EX-YU flag carriers face historic losses

The remaining national carriers from the former Yugoslavia are set to post record losses this year as a result of the coronavirus pandemic with estimates ranging to up to 100 million euros. Most of the airlines were loss making in 2019 too, however, governments in each three states have committed themselves to providing aid.

Air Serbia has amassed over thirty million euros in losses up until its resumption of commercial flights in late May, with the Serbian Ministry for Construction, Transport and Infrastructure noting it hopes to mitigate losses in the country's aviation sector, which includes the national airline, airports and air navigation service provider, to 200 million euros by the end of the year. According to the Ministry, the country will provide direct fiscal support to Air Serbia 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. The Serbian carrier has commenced “intensive communication” with special purpose vehicles set-up by Etihad Airways in 2015 called Etihad Airways Partners I BV and Etihad Airways Partners II BV, over the restructuring of its multi million dollar debt.

2019 financial performance

Airlines	Net profit / loss (million €)
Air Serbia	▲ 9.5
Croatia Airlines	▼ 10.7
Montenegro Airlines	▼ 8.0

Croatia Airlines registered a net loss of 23.1 million euros during the first half of the year, almost double from its loss in H1 2019. During the first six months, revenue declined 52.4%. The airline said it was too early to estimate the financial consequences, as the pandemic was still ongoing, but said it would be considerable. The carrier’s CEO, Jasmin Bajić, recently noted, “We are adjusting to the current situation and are doing our job to the best of our ability. All our costs have been reduced as much as possible. We all agree recovery will be a long-lasting process during which we may again be exposed to another wave of the virus spread. Having said that, I also want to emphasise that, besides “U” shape and “V” shape scenarios, we need to be prepared for other scenarios too. This applies to many airlines around us as well. Many carriers will have to downsize for an unspecified time”. According to sone media reports, the company has requested just over ninety million euros from the state to navigate the crisis. The Croatian Minister for Sea, Transport and Infrastructure, Oleg Butković, said recently, “What is most important and what is giving us the biggest headache at this moment is Croatia Airlines and how to stabilise the company which was already struggling and is now worse off because of corona. We are preparing a wide-ranging and comprehensive process together with the Ministry of Finance. We must come up with a model that will be sustainable and in line with European Commission guidelines. I believe that in September or October we will propose concrete solutions which will aim to safeguard both Croatia Airlines and the entire aviation industry which has been hard hit. The state has to offer a final solution".

Montenegro Airlines is also feeling the effects of the pandemic. The company lost over fifteen million euros in revenue during the first half of the year, while it is yet to estimate overall losses generated by the Covid-19 pandemic. “Currently, it is impossible to assess the company’s losses as a result of the coronavirus since the pandemic is still ongoing. In any case, we are talking about a multi million euro loss. An indication is that during the first half of the year, Montenegro Airlines’ revenues declined by 15.110.063 euros”, the carrier said. The President of the company's Board of Directors, Nikola Vukićević, said, “Once it becomes clearer as to how the aviation sector will function in the aftermath of the pandemic, we will have to refine the company's commercial strategy and organisational structure. We might have to reduce our workforce”. Late last month, the Montenegrin government injected 10.4 million euros into its flag carrier to secure liquidity.