State mulls Air Serbia nationalisation


The Serbian Minister for Construction, Transport and Infrastructure, Zorana Mihajlović, has said the country will consider buying new aircraft for its national airline and purchasing back Etihad Airways’ 49% stake in Air Serbia. Ms Mihajlović noted, “Perhaps we will acquire some additional aircraft and we will consider discussion over the buyback of shares from Etihad Airways. Why wouldn’t we buy them back? This situation has clearly demonstrated how important it is to have a national flag carrier. There was a lot of criticism directed towards Air Serbia and questions as to why we have a national airline. Now we can see how important it is. Air Serbia has demonstrated its social responsibility. Now it is our turn to create the necessary conditions for it to be able to commercially function”.

Ms Mihajlović added, “Air Serbia has grown its route network over the past few years, increased its revenue and indirectly enabled others in the tourism industry to benefit. Air Serbia’s current losses amount to over thirty million euros, and we estimate for it to at least double by the end of the year. There is no question whether or not we should help Air Serbia. We just have to make an effective and sound program. That doesn’t mean simply giving out money, but also creating the necessary conditions for Air Serbia to effectively function”. The Minister noted the carrier is ready to resume operations as of May 18, most likely to key European markets including France, Austria and the United Kingdom.

The strategic partnership agreement between Etihad Airways and the Serbian government, unveiled in August 2013, saw the Emirati airline make available a forty million US dollar loan facility to Air Serbia which was converted into equity on January 1, 2014 for a period of five years. This was matched by an equal funding injection by the Serbian government. The two sides each provided further funding through shareholder loans and other funding mechanisms of up to sixty million dollars to meet working capital requirements and support network development. The five-year deal was later extended until further notice, however, Etihad’s involvement in Air Serbia has been significantly reduced, with the state providing subsidies and funds for the airline over the past few years. Etihad registered an 870 million US dollar loss in 2019 and its equity investments in carriers around the world have unravelled in recent years.

Comments

  1. Anonymous09:02

    wow

    ReplyDelete
  2. Nemjee09:04

    I think by now it has become clear that Air Serbia operates better as an independent carrier than it did under Etihad management. I see no reason why the state shouldn't buy back the 49% from Etihad. That said, it doesn't mean JU and EY can't cooperate in the future as they did until now.

    For Serbia, JU plays a key role in many ways. Their schedule is also extremely convenient for business travellers as well as tourists. They have many destinations to which you can fly on Friday morning/afternoon and come back on Sunday evening.

    ReplyDelete
    Replies
    1. Anonymous09:16

      If this ever happens, we are back to the good, old Jat days. I don't blame GoS, nobody wants to be involved with a failing airline such as EY. It was clear from the very start that this Gulf enlargement would come to an end as it was all too artificial.

      Delete
    2. Anonymous09:27

      "If this ever happens, we are back to the good, old Jat days."

      Agree unfortunately.

      Delete
    3. Nemjee10:09

      What makes you think we are back to the days of Jat Airways? I mean what would really change from the current situation? Nothing much really. I mean right now the government can do what they want to with JU, who/what is stopping them really? Would be nice if you presented some concrete arguments to back such bold statements.

      Delete
    4. Dear @NEMJEE, my only concern is that because here is "BALKANS", things might get out of their hands and JU becomes Olympic airways, if you know what I mean. Have a nice day.

      Delete
    5. Nemjee12:25

      I understand all that, what I would like to know is what exactly would change. I mean the government already has the majority and they can do whatever they want to. What makes you think a larger majority would change the course of the airline?

      Delete
    6. Yes @NEMJEE exactly this government,for the time being they seem not greedy. What about another one? That is what I am afraid that this airline might become something that is manipulated by any government that will be elected like Olympic was in Greece. My opinion :when things get better, privatized at once.

      Delete
    7. Nemjee13:31

      Unfortunately privatization is not an option, look at what happened to Adria. If Air Serbia keeps on growing and being a successful company, I doubt any Serbian government would risk changing that.

      Delete
    8. Anonymous14:22

      I think they are afraid JU might become as mismanaged as OU.

      Delete
  3. Anonymous09:07

    As long as they keep professional managers, not SNS morons, I am fine with that

    ReplyDelete
    Replies
    1. Anonymous09:09

      Good luck with that

      Delete
    2. Anonymous13:21

      Yeah really, it will be SNS airlines in no time, like all other government owned companies.

      Delete
    3. Anonymous16:04

      Exactly, why do you think SPD wants to get its hands on LH!

      Delete
  4. Anonymous09:07

    But why buy it back? I mean Joe mutch will it cost??

    ReplyDelete
  5. Anonymous09:11

    The "new aircraft" is an ominous sign they might take those Sukhois :/

    ReplyDelete
    Replies
    1. Anonymous09:19

      You are absolutely right. This hot topic was discussed here not long ago.

      https://www.exyuaviation.com/2020/03/russia-serbia-to-resume-ssj100.html?m=1

      Sukhoi is the ideal choice for Serbia and its people.

      Delete
    2. JATBEGMEL14:46

      I see the A220 working perfect as a A319/B733 replacement. Both variants would complement them quite well.

      As for the SSJ, maybe as an ATR replacement. However, the SSJ capacity is a large jump from the ATR, while the ATR offers better economics for the regional routes that JU needs. Difference in the SSJ and BCS1 is roughly 20 seats, for which the SSJ might not be worth the investment.

      JU needs an aircraft like the ATR, and an order for 10 would allow for them to replace current ac, while boosting frequencies and add new regional destinations.

      Delete
    3. Anonymous15:53

      there is no way to compete with small machines and a hub model again cost efficient operators that use only new a320/1 and operate them p2p. not even when you get the them for free. there is no much difference if they run on 20 year old atr or new ssj, there is no way to match prices of a320/1 that operate p2p

      it was like this the last four years, and was like this in zag as well, and those have been boom years for aviation. but in the bear market ahead where cutomers will be much more price sensitive, it would be stupid to plan with such a high cost structure

      Delete
    4. Anonymous17:15

      Hubs are not built with ATRs or Sukhois. A220-300 is the future. You Can ask BT. RIX is a true hub in all senses.

      Delete
    5. JATBEGMEL18:26

      Most of the worlds largerst airlines have smaller jets and turbo probs that compliment their network and works exceptionally well for them. Not all airlines need to be ULCC's nor do trends show that all airlines should move to that model.

      A320 has shown to be too big for most of JU's destinations and are being replaced for smaller A319's. The A320's dont offer them the adequate flexibility they need as there isnt many places to send them profitably all year round.

      As for the ATR/SSJ comparison, there is a massive difference in operational costs sending a load of 35 pax for example on an ATR vs SSJ. They may not be able to match the costs of a larger aircraft, but neither is JU a 1€ ticket type carrier or a LCC spread around Europe serving destinations a couple time a week.

      JU already has a relatively lower cost structure the past couple of years. JU needs frequencies and a decent destination network for which there is a market that demands it. Its thanks to the transit pax that Serbia has better connectivity, more frequencies for which there is O&D demand, as well as destinations that would never be supported by O&D demand but O&D pax pay a premium to travel on.

      As for price sensitivity, this will be short lived until the world economy stabilises again and begins growing. In the mean time, many airlines are cutting back capacity, some bankrupting, which gives some airlines room to grow. The aviation market was even before the corona virus seeing a change to travel habits.

      Delete
  6. Anonymous09:12

    Don't think it will happen in the end but we'll see.

    ReplyDelete
  7. Anonymous09:18

    What has Etihad invested in Air Serbia in the last two years anyway?

    ReplyDelete
    Replies
    1. Anonymous09:19

      They got them out of the Airbus order from 1998 and even got them their deposit back.

      Delete
  8. Anonymous09:19

    Like it or not EY created the conditions for Air Serbia to build up its network and fleet.

    ReplyDelete
    Replies
    1. 09:19 absolutely agree. But the government shouldn't give a bailout without something in return. Unless the UAE wants to match the funds of the Serbian government to JU, which it hasn't to date.

      Delete
  9. Anonymous09:29

    Air Serbia is Etihad's only "successful" equity partner.

    ReplyDelete
    Replies
    1. Anonymous10:02

      thanks to the generous state

      Delete
    2. Anonymous10:15

      Germany and the UAE were also generous at first and their investment paid off. Same will happen to JU.

      Delete
    3. Anonymous19:58

      just when

      Delete
    4. Anonymous20:55

      Soon, LH needs its €9 billion from the taxpayers.

      Delete
  10. Anonymous09:29

    Zoka being Zoka. I wouldn't take seriously anything she says. At the end of the day, we all know who is going to make the final decision.

    ReplyDelete
    Replies
    1. Anonymous09:46

      Do you really think she just randomly came up with this idea? There were probably some talks.

      Zoka being Zoka is her saying yesterday that there are no flights anywhere in Europe at the moment.

      Delete
    2. Nemjee10:10

      Zoka's best aviation moment when she proposed for BEG-JFK to be extended to Mexico (or was it Argentina?).

      Delete
  11. Anonymous09:30

    Well here come the flights to China then, sponsored by the government and tax payers.

    ReplyDelete
    Replies
    1. Anonymous09:37

      The taxpayer is being cannibalised again. Prestige comes with sacrifice, my dear friend.

      Delete
    2. JATBEGMEL14:53

      China wouldnt be a bad market for JU, PVG in particular. BEG is one of the top 10 unserved destinations for PVG, while trade and tourism is growing between Serbia and China. JU already has a decent destination network to make them attractive for the Chinese market.

      Delete
    3. Anonymous15:11

      With growing demand BEG could also redirect some China traffic that used to fly to BUD and start their European trips from there. Many BUD-China flights struggled even before corona and I doubt they'll be back once all this passes.

      Delete
  12. Anonymous09:40

    This is actually great news.

    ReplyDelete
    Replies
    1. Anonymous09:42

      Yeah right.

      Delete
    2. Anonymous09:42

      I'm not so sure. Air Serbia benefits from having a huge codeshare with Etihad. They help fill Air Serbia's regional routes in particular. Also JU is in EY's frequnet flyer program.

      Delete
    3. Anonymous10:21

      Do you really think the share of those changing 2x to go somewhere is that big?

      Delete
  13. Anonymous09:40

    This contract is not meant to be renewed, because the whole point was for Etihad to manage the company until local workforce is prepared to take over. The issue was that in 5 years Etihad had not built up local talent at all. This is changing now.

    ReplyDelete
  14. Anonymous09:41

    Big news. Let's wait and see what happens in the end. Or if Vucic and Sheikh will reach some sort of a compromise.

    ReplyDelete
  15. Anonymous09:41

    Interestingly to me, this seems to be driven from the Serbian side (not Etihad), which shows Etihad's involvement in the whole story.

    ReplyDelete
    Replies
    1. Anonymous09:44

      +1

      Delete
    2. Anonymous10:01

      no, this can already be a reaction of someones action , just saying

      Delete
  16. Anonymous09:43

    What is Etihad Partners down to these days? Air Serbia and Air Seychelles?

    ReplyDelete
    Replies
    1. Anonymous09:44

      Yes

      Delete
    2. Anonymous10:15

      Etihad Partners has been dissolved, it no longer exists.

      Delete
  17. Anonymous09:44

    Given the state Etihad is in, it can only be a good thing.

    ReplyDelete
  18. Anonymous09:45

    In normal circumstances I would say good, maybe they find a different partner. In these, I doubt anyone would be interested.

    ReplyDelete
  19. Anonymous09:48

    After Etihad 'KNOW HOW' prepare for Serbian javno preduzeće KNOW HOW.

    ReplyDelete
    Replies
    1. Anonymous09:48

      Wouldn't be surprised to see Sinisa Mali as CEO after the elections.

      Delete
    2. Anonymous10:16

      Great choice he would be- smart and attractive : -7 A good representation for the company.

      Delete
  20. Anonymous10:00

    maybe Etihad have signaled that they dont want their stake anymore

    ReplyDelete
  21. Anonymous10:16

    I think many are afraid of Air Serbia's coming success. We already had numerous meltdowns on here. Some of the more monumental ones came with JFK, collapse of Adria, ten new routes in 2019, continued expansion in 2020... and so on.

    ReplyDelete
    Replies
    1. Anonymous10:20

      Why would people be afraid of saccess???

      Delete
    2. Anonymous10:23

      Well there are some people on here who do not want JU to sacceed in the end. Since the deal with EY was announced in 2013 people were spitting venom. Unfortunately this is a typical Balkana mentality (комшијина крава kind of situation). Some would rather have us all sit in the cesspool, equally miserable than for some to actually leave it and start thriving. JU is currently the only ex-YU airline that has a future.

      Delete
    3. Anonymous10:34

      as long as the state is bailing them out i would say yes

      Delete
    4. Anonymous10:40

      So you are against someone being provided with a lifeline to get out of the cesspool? Why? One of them going out and becoming successful can make it easier for others to come out and thrive as well. What is this obsession with government not helping out companies. It's a degenerate western ideology which suited them only because their industry was stronger and richer than the one they were going to attack (Africa, Latin America, Balkana...).

      Look at Air Serbia today and how much we would have lost if Jat Airways was shut down and replaced by Wizz Air. So why would you say yes to that sad and mean ideology? What are concrete benefits to what you are proposing?

      Delete
    5. 10:40 I couldn't agree more. Etihad served it's purpose and was a win for all parties involved. At the end of the day JU did improve its network and image with a little help from Etihad. As for the haters out there on JU - just ignore them as they will never change.

      I believe that there is an opportunity for JU to be able to change the conditions on the ground by getting better planes for better prices and increase network share as a result of the imminent closure of many smaller companies. At the end of the day, it's in the national interest of a State to have a national carrier that it can rely upon.

      Delete
    6. Anonymous13:28

      Yes, a "little help" of creating a boutique airline and a little Bit of help with the 330 and JFK slots :D
      A little help securing those A319...

      Delete
  22. Anonymous10:18

    Does GoS need to pay for the share? If yes how much $?

    ReplyDelete
  23. Anonymous10:32

    If Germany is about to nationalize its airline then I don't see why others wouldn't really do the same. By the way, I might be wrong but the Serbian government can not nationalize something that's already national. They can increase their stake in the company by buying out a minority shareholder.

    Note to haters: chill out.

    ReplyDelete
  24. BA88811:05

    Whilst BA is sacking 25% of pilots and other staff (14000 in numbers!) and plans on closing LGW base...AirSerbia is buying new aircraft and has full confidence.

    Of course, government never takes any responsibilty for what they say.

    This is me typing following shoe shopping trip in Italy end of Feb.
    (I’ll have what Ms Mihajlović had!)

    ReplyDelete
  25. Anonymous11:30

    Mislim da trenutno nije pametno raskidati stratesko partnerstvo sa Etihadom. Ako Nemacka upumpava u Lufthanzu 9 mlr evra mogu samo misliti kolko ce seik uloziti u Etihad sada kad nema limita. Etihad ce posle ove krize izaci mbogo jaci.A sto se tice novih aviona za ErSrbiju koje je najavila ministarka,mozda je mislila na drugi A330 za pokretanje letova za Kinu i Kanadu.

    ReplyDelete
  26. Anonymous11:31

    Fine if they do it, but it would be scandalous if they actually pay any money to Etihad for those shares.

    ReplyDelete
  27. They have turned into a profitable company with a good management and very bright future.
    I fully support this idea, even thou they should keep the strong links with UAE, just far away from EU.

    ReplyDelete
    Replies
    1. Anonymous12:24

      I agree that looking to the EU for a solution here would be wrong, but please be aware that no one has milked Serbia more than the UAE.

      Delete
  28. Difference BTW Air Serbia and Jat is just in a fact,that JAT aircrafts are still property, and AS are leased.
    Means,more debt to tax payers and profit to politicians to be made.
    Everything is same,identical
    M

    ReplyDelete
    Replies
    1. Anonymous13:33

      Yes, 100% correct! Dos you Know something about the company financial figures? It seems they stopped publishing them for a long time.
      What about the percentage paid by the taxpayer and his contributions? It seems that the government is quietly talking over the company and will no longer be a private one. Something like AZ or B2. Lukashenko has the grip on B2.

      Delete
    2. Anonymous15:13

      Wow the things you will read on here. JU has not been private since 1947 when the Communists confiscated AeroPut and made it a government company. So when exactly was JU private?

      As for B2, they are a very well run airline and if only JU was more like them.

      Delete
    3. JATBEGMEL15:32

      The owned aircraft of JU are old and inefficient. Sure, they might jump in for a rotation here and there, but they are not an aircraft to rely their whole ops on.

      I would say JU debt is more the amount needed to invest into a company that for decades hadnt had proper investment. Rebranding, aircraft, new routes, products, services, this isnt free. JFK and the 1 A330 has been an expensive prestige route for JU as well. Alot of money was as well wasted while finding the product that works for them ie from full service carrier to hybrid LCC.

      JU in 2018 showed improvements to its finances. 2019 might have even seen either profit or a small loss (up to 5 million €) when government subsidies are not included. Important to note is that JU is showing positive trends to its finances while others in the region are not. OU for example had larger losses compared to JU in 2018 (11 million vs 8,7 million), while taking cash for PSO routes, having a smaller fleet and operations and dimishing value to the Croatian market. OU last year needed an injection of 33,7 million euros while JU typically recieves 21 million. Serbia for its subsidies in 2019 saw a base opened in INI, flights start from KVO, 11 new routes from BEG and 1 leased A319, while frequencies on existing routes out of BEG was boosted. FB is not worth mentioning while RO requested for 157 million euros.

      Delete
    4. Anonymous17:32

      Nobody denies there have been improvements with JU but those improvements started in 2013 and not before this. You forgot to mention that the new airline went from a chic boutique to a lowcoster and it was a hard transition. The positive changes came after 2016 when the fare structure was adjusted and no more free stuff was served. Lowcoster model is the one that works today in Europe.
      OU has made losses but it has been entirely on its own and has not received any foreign aid similar to what happened with JU. The same goes for YM. They have recovered significantly.
      RO is somehow recovering from the fierce battle back home with the bigger boys. If Romania protected RO similar to JU then it would've been in another dimension. Gladly, EU law favours and backs competition and blocks protectionism. It is also a true fact it's much cheaper flying to/from OTP to many parts of the world compared to BEG and this is because of competition. As for FB, they are currently studying options to purchase the A220, they've been quiet and not backed by the government.
      Finally, it's worth mentioning the real competitor, which is BT. They had their struggles but is indeed an airline to learn from in many ways. That said, Latvia is 2-3 times smaller than some ex-Yu countries and look how far they went.

      Delete
    5. JATBEGMEL19:03

      If you have read a few comments here today alone you will see that there are those that think nothing has changed in JU the past years.

      My comment above touched on the transition from boutique to hybrid, so I havnt forgotten about that. It was a hard transition as alot was invested for a product not suited for the market, by people who didnt understand the dynamics of the European market.

      LCC has shown to be popular, but it has forced full service carriers to transform to remain competitive. An expensive lesson JU learnt. However, the LCC concept doesnt fulfill all aspects of the market.

      JU hasnt really had useful foreign aid. As mentioned above, this 'help' has been expensive, from a failed operating model, expensive aircraft leases etc. and paid from domestic funds. OU and YM may not have had foreign help but has had domestic help from the state budget.

      RO has a massive market that they cant manage well and is why theyre in the situation theyre in. Serbia doesnt ban airlines from operating to Serbia, with the latest exception the last year in INI. If there was this protectionism, Wizz wouldnt have aircraft based in BEG.

      Sure, travelling from OTP maybe cheaper than from BEG, but the same could be said that its cheaper to travel from BEG than ZAG.

      As for FB, theyre a small irrelevant carrier in Bulgaria that made a small loss in 2018. Theyve been studying taking on aircraft, but lets wait and see if they realise these plans.

      In regards to BT, it looks as if JU is following in their foot steps.

      Delete
    6. Anonymous20:57

      Just to add that RO got €80 million from the government after receiving another aid package a few months ago.

      Delete
  29. Anonymous13:18

    Corporate Suicide! If this happens its the beginning of the end of Air Serbia.

    ReplyDelete
    Replies
    1. You definitely do not understand the airline industry.. all I will say that JU after this pandemic is coming out bigger and stronger .. good to see all aspects of serbian gouvermant on the same page when comes to support JU in such a situation as other as other countries try to do the same .. great job

      Delete
  30. Anonymous14:40

    Announcements about Air Serbia:

    -we will expand the airline
    -we will make acquisitions
    -we will buy airplanes
    -we will buy back Etihad shares

    Behaving like an irresponsible loudmouth is only doing a damage to Air Serbia. Stop talking and start doing. Once deal is firm and signed, announce it.

    ReplyDelete
    Replies
    1. Anonymous15:37

      +100000

      Delete
    2. JATBEGMEL16:19

      Expansion was seen last year with an additional A319, new base in INI, start of flights from KVO, 22 new routes and a boost to numerous destinations. This year was expected another round of expansions with 6 new routes, boosting to frequencies and additional aircraft.

      JU did have 10 A320neo's on order but cancelled the order. Looks like a good decision, as at the time JU had massive losses and a model that wasnt working for them. JU's finances in the mean time are alot better.

      Other than that, what ever our government says is better ignored.

      Delete
    3. Anonymous22:19

      True, but the expansion and other facts you mentioned are in the past now, they were designed for pre-Covid world. Pandemic is a game changer. Air Serbia/govt needs to work on a new deal going forward in this Covid world. Four mentioned announcements (and two others: we will get a better deal at JFK; and we will work with China to start Air Serbia flights to China) are just throwing spaghetti at the wall to see what sticks while the public (and competition) is watching. It doesn't inspire confidence. Work on priority goals, make them happen and THEN go public.

      Delete
    4. Anon 22:19. Slazem se sa vasim zakljuckom.
      Praktican rad na prioritetu postavljenog cilja
      i njegovo osvarenje jeste osnov ozbiljnog poslovanja.
      Posle pandemije jeste potpuno novi uslov, pocetaku komercijalnoj avijaciji. Komercijalno vazduhoplovstvo i Aerodromi Srbije su jedan od triglavna stuba te drzave. Za to ostvarenje je obavezno za pocetak par stotina miliona evra. Da li Srbija ima dovoljno sposobnih ljudi u biznisu. Obrazovanih mozda.
      Poslovno sposobnih? Daleko je Srbija od Sidneja.
      Pandemija i odnos sa Kinom i ovde obara zivot.
      Zivot koji je tekao do prije dva meseca.
      Iskreno verujem u ponovni pocetak ozbiljnog vremena
      Koje sada pocinje i u Srbiji.
      U nadi da cu sleteti u toku juna na Beogradski, a zatim
      poleteti sa Kraljevackog aerodroma za Solun,
      pozdrv iz Sidneja. ✈🛫
      Rodney Marinkovic and Aviation Enthusiast Associate Group.

      Delete
  31. notLuftansa20:57

    that means Jatovanje is coming back big time. Cousin, sister, brother, party member will get the jobs they are unable to do properly. Goodbye Air Serbia.....

    ReplyDelete
    Replies
    1. Anonymous23:16

      Critics also said that in 2013 but the reality in 2020 is that professional management with international experience is heading Air Serbia and is getting kudos from peers and aviation experts for well timed, smart moves made in the last year or two. Your pathetic wish to see the end of Air Serbia will actually turn out the opposite, as Air Serbia is more likely to come out of pandemic stronger and larger than regional competition.

      Delete

Post a comment

EX-YU Aviation News does not tolerate insults, excessive swearing, racist, homophobic or any other chauvinist remarks or provocative posts with the intention of creating further arguments. A full list of comment guidelines can be found here. Thank you for your cooperation.