State outlines Air Serbia aid package plans


The Serbian Ministry for Construction, Transport and Infrastructure has drafted several strategies to financially assist the country’s national carrier which has been grounded by the coronavirus Covid-19 pandemic since March 20 and has so far incurred over thirty million euros in losses. According to the ministry, the country will provide direct fiscal support as its main mode of assistance. The amount will depend on the final financial fallout from Covid-19, as well as the sum required to strengthen Air Serbia’s role in the wider Balkans, which it notes “is currently very plausible”. It said it was difficult to approximate an exact sum the state would invest in the national carrier but noted the assistance would be continuous and in line with the government’s priorities, needs and possibilities.

Four different aid proposals have been made for Air Serbia. “One of them is providing assistance in overcoming existing losses the airline has incurred due to the ban on commercial flights during the duration of the recession in the air transport sector. Another is to cover the losses for the transport of passengers and cargo”, the Ministry for Construction, Transport and Infrastructure said. It added, “First and foremost we will discuss relief for taxes and utilities, especially those payable to the state. A decision on whether and when the state would increase its ownership stake in Air Serbia would depend on the conditions and our financial capabilities after the the state of emergency is lifted in the country” (expected later this week).

The ministry also noted it would cover damages caused to the interior of Air Serbia’s aircraft which have been transporting tons of medical supplies and equipment from China over the past month on almost thirty flights. “Air Serbia will report all the costs and damages associated with these flights”, the ministry said. According to the country’s Deputy Prime Minister, Zorana Mihajlović, the airline is estimated to record a sixty-million-euro loss from the ongoing Covid-19 pandemic. Air Serbia has tentatively scheduled its resumption of flights for May 18 when the country’s airports are expected to open. A Notice to Airmen (NOTAM) - an aviation document informing all carriers of important and urgent messages – issued by the Serbia and Montenegro Air Traffic Services Agency last week banning all commercial flights in and out of the country until May 30 has been revised and brought forward to May 18.

The International Air Transport Association (IATA) - the representative body for the global airline industry - and Airports Council International (ACI) - which represents the world’s airports - issued a joint appeal to governments last Thursday to rapidly provide financial support to airlines and airport operators due to the severe effects on both sectors of the travel restrictions and lockdowns imposed by many countries. “Governments will depend on aviation to be ready to lead an economic recovery when this pandemic is behind us”, IATA Director General and CEO, Alexandre de Juniac, said. He added, “Governments must act now with financial lifelines that only they can provide for airlines and airports to see them through these extraordinary times”. The head of ACI World, Angela Gittens, said, “The financial impact of the current crisis is unlike anything we have ever seen and requires urgent action by governments to assist the aviation industry to protect jobs, ensure essential operations, and plan for recovery. Urgent tax relief and direct financial assistance that is to the benefit of the entire aviation ecosystem is needed to help preserve millions of jobs, protect essential operations, and foster a balanced recovery”. IATA and ACI jointly called on governments to provide tax relief for airlines and airports. This would include reducing or waiving payroll taxes, corporate taxes and other levies on the sector. They also appealed for loans, loan guarantees or “direct support” to ensure the aviation ecosystem maintained financial liquidity.

Comments

  1. Anonymous09:04

    Anyone know what routes will be resumed?

    ReplyDelete
    Replies
    1. Anonymous09:07

      I guess VIE, ZRH, AMS, ZAG and ATH.

      Delete
    2. Anonymous09:09

      "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."

      https://www.exyuaviation.com/2020/05/state-mulls-air-serbia-nationalisation.html

      Delete
    3. Anonymous09:18

      I can't wait!

      Delete
  2. Anonymous09:05

    Wow impressive!!! Nice to hear.

    ReplyDelete
  3. Anonymous09:07

    Smart decision. But I fear much more state involvement in the airline after this is over.

    ReplyDelete
    Replies
    1. Anonymous09:09

      +1

      Delete
    2. Anonymous09:09

      It's the same everywhere. Look at France, Switzerland, Austria... It's the new norm.

      Delete
    3. Anonymous09:15

      No. The government will takeover completely even after Corona. The idea is to move away from the Arabs.

      Delete
    4. Anonymous09:16

      ^ you actually don't know that at all.

      Delete
    5. Anonymous09:56

      Ah no? You missed the news the other day sweetheart.

      https://www.exyuaviation.com/2020/05/state-mulls-air-serbia-nationalisation.html

      Delete
    6. Anonymous09:59

      Yes you might want to read the article you quoted as well as today's article. Where do you see definitive decision and where do you known whether the government will completely take over?

      Also please stop with your patronizing labels. They are not very amusing. Thank you.

      Delete
    7. Anonymous14:25

      It must be the one whose posts start with "I heard that...."

      or 1 of the ones: "I took a flight with carrier x y 2 months ago and half seats were empty and I can now claim their LF is 50%"

      Delete
  4. Anonymous09:13

    I'm still hoping it won't get nationalised.

    ReplyDelete
    Replies
    1. So the government should give the money for free while the UAE pays nothing?

      Delete
    2. Anonymous12:57

      Well you are hoping in vain since JU was illegally nationalized in 1947 and it hasn't changed since then. JU is already a national company where the government is the majority owner.

      Delete
  5. Anonymous09:14

    "as well as the sum required to strengthen Air Serbia’s role in the wider Balkans, which it notes “is currently very plausible”. "

    What could this mean? Vucic mentioned something similar a few weeks ago.

    ReplyDelete
    Replies
    1. Anonymous09:19

      They said they will get more planes so I guess more frequencies and destinations.

      Delete
    2. Anonymous12:25

      There are rumours of a partial acquisition of Montenegro Airlines.

      Delete
  6. Anonymous09:37

    They indeed deserve this aid.
    I hope that it will be well investrd in the fleet renewal.

    ReplyDelete
    Replies
    1. Anonymous11:36

      Welcome, SSJ-100s!

      Delete
    2. Anonymous16:48

      @anon 11:36
      Nice try

      Delete
  7. Anonymous09:37

    I don't understand why the decision of obtaining Etihad's share will depend on the government's financial capabilities. Why would they need to pay anything? What's the worth of a company that owns very few very old planes and makes losses year after year?

    ReplyDelete
    Replies
    1. Anonymous09:39

      Well I guess then you will have to keep wondering.

      Delete
    2. Anonymous09:54

      I guess so. If no logical explanation can be given we can only wonder, and make our own conclusions.

      Delete
  8. Anonymous09:39

    If I were JU or the Government I would use this opportunity to do a complete fleet renewal or at least a removal of old atrs and purchase or lease of new 600 series or all Q400s which are over saturating the market after Flybe failed. (biggest Q400 customer in the world.. Was that is).

    Also use the money to get rig of OLD 737 or retrofit them to cargo. Ideally just remove them as it unnecessary causes constrains in cres, maintenance operations as well network planning.

    Work on Airbus fleet as well. May get a cheap 330 as well even if it has no use at the moment. It will in near future, but by then the prices will go up in leasing costs.. Etc

    All in all, I would use the funds smartly and use the opportunity (a bad wording unfortunately) and come out better and stronger

    ReplyDelete
    Replies
    1. Anonymous09:44

      +1

      Delete
    2. Anonymous09:45

      While I agree people also forget that aid will be used to cover huge losses cause by the coronavirus. Only when that is covered can you start thinking of investing aid in other areas to improve your business.

      Delete
    3. Anonymous11:32

      Your point about getting a cheap A330 js quite intresting. Alitalia has announced a downsizing due to the nationalisation which will see them drop a few LH aircraft. Hasnt been specified if its the A332 or B772 but its a possibility. Also they are former Etihad partners and colaborate closely on CS so that could also belp

      Delete
    4. I agree. This would be a great opportunity to get some nice planes at a great price. There has not been such a good market to buy planes in decades!

      Delete
    5. Anonymous12:42

      Retrofit 40 years old aircraft for cargo :)

      Serious freight companies are taking deliveries of first B737-800 converted freighters and with the amount of aircraft available on the market, it will make less than zero sense to convert such old museum aircraft.

      Delete
    6. Anonymous12:58

      American Airlines is dumping their A330-300 so JU can consider those?

      Delete
  9. Anonymous09:43

    Now it‘s the best time to change planes. I am sure that market for airplanes was never cheaper than now. So many companies are putting their fleet on storage.

    ReplyDelete
  10. Anonymous09:44

    Considering how many airlines are getting state aid (even the big ones in the US) it makes sense. Ranting about JU getting state aid is hilarious. Absolutely everyone is getting it. Even LCCs.

    ReplyDelete
    Replies
    1. Anonymous09:57

      Is U2 receiving any aid? I don't think so!

      Delete
    2. Anonymous10:01

      Yes. Easy jet has received a £600 million coronavirus loan from UK Treasury and Bank.

      Delete
    3. Anonymous12:44

      The difference is they are receiving loans to survive, not take advantage of the situation for government to have excuse to pump unlimited amount of money.

      Not to mention UK government doesn't own any shares in easyJet.

      Delete
    4. Anonymous13:00

      Well who cares about easyJet. JU is a government owned airline like Alitalia, LOT, Turkish Airlines or Aeroflot. If the government wants to invest then let them. Dubai also invested in EK and look how well it paid off for them!!!!!!!!

      Delete
    5. Anonymous13:51

      I wonder where all these "dusebriznici" were few days ago when it was discussed that Croatian Government will pay to PSO applicant 599 EUR for OSI-ZAG flight.

      Apart from it OU will get 34 mil EUR financial help + "uzdruzeno oglasavanje" fund money + corona crisis cash.

      And now when JU should get financial help they remembered easyJet.

      Delete
    6. Anonymous15:16

      Because easyJet is easyJet that's the difference...

      Delete
  11. Anonymous09:57

    Makes sense for JU to get aid, lot's of aid.

    ReplyDelete
    Replies
    1. Anonymous12:44

      The average Serbian will be much better off because of it!

      Delete
    2. Anonymous12:47

      Yes. Some 10,000 families that directly or indirectly depend on JU will.

      Delete
    3. Anonymous13:08

      More than that, JU is also helping out by keeping Serbia connected to Europe with convenient schedules. Imagine if we didn't have that, if we had to rely on Wizz Air. At least you could be in Dortmund or Malmo in the morning. LOL

      Delete
  12. Anonymous10:20

    Measures seem to be in line with IATA recommendations.

    ReplyDelete
  13. Anonymous10:20

    "A decision on whether and when the state would increase its ownership stake in Air Serbia would depend on the conditions and our financial capabilities after the the state of emergency is lifted in the country” (expected later this week)."

    Interesting. State of emergency is being lifted on Thursday so maybe next week we will know more.

    ReplyDelete
  14. Anonymous10:25

    In Europe not a one airline gets financial help, they all get loan which has to be return in several years. If Serbia will just give money it will be sanctioned by EU, and even Ryanair said it will put on court each and every country that will just give money or give loans with noncommercial conditions.

    ReplyDelete
    Replies
    1. Anonymous10:28

      This is so wrong. For example Air France has received 3.0 billion euros in direct state aid.

      Delete
    2. Anonymous10:29

      Yes but it's called Air FRANCE not Air SERBIA. You realize the name of the company and the country it's coming from is the trigger for most?

      Delete
    3. Anonymous10:32

      EU state aid rules have all been suspended.

      Delete
    4. Anon 10:25 / 10:29

      EU will not sanction any of its members or non-members for helping out an airline in this situation. The exact form of state aid is irrelevant - Serbia can put the money in a gift box, put a bow on the top and give it to Air Serbia and there will be no sanctions whatsoever. It's a pity that Adria couldn't make it a couple of more months, Covid-19 would have saved it. What a paradox.

      As for Ryanair, their CEO can take all the lawsuits from his wet dreams and clown statements and stick them where the sun doesn't shine.

      Delete
    5. Anonymous13:59

      "It's a pity that Adria couldn't make it a couple of more months, Covid-19 would have saved it."

      I doubt the current government would be willing to pump in 100m EUR just to cover debt and then whatever it takes on top to keep people on payroll for sitting at home.

      "As for Ryanair, their CEO can take all the lawsuits from his wet dreams and clown statements and stick them where the sun doesn't shine."

      I don't like the guy, but his wet dreams and clown statements brought Ryanair from a mediocre little regional no-name to second largest airline group in Europe. I bet he knows more about airline business than all of us here together :)

      Delete
    6. I don't deny his knowledge on the airline business. That said, his airline group did not become second largest in Europe by collecting money from lawsuits. It will not navigate this crisis with money from lawsuits either. I understand that he is quite experienced in blackmailing governments on various levels, however that coin has two sides - which he is about to discover.

      Delete
  15. Anonymous11:00

    My guess is the government will invest 100 million in Air Serbia.

    ReplyDelete
    Replies
    1. Anonymous11:05

      make it double.

      Delete
    2. Hopefully the government will get something in return for the 100 million.

      Delete
  16. Have the feeling AirSerbia will booming once everything is back to normal. The strategy to bring millions of Chinese tourists is there, so only that will be enough to employ serious recourses to China. GoS is hiding something in its sleeve... More planes and more destinations are on the horizon..
    Some good days ahead for Serbian aviation.
    My full support as a citizen.

    ReplyDelete
    Replies
    1. Anonymous12:29

      + 1000

      Good luck Air Serbia!

      Delete
    2. Anonymous12:31

      Not judging here, I must add that JU will clearly get the most out of state aids in Europe - relative to its size and number of passengers carried.

      Within the EU, the commission still must approve aids even if currently some state aid rules are not being enforced. There will be thorough checks that only Corona incurred costs will be compensated for and most of aids must be in form of loans or equity share or similar.

      Serbia will not just compensate JU for Corona losses but do a lot more for its airline and (most likely) does not even need to fear restrictions by other countries it flies to or by the EU (remember EU countries do have several protectionist measures for ex. against ME3 airines as they are receiving too much state aid, thus distorting the market).

      One can only congratulate Serbia for being able to do so and JU for having such massively supportive majority owner.

      Delete
    3. Anonymous12:35

      How do you even know how much JU will get to make such wild predictions???

      " It said it was difficult to approximate an exact sum the state would invest in the national carrier"

      Delete
    4. Anonymous13:10

      whatever JU gets, it will be worth every penny in this situation.

      Delete
    5. Anonymous13:47

      If EC remained blind about 34 mil EUR illegal help that OU received (and planned much more to receive due to corona crisis) as EU carrier than it is more than sure that bigger JU (as non EU carrier) is here in much better position.

      Delete
    6. Anonymous15:31

      Repeating false claims does not make it true. OU's 34 million you mentioned are a LOAN, will fully have to be paid back plus interest.

      Delete
    7. Anonymous15:41

      Of course. Like the 106 million euros from 2012 which have been repaid....

      Delete
    8. Anonymous16:04

      Anon 12:35 - the anon 12:31 made no wild predictions but stated what is written in the article and made drew a logical conclusion from an objective way of looking at it.
      Did YOU even read the article? There are at least 12 points which outline JU support beyond normal or European-average levels. Let's pick the article to pieces, shall we?

      - several strategies to financially assist -> not one, but several, indicating the several levels of state aid JU will receive
      - country will provide direct fiscal support as its main mode of assistance -> very clear, at least they don't even try to hide it now
      - amount will depend on the final financial fallout from Covid-19 -> makes it clear there is no limit of support and deliveres an excuse to invest more at any later point if/whenever needed
      - as well as the sum required to strengthen Air Serbia’s role in the wider Balkans -> makes it clear it is not about covering the Corona-loss, but it is about providing money as much as it needs in order to give ASL a strong competitive advantage within the Balkan region
      - noted the assistance would be continuous -> long term financial support whereas most other airlines receive one-off aid!
      - in line with the government’s priorities, needs -> so in Serbia a national airline is apparently a top priority of the country therefore country willing to invest "whatever it takes", not the case in many other countries in the region that have lost their national airlines
      - Four different aid proposals -> four different ways of how to pump money into JU, not one, see point no. 1
      - One of them is providing assistance in overcoming existing losses the airline has incurred due to the ban on commercial flights during the duration of the recession in the air transport sector. -> that is fine, it's what every country is doing right now
      - Another is to cover the losses for the transport of passengers and cargo -> should of course be included in the previous point, not to give extra money for the same thing twice
      - First and foremost we will discuss relief for taxes and utilities, especially those payable to the state -> not the case in other countries, so on top of all the beforementioned several levels and steps of state aid, JU will also have to pay less (or nothing, who knows) for taxes and fees in the future
      - state would increase its ownership stake in Air Serbia -> is a precondition for state aid in most other countries
      - ministry also noted it would cover damages caused to the interior of Air Serbia’s aircraft which have been transporting tons of medical supplies and equipment from China over the past month on almost thirty flights -> can be used as a blank excuse to invest into the cabins of JU aircraft using not own, but state money. Instead of fixing a scratch on three seats, JU may possibly report much more, it's not like the ministry can check if a cabin problem was caused by a transported relief package or existed since years!
      - Notam banning all commercial flights in and out of the country until May 30 has been revised and brought forward to May 18 -> how convenient the state revised the date exactly to THAT date on which JU has pubicly announced it would be ready to restart flights. What a coincidence.

      Got no words for you fanboys. Now go ahead and start the bashing, I'm gone for the day, anyways.

      Delete
    9. Anonymous16:10

      Maybe you should read what IATA said. But amazing how much time you have on your hands. You have been truly triggered.

      Delete
    10. Anonymous16:27

      Triggered yes, perhaps cause no other airline of that size get this much support and money blown up its buttox vastly distorting the market.

      Delete
    11. Anonymous16:30

      Sure that's the reason.

      Delete
    12. Anonymous16:32

      I missed your point by point tirade about Montenegro Airlines' 155 million euro state aid. An airline with 4 operational aircraft.

      Delete
    13. Anonymous05:16

      What is the point of financial support of AirSerbia unless new rules are put in place to help protect the investment? For example, now is the right time to ask Wizz to obtain AOC in Serbia, or else...

      Delete
  17. Anonymous15:50

    most recent available data:

    BEG-JFK-BEG

    2019-10 - 24 flights - 4,857 pax - 80%

    2019-09 - 34 flights - 6,452 pax - 75%

    2019-08 - 54 flights - 12,081 pax - 88%

    2019-07 - 57 flights - 11,220 pax - 77%

    year to year comparison:

    2018-10 - 34 flights - 6,629 pax - 77%

    2018-09 - 46 flights - 9,222 pax - 79%

    2018-08 - 54 flights - 11,992 pax - 87%

    2018-07 - 52 flights - 11,058 pax - 92%

    ReplyDelete

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