Lepa slika,nadam se da će ih sledećeg leta biti 2 komada u bojama AS😃
ReplyDeleteEven with the subsidies they waste much less money than Jat and at least they have a decent network, frequent flyer program, crew, online check in...
ReplyDelete