State launches talks with UAE over Air Serbia future


The Serbian government will today hold talks with Etihad Airways and its partners in the United Arab Emirates over Air Serbia’s future and the state’s potential plan to renationalise the carrier which has been hit hard by the coronavirus Covid-19 pandemic. The Serbian President, Aleksandar Vučić, said, “We will strengthen Air Serbia. On Monday we are holding talks with the shareholders from the United Arab Emirates and by Tuesday we will know what action needs to be taken. We will request for them to provide part of the finances for the losses that have been incurred over the past four months. These are massive losses. We are ready to provide part of the funds too. If they [Etihad] don’t want to, we are ready to recapitalise the company and take a greater stake in the airline as a result. We won’t give up on building up the company”.

The President hinted that if Etihad were to fully or partially exit the airline, another strategic partner could be brought in. “We might introduce some other strategic partners, but we will continue to hold a majority stake. Air Serbia will be our flag carrier and it will be stronger than it is today”, Mr Vučić noted. The Serbian Ministry for Construction, Transport and Infrastructure estimates the airline will loose up to eighty million euros this year as a result of Covid-19. It previously said, “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 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 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.

Air Serbia is continuing to rebuild its network after resuming a limited number of commercial flights on May 21. Today, the airline will reinstate operations from Belgrade to Dusseldorf, Prague, Bucharest, Istanbul, Sofia, Tirana, Athens, Copenhagen, Podgorica, Tivat and Stuttgart. This will be followed tomorrow by the resumption of flights to Brussels and Berlin, and on Wednesday to Stockholm. The carrier will also bring back services from Niš to Hahn and Nuremberg as of tomorrow. Since reintroducing flights, the airline has increased frequencies on its operations to Zurich, Paris, Amsterdam, Vienna, Ljubljana, London and New York.

Comments

  1. Anonymous09:00

    It will be interesting to see what Etihad decides.

    ReplyDelete
    Replies
    1. Anonymous09:03

      Hopefully they transfer some A350s to JU.

      Delete
    2. Anonymous09:12

      Dont be hillarious. They have 6 stored a350-1000 with very high capacity. They can lease to JU some A330-200 when they are retiring them all.

      Delete
    3. Nemjee09:44

      I don't think their engines match.

      Delete
    4. Three A350s would solidify the long-haul needs of JU. Not a bad idea.

      Delete
    5. Anonymous22:48

      For money losing they are great.

      Delete
  2. Anonymous09:02

    JU no longer needs EY but it's good that the government is forcing EY to give money. Good thing is that demand is growing and their revenue should boom. Today the flight to IST is almost full. I think the A320 is going.

    ReplyDelete
    Replies
    1. Anonymous09:04

      The only problem is that if EY leaves the government will put in place some politically appointed management.

      Delete
    2. Anonymous09:10

      Haha and you think the government couldn't do that until now? You are forgetting who is the majority owner. It will be business as usual.

      Delete
    3. Anonymous09:10

      No, I don't think that Vučić will allow for his prize project to be ruined by some party-appointed idiot

      Delete
  3. Anonymous09:03

    What could these "other strategic partners" be in this sort of business climate?

    ReplyDelete
    Replies
    1. Anonymous09:08

      It would have to be an airline from some country/leader that is politically close to the president. My only guess would be Turkish Airlines.

      Delete
    2. Anonymous09:11

      Or simply no one.

      Delete
    3. Anonymous09:18

      I doubt anyone would be interested.

      Delete
    4. Nemjee09:28

      JU has been flying solo since last January and they seem to be fine. I think they have proven that we can survive without foreign tutelage. ;)

      Delete
    5. Anonymous09:28

      Someone from China maybe?

      Delete
    6. Anonymous09:30

      @Nemjee yes but the majority of the top management is Etihad appointed and foreign.

      Delete
    7. Nemjee09:34

      It's not the majority, there are some but a great deal of top management is not from Etihad. Please don't forget that just because someone might be a foreigner and working for JU doesn't mean he was automatically appointed by EY.

      Delete
    8. Anonymous09:43

      Nemjee JU has proven that it can survive IF its losses are continuously covered by the state!
      And so does any company, anywhere in the world.
      So lets stick to reasonable arguments.

      Delete
    9. Nemjee09:58

      But if we are sticking to reasonable facts then shouldn't we also look at what has been done since Belgrade took over? I mean such a simplistic point of view should not be enough especially if we take into consideration Etihad's mismanagement in the period 2013-2019.

      Delete
    10. Anonymous10:27

      Reasonable reasoning would also show what happened to airports over the last 6-7 years all over Europe.And without the governments having to spent hundreds of millions of Euros in subsidies for a single airline.
      In a booming market JU managed to be loss making every single year.

      Delete
    11. Nemjee10:47

      Aha and we are conveniently going to ignore all the reforms they have undertaken in that period? Are you seriously implying that an airline that was as mismanaged as JU can fully and completely reform itself in a year and a half?
      Furthermore, we should clearly distinguish the two key periods at JU, pre and post Etihad. In the post Etihad era JU's recovery started as we could see by a sharp increase in revenue and load factor. JU's sustainability will be known in the next 5 to 10 years.

      Delete
    12. Anonymous11:03

      Why we needed to pay so much money year after year to initiate reforms?
      And why even after all those reforms (hope you do not mean the new wings of Europe boutique airline concept) the airline is nowhere near being self sustainable?

      Delete
    13. Nemjee11:23

      I am sorry but I am failing to see what you are proposing here. Are you implying we should shut JU down?
      Obviously various reforms were put into place but only those that were implemented by Belgrade based management have produced positive results. Air Serbia only started reforming a year and a half ago which isn't enough to sort out such a massive mess. What matters is that they are on the right way. Shutting down an Serbian airline that has been around since 1927 doesn't seem wise especially not now when a greater emphasis is being put on inbound tourism.

      Delete
    14. Anonymous11:58

      "We could see by a sharp increase in revenue and load factor"

      Revenue 2014- 262 Million $
      Revenue 2018- 288 Million $

      LF 2014: 67%
      LF 2019: 72%

      Nemjee, we know you like JU much, and the ones who critize it do not necessarily hate it, but a bit more realism would not harm you.

      Delete
    15. Nemjee12:05

      With all due respect I don't think I am the one who needs an additional dose of realism. That said, I am still waiting for people to answer my question what is their solution for JU. Furthermore, I am going to repeat once again, you are comparing JU pre-EY while I am speaking about JU post-EY.

      I honestly don't see where all this toxic intolerance of JU is coming from. Every time there is a topic on JU there is so much negativity.

      Delete
    16. Anonymous12:06

      At least ju reduced their work force>

      2016 1.601
      2017 1.466
      2018 1.370

      Delete
    17. Anonymous12:35

      namjee you will never hear a constructive comment from them because its only hate and spitting on ju and beg

      Delete
    18. Anonymous13:07

      Revenue:

      2014:262 Million
      2015:305
      2016:320
      2017:288
      2018:288

      LF:
      2014:67 %
      2015:71
      2016:72,4
      2017:73,4
      2018:71.2
      2019:72

      Since I don't want to be perceived as negative and toxic and to spit on JU and BEG:

      Bravo JU for having the exact same revenue 2 years in a row! Excellent job!
      Bravo for increasing the LF for 0.8% on an annual basis!


      Delete
    19. JATBEGMEL13:16

      @ 11,58

      Since we are playing with numbers, what was JU's net income 2013-2018? Minus the government subsidies. All of this was debated here.

      Quick search has:
      2016: -39 million EUR
      2018: - 8,9 million EUR

      In the mean time, alot has happened in JU. Im not saying alot of decisions made in JU were good, but they havnt stayed still. We have seen a newer fleet, more destinations, more frequencies, dedicated lounge, onboard wifi, change in onboard product, rebranding, relaunch of long haul, investments in IT etc.

      2019 financial results will be interesting to look into. The fact they had a massive expansion, and was due to have another expansion this year, for me, shows a good indication that either their net income was either better, or at least similar to 2018 figures.

      Im sure JU has contributed more to the Serbian economy in 2018 than the 8,9 million in losses (or the ~20 million in subsidies).

      Delete
    20. Anonymous13:19

      Anon 13.07 are you stupid or what? You will have to compare their 2018 to their 2019 results, ALL of them, not only the ones that suit your hateful agenda

      Delete
    21. Anonymous13:19

      So many people need Bromazepam when it comes to JU and their growth

      Delete
    22. Anonymous13:23

      How about we see that in 2018 they carried less passengers than in 2017 but their revenue stayed the same and the number of employees actually went down. Are we going to ignore those numbers? Hmmmmmmmmmmmmmm

      Delete
    23. Nemjee14:07

      I am still waiting for someone to tell me what's the alternative since having JU around is not a good enough option.

      Delete
    24. There are people who look ugly in everything beautiful. In Serbian, it is called "baksuzi ili namćori". Such people should not even be commented on.

      Delete
    25. I will certainly agree with NEMJEE here. Serbia is still a poor country so you still can't expect someone from the private sector to create an airline let's say like AEGEAN. So this beloved "taxpayer" matter will still continue in this blog.

      Delete
    26. There is no alternative to JU. If anything, the recent crisis has proven the need for a national carrier in Serbia. Nemjee is right.

      If JU continues along its current path it will do great. ALL big airlines have support from the State and there is a reason for doing so: NATIONAL INTEREST. Not just tourism, but also business, investment, political needs etc...

      Delete
  4. Anonymous09:05

    Fingers crossed for the best outcome.

    ReplyDelete
    Replies
    1. Your all a bunch of sheep. Its like like ones fighting against the other. Stop your political views and get to work. Who cares who owns it. Get your country up and running. Who cares if its left or right wing. Stop fighting. Cause your going to lose it all if you don't stop bickering

      Delete
  5. Anonymous09:06

    Let's see if Etihad will cash out. I doubt it.

    ReplyDelete
    Replies
    1. Anonymous09:08

      If they do, maybe they will again take a more active role in running the company.

      Delete
    2. Anonymous09:10

      Given the state Etihad is in, I doubt it as well.

      Delete
    3. Hahaha. Edihad has had enough of it. That seems to be everyone's solution. They can't help everyone.

      Delete
  6. Anonymous09:07

    Etihad might have little effective control in Air Serbia at the moment, but Air Serbia wouldn't have achieved most of the things it has done were it not for Etihad.

    ReplyDelete
    Replies
    1. Anonymous09:28

      True. EY created the conditions for Air Serbia to build up its network and fleet.

      Delete
  7. Anonymous09:10

    How much money will they be asking for?

    ReplyDelete
    Replies
    1. Anonymous09:19

      We don't know. But I guess if they are estimating a loss of 80 million this year, they might ask for 40 million.

      Delete
  8. Anonymous09:18

    Well at least it seems the government won't have to pay for their share back, like some claimed here.

    ReplyDelete
  9. Anonymous09:22

    Etihad will definitely exit Air Serbia and this will be the best excuse. Tony Douglas, Etihad CEO, is trying to make a smaller and more profitable airline. For that they don't need JU. Vucic is obviously aware of it, otherwise he wouldn't be announcing this and preparing everyone for the inevitable.

    ReplyDelete
  10. Anonymous09:26

    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
  11. Anonymous09:33

    It's good to see JU resuming so many routes today.

    ReplyDelete
    Replies
    1. Anonymous09:39

      Yes! BEG is getting a bit busier.

      Delete
    2. Anonymous09:45

      JU even operated two flights to ZRH yesterday, even with LX sending the A321!

      Delete
  12. Anonymous09:39

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

    ReplyDelete
    Replies
    1. Anonymous09:42

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

      Delete
    2. Anonymous09:45

      Nothing really.

      Delete
    3. Anonymous09:46

      Etihad did that Anon 09:42?
      LOL dude!

      Delete
    4. Anonymous09:47

      ^ Yes Etihad did that.

      Delete
    5. Anonymous09:51

      And who do you think did it? Jat Airways?

      Delete
    6. Anonymous09:51

      ^No it didn't. EY just took 50% of the deposit that the state had paid to Airbus without spending 1€ of its own money....

      Delete
    7. Anonymous09:53

      FYI

      Airbus returns jet deposit to Air Serbia

      Air Serbia has said the European plane manufacturer Airbus has returned a 23.5 million dollar deposit made by its predecessor JAT Yugoslav Airlines for eight A319 aircraft in 1998.

      https://www.exyuaviation.com/2019/01/airbus-returns-jet-deposit-to-air-serbia.html

      Delete
    8. Anonymous10:29

      Exactly!
      State owned JAT Yugoslav Airlines paid a deposit of 23.5 million dollars and we got only half o it back, the rest went to the 49% owner of ASL.
      And even most importantly without any interest for 21 years that Airbus kept that deposit!

      Delete
    9. Anonymous10:35

      It got the full amount back. They say so themselves. I don't know why you are making up that Etihad took 49%.

      Delete
    10. Anonymous10:46

      Etihad owns 49% of JU and it got money that wasn't theirs to begin with.
      Those millions should have gone directly to the state who covered 100% of JAT losses.

      Delete
    11. Anonymous10:51

      It didn't work that way. How difficult is it to get it through your head? Etihad didn't take 49% of the money which was confirmed by Air Serbia and the government. Since the A320neo order was cancelled, Etihad negotiated and returned the full depoait sum to Air Serbia to invest in their fleet. It even shows up in Air Serbia's financial report.

      Delete
    12. Anonymous10:56

      Etihad owns 49% of ASL.
      ASL got 23.5 million dollars that belonged to JAT and who's JAT is a separate company than ASL/
      The Serbian government assumed 100% of JAT debt but it gave that deposit to ASL. And so EY without lifting a finger got a nice subsidy.
      But of course you understand all that. You just feel obliged to defend a very bad agreement for our interests.

      Delete
    13. Anonymous11:01

      Pretty much everything you wrote is completely false and you don't understand the basics of business. Just because a company owns a certain percentage in another does not mean that company gets that percentage of any revenue or profit. You think Air Serbia gave 49% of its 2019 profit to Etihad last year? JAT was not a different company. Air Serbia is the legal successor to JAT which you can see by going into the Serbian business registry. Finally I don't need to defend anything. I can simply open Air Serbia's financial results and see where the money went.

      Delete
    14. All of you writing about JAT as bad company and predecessor of Air Serbia are first supposed to learn the difference between JAT Yugoslav Airlines, giant and excellent company, flag carrier of Yugoslavia, and rotten, failed and miserable Jat Airways, which came much later, and was airline of SRJ i Serbia and Montenegro and finally Serbia When you manage fhe difference between these two Universes, I Will take you for serious Btw keepin my fingers crossed for JU to overcome the crisis, with or without Etihad, as the only company from ex-yu which managed to make some good results over relatively short period of time

      Delete
    15. JATBEGMEL14:31

      @ pozdrav iz Rijeke

      Small correction. JAT Yugoslav Airlines was rebranded as Jat Airways in 2003.

      I agree, many people talk without knowing the basics.

      Delete
    16. @JATBEGMEL

      Correction correct and accepted :) Thanks!

      Delete
  13. Nemjee09:42

    Love him or hate him but at least during Hogan's tenure Etihad had a clearly defined strategy and it was sticking to it. Once he was out of the picture everything fell apart overnight. Building a mega carrier in the middle of nowhere takes a lot of cash, just ask Qatar or even Emirates which needed at least two decades to build a strong enough brand in order to reach profitability.
    Etihad basically stopped half-way and is now struggling to survive while trying to reach the impossible: shrinking into profitability. Don't forget that one of the first measures the new management took was to cut the quality of onboard catering. Imagine being stuck on a 16 hour flight from California to AUH and being served only a tiny (glorified) snack. Meanwhile Qatar is keeping the pressure on them and so is TK. Unless something drastic changes I don't see EY making it in the long-run. Especially not now when Saudia is also in expansion mode.

    It's a shame they didn't invest more in their relationship with JU. Suspending the second daily rotation was a major mistake as their connectivity was seriously affected. If I remember correctly BEG-AUH was overtaken by BEG-DXB and BEG-DOH and is on par with BEG-TLV! They could/should have used JU as a two stop partner for many secondary destinations they do not fly to.

    ReplyDelete
    Replies
    1. Anonymous09:45

      +100

      Delete
    2. Anonymous09:48

      Interesting analysis

      Delete
    3. Anonymous10:03

      Maybe if there were no blockade Doha would be most busiest from Belgrade

      Delete
    4. Anonymous10:08

      Most of the largest middle eastern carries have problems with profitability. Maybe Qatar seams to be one of the most powerful airlines in the world but every year they are losing more and more cash just because emir wants to show that he has the largest one in the region. Qatar is under blocade for more than 3 years and still they have not reduce fleet or orders after they were banned from their most imporatnt market. Every airline in the middle east wants to be the largest one or the best one so they often forget importance of profitability. Etihad invested to much in some money losing of low profitability projects like Air Berlin, Alitalia, Air Seychelles and Air Serbia so it is not weird that they are losing 1 billion every year. Only Emirates knows how to make profit in the middle east on hub and spoke basis.

      Delete
    5. Anonymous10:10

      I've read many good revews about their premium product (and revenue bringer) but you can't fill an entire A380 with just business and first class passengers.
      My only experience with EY was 10 years ago on a 5 hr flight in economy but even then overall catering was bad. The person next to me asked for an xtra bread roll and the FA walking around with the bread basket refused by saying it was "one per person". It sticks in my mind even today.

      Delete
    6. Nemjee10:23

      Anon 10.08
      Emirates is different because they are a pioneer. I remember in 1997 I flew with them for the first time. Their A310 was in fantastic shape, uniforms stood out, tv screen in each seat, great meals and the crew even went through the cabin offering to take free pictures of people travelling together. They brought something new onto the market and in many ways they forced the well established carriers to either adapt or die. For example Gulf Air was crushed by them and they have not recovered to this day. They are trying to remain relevant but their access to cash is non-existent when compared to their neighbors.

      Don't forget that Abu Dhabi launched Etihad while knowing very well that Emirates was already a well-established carrier and that Qatar was already in expansion mode. So they are guilty of wanting their own brand new, shiny, bling bling toy. Unfortunately they went shopping around the world before their AUH based operations were profitable. In stead of sticking to their core business activity, that is offering connections via AUH, they started cutting some key regional and global destinations. They basically tried to tackle an inferno with gasoline in stead of water. Now with Air Arabia and Wizz Air moving into AUH, their future will remain even more uncertain. Etihad has a deep identity crisis and no one seems to be willing enough to deal with it.

      Anon 10.10

      Unfortunately there were similar scenarios with business class passengers. Their online reviews are quite bad while their prices are not that cheap. Not a good combination.

      Delete
    7. Anonymous10:44

      Let's not forget that Emirates and Dubai are global brands. Unlike QR and to a great extent EY, EK can also rely on a significantly bigger number of point to point traffic. Abu Dhabi is trying to transform itself into a place with lots to see and do. But it will take time. Doha is like Dubai 20 years ago and unlike Dubai they don't really have any beaches or a nice sea. But they will have a lot of traffic for the 2022 world cup.

      Delete
  14. Anonymous09:51

    I don't think Etihad will leave the end but we'll see.

    ReplyDelete
  15. Anonymous11:05

    Whilst talking with EY, it's really high time to revive and retrieve Jat Airways brand, logo and network. Even the name was unique > Јат ервејз/Jat ervejz. Also the Frequent Flyer programme legendary brand> Extra Flight Club
    There ais a huge number of missing destionations:

    https://en.wikipedia.org/wiki/List_of_Jat_Airways_destinations

    MIR, OMO, ZBK...

    ReplyDelete
    Replies
    1. Anonymous11:12

      No thanks

      Delete
    2. Anonymous11:22

      Your arguments please?

      Delete
    3. Anonymous11:42

      Terrible service, Joke About Time, ancient planes, huge debt, no vision, incapable management, image zero...

      Delete
    4. Anonymous11:56

      He's obviously trolling, best to ignore him.

      Delete
    5. Anonymous12:16

      With more neutral name, like Air Baltic, it could work as new ex-Yu carrier. Now it would be ideal to base 2 regional aircrafts in Ljubljana, get a deal with Slovenian government for Brussels flights, etc.

      Delete
    6. Anonymous12:47

      And when OU said that they are going to base aircrafts there for charters and regional routes that was unprofitabile and stupid. And nobody needs another JAT here.

      Delete
    7. Anonymous13:22

      It’s not new JAT. It’s an opportunity for a carrier to strategically establish itself as a carrier of ex-YU territory.

      Delete
    8. Anonymous13:26

      I’m sure that it would be much easier and publicly much more acceptable for Serbian airline to serve Slovenian market with the subsidiaries of Slovenian government then it would be the case with Croatian.

      Delete
    9. Anonymous14:06

      "It’s not new JAT. It’s an opportunity for a carrier to strategically establish itself as a carrier of ex-YU territory." - Of course. Its not the carrier of Yugoslavia but is carrier of ex-Yu. Significant diference in operations.

      Delete
    10. Anonymous15:25

      JU is already serving the entire region and beyond Ex-Yu with their own name.

      There's no problem about that.

      Delete
    11. Anonymous16:15

      Who wants to fly can do so via BEG.

      Delete
  16. Anonymous11:57

    Did AirSerbia purchased any aircraft or they all are leased? AirSerbia need newer aircraft.

    ReplyDelete
  17. Anonymous13:57

    Russians finally will deliver Superjets..

    ReplyDelete
    Replies
    1. Anonymous15:26

      Yupee! Could you please share more details with us??? How many Sukhoi jets are ordered?

      Delete
    2. Anonymous16:07

      To Mongolia

      Delete
    3. Anonymous16:38

      No orders where placed for SSJ 100 by Air Serbia or goverment. There were just plans to order these.

      Delete
  18. Anonymous15:17

    Moozda sledi saradnja sa Lufthanzom?Ne zaboravimo da oni treba da pokrenu liniju BEG-PRN

    ReplyDelete
    Replies
    1. Anonymous15:36

      То је био чист политички трик од ког нема ништа. Уз све то, докле год аеродром у Приштини носи то име, летови за Београд се не смеју реализовати.

      Delete
    2. Anonymous15:38

      Becoming a LH satellite airline would be the worst.

      Delete
    3. Anonymous16:07

      We have already one LH satellite in ex-YU

      Delete
    4. Anonymous16:21

      Od tog politickog trika AS bi imala itekako koristi od transvernih putnika.Ne mislis valjda da bi Vlada dozvolia da LH vrsi transvere preko BEG?

      Delete
    5. Steta sto nema transVeri iz MinKen i za MinKen. I dobro sto ima iz StuDgarD i za StuDgarD. A Vlada to ne moz da dozvoli posto nece da se realizuju dosta srestva za sendvici za ovi sto pisu transVeri

      Delete
  19. Anonymous21:07

    Triggered Air Serbia haters lack self control to wait until actual results of EY-JU talks are made public before talking trash. Perhaps their oxygen-depleted brains sense and fear the outcome with be positive for Air Serbia so they started barking in advance, as if their jealousy could prevent inevitable growth and expansion of Air Serbia. So sleep tight tonight. Once results are published ... I will strike down upon thee with great vengeance and furious anger those who attempt to poison and destroy my Air Serbia brothers.

    ReplyDelete
    Replies
    1. Anonymous22:20

      Allowing W6 to resume flights before JU in BEG is unpardonable. Also you have to convince the taxpayers and the mayor of UZC for being forgotten. See you tomorrow.

      Delete
    2. @An.21.07

      For your own personal sake, benefit and well-being, I suggest you seek professional help, and soon, please. Seeing things which do not exist is pretty serious condition. Advice coming from the same guy who wrote 13.23 post earlier today hoping for the best outcome for JU and pointing it out as the only good and positive ex-yu company. Cheers!

      Delete
    3. Tarantino23:43

      Riječanin if you are not a hater it doesn't apply to you.

      Delete
    4. Anonymous01:02

      It's interesting to read all of the day's comments - especially Nemjee's defence of the Air Serbia project. I won't buy into the arguments "for or against", but we should have a look at what is known for a fact.

      The airline started life with the Govt assuming assuming all of the airline's prior debt when EY became involved back in 2013. Both parties invested $40m each - giving the airline at least $80m of fresh capital to begin its new life.

      This does not include other financial benefits of fuel subsidies and airport fees - those amounts we don't know but can safely assume that they ran into quite substantial sums for at least the first 3 years until the end of 2017.

      Not long thereafter, the airline took money from the EAP Bond issue in 2 tranches - to the tune of $120m. These repayments are due this year and next year.

      So together with the initial capital injection of $80m and the bond debt of $120, the airline had $200m at its disposal throughout the period of 2013 up until now.

      Along the way, there were other subsidies granted by the Govt, as well as monies that have come to it through PSO routes being granted.

      Again, no one really know how much this amounts to, but suffice to say that it was considerable.

      So after $200m that we know of for a fact and other substantial amounts that we don't really know how much it amounted to, the airline is still loss making and has not been able to move the needle that much. Yes, they have made great efforts to grow their network and invest in new routes and a few newer aircraft and have for sure contributed to the economy and tourism, but as a stand alone business, they are not even close to break even not now, nor for the foreseeable future.

      Talk of recapitalising the existing business will require even more money than has been invested into it up until now. Someone will have to pay the $120m debt to the bond holders (read this as the Govt) - in addition to invest additional funds to recapitalise the business.

      Does this sound like it is a good and sustainable business worth throwing a bottomless pit of money into ? I guess the answer depends on which side of the argument you sit on.

      New and successful startups have begun life with much less money that is being thrown into JU. Maybe this is the way forward. Let JU go into voluntary administration and then start again with an entirely clean slate where you can rid yourself of the legacy issues that have been the noose around the neck of JU for the past 20 years.

      A fit for purpose new airline with a much lower number of employees and new practices and a route structure for the "new normal" that is emerging in the aviation industry in a post-covid world, may well be the best way forward.

      Delete
    5. Anonymous02:50

      Anon at 1:02 Do you know for certain the outcome of the negotiation? If not, what is the purpose of this BS? If you want to close down debt ridden airline to ensure a fresh start, why don't you start with closing down Montenegro Airlines, then Croatia Airlines, then Lufthansa. You do that first, you will get my ear for a day. Otherwise FO.

      Delete
    6. Anonymous03:14

      Maybe you start by having some cool-aid to calm down. I thought this was a blog to throw out ideas and discussion pts. Ofcourse, you are free to respond in any way shape or manner that gives you comfort.

      The topic was JU - not YM or OU or LH.

      I was merely offering an answer or scenario to Nemjee's question, which asked has anyone an alternative to JU. So, I thought by looking at the facts thus far, it might provide a backdrop for an alternative way forward.

      Throwing a shitload more money into something which has already had a shitload of money thrown into it without becoming operationally profitable - might not be the smart or best way forward - irrrespective of what happens in the discussions between the Govt and EY. Whatever that outcome, it will still require oodles of more money which someone will have to foot the bill for.

      This is not BS - this is a FACT !

      So, a better way forward so that you put good money into a "healthy project", rather than throwing good money into a sinkhole, is to start again fresh. This is already happening in the Mauritias, Sth Africa and Australia (with Virgin Australia).

      I am NOT saying that the Govt should not have an airline - I believe 200% that they should. The issue is how best to achieve that outcome.

      I really believe that the time is to consider Air Serbia V2.0 and start afresh, with healthy capital going into something that can be built from the ashes of Air Serbia V1.0 - just like they are doing down in Australia with Virgin Australia.

      In doing so, they would also release themselves of ALL prior debt obligations - especially the $120m bond they need to repay - just like Air berlin and Jet Airways having gone bankrupt no longer have to cough up. Wouldn't it be better to invest this $120m in a brand new airline with a fresh start instead of throwing $120m down the toilet and still having to fork out another $100m or so, on top of what has already been spent on a project which has not and cannot make any money in the forseeable future ?

      Let me state again, I am 200% for a Serbian carrier - it is just a question of how best to make this happen given the "new normal" post-covid world we find ourselves in.

      No need for any provocations. Argue the pros/cons vociferously - that is what a blog like this is all about.

      Delete
    7. Anonymous04:25

      Who are you to make the call about Air Serbia? If you are not representing government or EY you are nobody. Come back when the topic is YM/OU to passionately fight for their closure. And who are you to "care" about taxpayers money when you didn't say a word about dozens of times more money being burnt on operational support for railways, public transit or overblown military spending? Those millions are not causing you burn but only those for Air Serbia are? BS.

      It's easy to see who are those mounting continued attacks against Air Serbia - those affected the most. Either jealous neighbours (you are nowhere to be found bitching against them when YM/OU are the topic!) or W6/LH Group - they are not getting their way at BEG. So which one are you working for?

      Delete
    8. Anonymous05:28

      Another indication it's not about taxpayer money: N1 and nova.rs reporting only targets Air Serbia spending but avoids targeting much bigger tax spending on public transit and railroad. Is it because W6/LH doesn't compete with Belgrade city bus and Serbian Railroad but their interests are affected by JU? What a coincidence. Cherchez la femme.

      Delete
    9. Anonymous08:42

      You cannot compare public trasport and railways with an airline. Public transport is used for conneting people in city and it is improvment in quality of life because people need go to work or market or airport.

      Delete
    10. JATBEGMEL12:48

      @ 01,02

      Your argument has very selective information.

      Alot has happened in JU, during EY management and post EY management.

      Alot of money was invested into rebranding, new interiors, wifi, dedicated lounge, IT, staff, training, long haul, new destinations etc.

      It was the initial phase that saw alot of losses made, however they have significantly reduced them the past 2 years since they changed their model. 2018 was a good indicator, since they went down to just under 9 million Euros, which isnt that bad. If Im not mistaken, its one of the lowest in the past 2 decades. In the mean time, many positions have returned to Belgrade and a massive expansion went ahead last year, which seems to have had positive results considering a new one was expected this year. I doubt a new expansion would of happened had the losses increased significantly.

      Saying that and looking around us, JU in 2018 produced less losses compared to all ex-YU carriers, transported more pax, has a larger fleet, more destinations and a more relevant network. OU for example, on top of receiving last year a higher cash injection didnt plan to boost its network no where near what JU acheived last year. RO requested from its government over 150 million Euros.

      The Air Serbia project isnt bad, however could of been managed alot better. Having said that, good management and Serbia doesnt go together in the same sentence, especially when talking of a government run operation. You can close and restart the airline a thousand times, and be back to the same. AZ is an example of this.

      Lets see what the 2019 results say.

      Delete
  20. Anonymous05:07

    Anonymous 03:14

    Nice display of double standards. You said:

    The topic was JU - not YM or OU or LH.

    only to do the opposite:

    1: This is already happening in the Mauritias, Sth Africa and Australia (with Virgin Australia).
    2: just like they are doing down in Australia with Virgin Australia.
    3: just like Air berlin and Jet Airways having gone bankrupt

    Start working on YM, OU and LH bankrupcy.

    ReplyDelete
    Replies
    1. Anonymous06:04

      Wow, what a hostile recalcitrant crowd !

      I was trying to make a case for a healthy reset of JU, with fresh capital going into an unencumbered new entity, using the assets of the debt burdened entity - which is what is happening in other parts of the world, like for example with Virgin Australia in Australia, which voluntarily chose to put itself into administration in order to unshackle itself from the financial burdens of the past.

      You must not comprehend the English language - which is ok as it may not be your first language. There are no double standards used at all - they are merely examples or illustrations of what is happening or has happened elsewhere.

      No one has a mortgage on the best or right ideas, so it is worth exploring what is happening elsewhere, as it may provide a better pathway forward in this case. And if it doesn't, it doesn't - no big deal. This is simply a forum for ideas and debate.

      As for closing JU, once again,I understand if your comprehension or language is challenged due to English not being your first language. I am NOT - repeat, NOT - advocating for closure of JU. I am simply saying there might be a better way forward for JU and Serbia, by ridding itself of this vicious debt cycle which it is trapped in. This can only happen if the airline declares insolvency. If it was to do so, great, then the Govt can assume 100% ownership of the new entity, properly capitalise the business with new funds and be done with trying to pay off debts and sins of the past.

      Smart way to move forward.

      As for making a call about JU ? You are right, I am not the govt and am simply a nobody - just like you. As nobodies, we should be free to make comments, observations and suggestions, without intimidation or name calling - not always easy in our part of the world.

      While there are other industries in many countries which receive massive injection of state funds - like railways and bus companies as you have rightly suggested - this is an aviation blog, so best we limit our discussion to aviation related matters. I am sure there are other websites were you can voice your support for funding train and bus companies.

      Delete
    2. Anonymous06:35

      No need to reset 92 year old airline. Try it with other airlines if you love them so much.

      Delete
    3. Anonymous07:46

      Ofcourse there is ... it has had numerous resets in its 92 year history. Even since 2013, it has had 2 resets. What world do you live in ?

      Delete
    4. Anonymous07:50

      BTW, each time you inject any significant amount of capital into a company, it results in a significant reset. So if you are saying that there is no need to reset it, then you are arguing against yourself and undermining your own point ... you might want to rethink your comment

      Delete
    5. Anonymous08:01

      2013 was rebranding.

      Delete
    6. Anonymous08:08

      2013 wasn't just a rebranding.... it was a change in the ownership and governance structure ... which was a massive reset

      Delete
    7. Nemjee08:12

      So you want to shut them down despite the airline finally consolidating their operations? Why are you using the period of AUH mismanagement as the basis for your argument when those people are out of the picture right now. Today decisions are made in Belgrade and they seem to be producing positive results. JU as any aviation business needs volume and as we've seen from their reports in January and February they are on track to finally getting it. Shutting JU down and starting over won't necessarily produce the wanted result, just look at Alitalia and/or Olympic. How many times have they been shut down or re-branded only for business to continue as usual. As for start ups that had much less capital, what has that got to do with aviation business where different rules and regulation apply?

      Air Serbia's biggest problem is that it wasted 6 years on random, clueless and overpaid managers from Etihad. That is why I said that we need to give JU another 5 to 10 years before we make any final decision on what to do with them. Until then let them keep on doing their thing as they have been doing since January 2019 when they took over control of the airline.

      Delete
    8. Nemjee08:13

      Anon 08.08

      Change in minority ownership, JU still remain a government owned business, same way Jat Airaways and JAT Yugoslav Airlines were.

      Delete
    9. Anonymous08:45

      If you have something against JU and the way they are doing their job good or wrong, you will be always attacked by JU fanboys.

      Delete
    10. Nemjee08:55

      So discussing aviation matters is qualified as being attacked by JU fanboys? Or is it a way out of a discussion when you run out of arguments?

      Delete
    11. Anonymous16:56

      Nemjee, mate from Aus is asleep now but he will be able to use his shutdown and start with a clean slate theory tomorrow on a neighbourhood airline asking for 92 mil eur state help. Looking for your reset on that one mate!

      Delete
  21. Anonymous08:05

    Whoa ! I seem to have missed the overnight action. Interesting comments and arguments.

    I hope that someone really brave (or really stupid), has the courage to start a new airline in Serbia - a Serbian "Aegean" with private funds and ZERO govt involvement would be fantastic ! That is the only way to give JU the shake it so desperately needs and it is one sure fire way to minimise/limit Govt aid from being pumped into JU without the accountability that would be required in a 2 airline environment. Then it will need to stand (or fall) on its own merits.

    Nothing like home grown competition to level the playing field and bring about the required changes/improvements.

    ReplyDelete
  22. Anonymous09:32

    Nemjee, this is an aviation blog, yeah ? So if reference is made to startups, it should be understood that it relates to airlines - not fishing boats or bread factories or some other random thing. Virgin America was a startup with $40m, while Virgin Blue began with $10m in startup capital. Air Serbia had $80m at the start and then borrowed $120m at almost 7% interest, not to mention however much else it got under the table - that's at least $200m and then some.

    Do you think they have been good for it ?

    ReplyDelete

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