Air Serbia drafts future strategies as state adopts aid plans


The Serbian government has adopted a draft of its 2021 state budget which foresees “investments of special importance” amounting to 118.1 million euros in ten companies, amongst which is Air Serbia. The sum will be shared between them, although the exact figure each company will get has not been disclosed. The airline was the beneficiary of 20.8 million euros "from premiums, subsidies, grants and donations" each year over the past three years. The Serbian government has previously said it would provide direct fiscal support to the airline in order to mitigate the effects of the coronavirus pandemic. Last month, it adopted a decree which enables the state to recapitalise companies such as Air Serbia with over 250 million euros in funds. The policy foresees assistance for both state-owned a private enterprises which were profitable at the end of last year and can prove they would go bankrupt or be in significant hardship without the recapitalisation. 

Air Serbia is currently offering financial incentives to encourage employees to voluntarily resign, with the company seeking to reduce its headcount by some 300 staff members as a result of the pandemic. Furthermore, some employees will endure pay cuts, with wages for pilots and cabin crew to be reduced 20%, while staff members from lower paygrades will see their monthly income slashed by 15%. Employees which are part of the two lowest paygrades will not have their wages reduced. “Due to well known difficulties caused by the coronavirus pandemic, the company did not achieve the goals it set for 2020. In order to preserve our business, we are forced to reduce wages. This measure is temporary and will come into effect from December and last until March of next year”, Air Serbia told its employees. 

The Serbian carrier recently said it was is in the process of devising a long-term strategy for the coming years based on several different scenarios and is in discussions over its plans for 2021. “The uncertainty of what kind of travel conditions will be in force puts a serious limit on long-term planning, however, we are working on making some plans and developing several business scenarios for the coming years. We have already held negotiations for next year, but it is very difficult to make concrete plans when travel conditions are unknown and constantly changing. This means we must think fast and act within short deadlines. We often say it is easier to make a plan for the coming month than for next year”, the company said. It added, “Constant monitoring of bookings is crucial right now. This is the basis for further decisions and flights. If we see bookings increasing rapidly on certain routes, we react by increasing the capacity of those flights, allocating larger aircraft. Flexibility is currently the key issue in our business”.

Comments

  1. Anonymous09:03

    Good to see they are planning for the future.

    ReplyDelete
    Replies
    1. Anonymous09:03

      I hope it includes fleet renewal.

      Delete
    2. Anonymous09:05

      Good thing is that they got the two A319s. There are rumors going around that they will replace the two old EY A319s which is good as they are not reliable like the rest of the fleet.

      Delete
    3. Anonymous09:13

      Fleet renewal never seems to be a priority for JU.

      Delete
    4. Anonymous09:15

      True, I guess all those A319s, A320s and the A330 were part of something else.

      Delete
    5. Anonymous09:18

      Those aircraft are for the most part over 15 years old. That's not a fleet renewal. It's just a replacement of old planes with other old planes. And let's not even mention the 35 year old Boeings and 30 year old ATRs.

      Delete
    6. Anonymous09:26

      So replacing really old planes with new(er) ones is not fleet renewal?

      Lol. Ok.

      Delete
    7. Anonymous09:35

      You renew the fleet when you get brand new aircraft.

      Delete
    8. Anonymous09:38

      No, that's not what renewal means. Here's the third definition of the Oxford dictionary:

      3.
      the replacement or repair of something.
      "the need for urban renewal"
      Similar:
      renovation
      restoration
      modernization
      improvement

      Delete
    9. Anonymous10:40

      You guys are funny:)

      Delete
    10. Anonymous11:00

      They literally dont have any future plans for a fleet...

      Delete
    11. Anonymous11:06

      "You renew the fleet when you get brand new aircraft."

      Please continue to impress us with your aviation knowledge.

      Delete
    12. Anonymous11:48

      Anon 11.00 and you literally know that? Are you aware that they got two new A319s just recently?

      Delete
    13. Anonymous12:02

      Why i would be aware of 2 A319s in JUs fleet? You see these are 2 planes who already came to JU, and they were planed to come last year. So if they were plan of fleet expansion in the past, that means they are not in the fleet renewal or fleet expanison plans for the future.

      Delete
    14. Anonymous12:08

      They were supposed to come in March 2020. Not last year

      Delete
    15. Anonymous13:16

      And how do you know they don't have a plan right now? What are you basing your argument on?

      Delete
    16. JATBEGMEL17:33

      Brand new aircraft cost money, something JU doesnt have. Younger, leased aircraft is more than fine for the mean time until they sort out their finances, for which they were on the right track in doing.

      Delete
    17. Anonymous17:43

      Covid aside, payment for the right to use an aircraft (apart from aircraft maintenance, crew, fuel, navigation fees, etc.) is a fairly typical cost in aviation.

      So, if, given your income, you cannot afford it now, you will not be able to afford it also in the future. It means business is not viable.

      Delete
    18. Anonymous18:07

      @17.43 What you're basically saying is developing new routes, cutting costs, looking for additional services that you can offer to the travelling public and charging for them, marketing, and all else is... futile?

      In any business, not just aviation, you don't get to earn as much as you would after years of treating your customers right, providing quality service, becoming a household name, widening your audience. Therefore, any well-run business should be earning more and more as they mature; this also means they would be able to afford fixed costs they weren't able to afford before. I guess the parallel is clear.

      Delete
    19. Anonymous18:27

      re. anon 18.07:

      This is a strategy of Etihad itself: 10 years of growth with immense losses and then we shall see. Nope. This is not a strategy.

      All these efforts you mention can make a difference, but not that big of a difference. An insider that has full insight into the financials of JU should know BY NOW, whether it may be a viable business.

      It is all about strength of the local demand and local willingness to pay the premium for direct flights (and not just the lowest price).

      Anon 17.43

      Delete
    20. Anonymous03:49

      If I could not afford a new BMW when I was in my 20's it does not mean I won't be able to afford it when in my 40's. Same with Air Serbia and new planes.

      Delete
    21. Anonymous05:38

      Anon 18:07

      It's not all about the strength of the local demand. Diaspora and external demand come first. Regional demand and transfers are next. Local demand is 100% relevant only for charters.

      Delete
    22. Anonymous07:52

      anon 3:49:

      It is not about buying yourself BMW, but about having income to meet all the costs normally associated with running your business. And it is not some start-up company that may miraculously grow the market demand and the profit margins because it has some unique product entering the market. Here it may grow in size, but usually growth in size comes with less profitability and not more profitability, because you normally open more promising routes first. Aviation is a very mature business with a lot of competition.

      This is like having a train company, with income from pax and cargo that ALMOST meets the costs of maintenance, electricity, staff, but not the locomotives. Locomotives in this business are not a luxury. You can exploit the current locomotives until they delapidate, but what next, if your income does not allow you to meet the costs of the new ones?

      Delete
    23. Anonymous08:16

      Re Anon 5:38

      Local demand means O&D demand to/from BEG. It is this demand that will decide and actually already decides the future of JU (although not being insiders we don't know what this fate is actually like and will learn only after couple of more years - insiders should be able to say already).

      You have delusions typical for most of the comments here: transfers at BEG.

      In this part of Europe transfers will not allow any airline to have a sustainable business. KLM may have a sustainable transfer business at AMS, because it takes over pax that don't want to pay truly exorbitant prices charged by BA for direct flights from London. So even undercutting these prices, they may actually make a nice profit on transfer pax from the UK (and they have a nice Dutch O&D anyway), etc.

      There are two questions here: first: is there a sufficient O&D market to/from BEG, and only secondly: are JU's operations on this market structured in an optimal way (sometimes despite business opportunities being there, businesses are not efficient enough to use those opportunities). If the answer to the first question were NO, there would be not reason to even consider the second question (and here you may do some improvements with time, but let me repeat: you will never invent the aviation market, where it does not exist and there are no conditions for it).

      So the question boils down to the following: is it possible for JU to have on average 40% of O&D pax onboard of its flights (including primarily to JFK) each paying on average 30% more than they would pay on LH indirect fligtht? YES/NO (I am sure that the insiders at JU already know very well).

      Delete
  2. Anonymous09:03

    €20 million per year is not that bad, definitely an improvement over Jat Airways. I guess without New York Air Serbia would not be far from breaking even. Since JFK is a political project then the government should pay for it even if all the losses on the route are made from November to April.

    ReplyDelete
    Replies
    1. Anonymous09:53

      Jat was also flying to JFK. It is not a political project, just a continuation of a service that was blocked by someone else's political project. Now you know.

      Delete
    2. Anonymous10:05

      No, JAT was flying to JFK and Jat was never flying to JFK.

      Delete
    3. Anonymous15:22

      Is JAT pronounced differently from Jat?

      Delete
    4. Anonymous15:36

      Sorry I meant to say just jat but auto capitalization at the beginning of the sentence made it into Jat. Does that make any material difference for you?

      Delete
    5. There is a big difference between JAT and Jat.

      JAT Jugoslovenski aerotransport flew to JFK, and many other intercontinental locations.
      as well as Euro-Mediterranean destinations and within Yugoslavia.

      Jat Airways only flew to Euro-Mediterranean destinations, and within Serbia-Montenegro.

      Delete
    6. JATBEGMEL17:47

      @ 09,03

      The government has been paying for the overall losses since rebranding. Even before JU relaunched JFK they were losing money, so cancelling JFK isnt a guarantee that they would suddenly become profitable. Problem with profitability wasnt just JFK, it was a combination of bad choices that resulted, only a couple years later since rebranding, in the restructuring of operations ie: full service to hybrid, changes in fare structure etc.

      Delete
    7. Psi laju karavani prolaze19:33

      JU500 service existed for many years before US banned it in 1992 and JU500 service exists now. Regardless of how much money (if any) this route is and has been making over time, there is no way anyone reasonable on this planet can pin it's existence on a single political party/person or a project. JU500 is and will outlive those who introuduced it, banned it, reintroduced it and those who are still envious.

      Delete
    8. Anonymous22:34

      You sound religious.

      Delete
    9. Anonymous03:52

      introduced by Josip Broz: dead
      blocked by: George WH Bush : dead
      JU500: still flying
      you: envious neighbour?

      Delete
  3. Anonymous09:03

    Good news is that they are starting to fire people from the overblown administration. I heard that many from Jat era are about to be let go.

    ReplyDelete
    Replies
    1. Anonymous09:05

      There are very few people from "Jat era" that are left. And your assumption that people that have worked at Jat are bad or don't know their jobs is very misguided.

      Delete
    2. Anonymous09:06

      There are still a lot of them in administration and given how badly Jat was run I think you are the one with a misguided opinion.

      Delete
    3. Anonymous09:08

      Jat was run by politicians and CEOs appointed by political parties. It is thanks to people in Jat's administration that the airline survived until it did with any sort of network and operations.

      Delete
    4. Anonymous09:12

      Not really, Jat Airways only managed to survive because it inherited some people and a whole system from JAT. What Air Serbia inherited from Jat Airways was mostly members of political parties who got a nice and well paid job. JAT guys by then mostly retired. That is why Jat's seasonal network was just copy past of the previous one which was copy past of the previous one and so on.

      Delete
    5. Anonymous09:17

      Try not to comment with assumptions on things you obviously know nothing about.

      Delete
    6. Anonymous09:18

      You are right, I apologize. Jat Airways was a brilliantly run, trend-setting airline that set the bar higher and higher.

      Delete
    7. Anonymous09:21

      No it wasn't. It was limited by political interference and inept upper management comprised of political party members. But you don't know what you are talking about. Most of those left the company or were forced to leave within the first year of Air Serbia.

      Delete
    8. Anonymous09:21

      Still flying ex-JAT cabin crew, over 60 years old, with all conditions for retirement fulfilled several years ago...

      Delete
    9. Anonymous10:56

      Have you seen how old they are on US carriers ?? Ours are still teenagers compared to theirs !

      Delete
    10. Anonymous12:17

      @ Anonymous10:56 Really?! How dare to say that 60-yrs old cabin crew are teenagers?! - Compare ASL with your strategic partner EY, or EK, QR, TK! - EY rejuvenated 60% ASL cabin crew in autumn 2013, while those selected from JAT, even then old enough to retire still fly as 60-65 years old with 45 years of benefited work! Retire the old immediately, keep the young!

      Delete
    11. Anonymous12:45

      JAT staff were some of the best in Europe! It was always refreshing board on a JAT flight because you could tell that the staff loved their work, unlike the staff in the U.S., Canada or LH.

      Delete
    12. Anonymous16:03

      @ Annon 12:45, true that, but your opinion share with JAT memories Facebook fan group.

      Delete
    13. Anonymous18:03

      JAT cabin crew might be a bit rough on the edges (i.e. not so much fake smiles and perfect hairstyles), but they sure know how to perform in an emergency, be it a medical or tech - and this is what this job is all about. I wouldn't let them go under any circumstances, unless they need to retire due to medical reasons.

      Delete
    14. Anonymous23:28

      In November 80 cabin crew members lost their jobs.

      Delete
    15. Anonymous00:34

      @Annon 23:28 All young, or even some old lost their jobs?

      Delete
  4. Anonymous09:06

    I think under the circumstances they are doing relatively well. They are serving around 30 destinations from BEG with decent frequencies.

    ReplyDelete
    Replies
    1. Anonymous09:07

      It's also good that they brought back SVO with a revised schedule so they can offer connections. BEG-SVO was selling for 49.000 RSD one way so I suppose the flight is quite full.

      Delete
    2. Anonymous09:45

      ^ Do you know how OSL is performing since its their newest route?

      Delete
    3. Anonymous09:49

      I heard Oslo does well, DY leaving is also helping them plus transfers. Oslo connects to almost everything.

      Delete
    4. Anonymous23:25

      A smart choice for Wizz Air would be to move their future Oslo flights to Gardermoen now that they have a base there.

      Delete
  5. Anonymous09:06

    They have been pretty proactive and "flexible" as they say with adding flights and frequencies if there is demand which is good.

    ReplyDelete
    Replies
    1. Anonymous09:10

      +1

      Delete
    2. Anonymous09:13

      they have brought a lot of routes back quickly

      Delete
  6. Anonymous09:20

    I'm guessing the few expats in the head office have been the first one to leave.
    Good to see the state fully committed to support its airline, unlike many other countries especially in Europe.

    ReplyDelete
    Replies
    1. Anonymous09:27

      And Salt has already left though his contract was not renewed even before these redundancies. I guess Air Serbia knew this was coming and they were probably looking at way to get rid of foreigners whose salaries are considerably higher than the ones given to locals doing the same job.

      Delete
    2. Anonymous10:22

      Air Serbia operates better as an independent carrier than it did under Etihad management.

      Delete
    3. Anonymous10:24

      It is still under EY management. CEO and CCO are both Etihad appointed.

      Delete
    4. Anonymous10:38

      Why are these 2 guys still there ? Think of how much they are paying them and then how many good local people they would be able to employ (or keep) for the same salary - at least 15 to 20 people ? I mean, after 7/8 years, what does it say about their succession planning abilities if there is still no one who can step up into these roles, especially at least the CCO if not the CEO role ? Besides, if Etihad are not contributing one single $ into keeping JU afloat, then why are they still able to appoint / influence who is in these 2 key roles ? At the end of the day, it is the middle management which keeps things moving along, so that is who they need to ensure stays

      Delete
    5. Anonymous10:46

      All upper middle-management that came from EY earns around €8.000 a month. In Dinars that comes out to be 1.000.000 in Belgrade where average salary is 73.000 Dinars. For that kind of salary JU should be swimming in profits and flying around with brand new planes. Since that's not the case how do they justify the money they are getting?

      Delete
    6. Anonymous10:58

      Wow ! Who else is there from EY other than the CEO and CCO ?

      Delete
    7. Anonymous11:49

      Are they also getting their salaries reduced? I know several people have left even before all this.

      Delete
    8. Anonymous17:23

      There is an English adverb that fits well with this discussion: you pay peanuts, you get monkeys.

      Currently there may be an oversupply in the market of pilots and FAs, but not necessarily ppl from operations etc.

      Delete
    9. Anonymous17:26

      Sorry, I meant "proverb".

      Delete
    10. Anonymous18:13

      @10.46

      Name one airline, anywhere in the world, where CEO/CCO of an international airline do not earn at least 8-10x the average income in that country. Also, what kind of qualifications would a CEO have if they were to earn an "average salary", as to your liking?

      As a business consultant, I saw countless number of cases where shareholders / owners made great "savings" by cutting top management remuneration, only to find themselves years later with incompetent staff and a failing business. Or in our local language, zakolju vola za kilo mesa. Literally.

      Delete
    11. Anonymous23:49

      @Anon 17:23: There is an oversupply of every single type of aviation worker all around the world. Pilots, baggage handlers, air traffic controllers, aircraft cleaners, cabin crew, ... everyone.

      Delete
    12. Anonymous01:01

      The CCO is not appointed by Etihad, only the CEO has any links to EY

      Delete
    13. Anonymous01:53

      The CCO worked at Alitalia which was run by Etihad, who also appointed all key positions. The CFO at Alitalia was the current CEO - so these guys worked together and he brought him over with him. He wouldn't have been appointed if Etihad had an issue with him, so he sure does have links to Etihad

      Delete
    14. Anonymous04:18

      Anon at 01:53
      When Air Serbia applied for US flight permits, it had to demonstrate Serbia had effective control over the airline. And so they did, as shown by obtaining permissions to fly to JFK. It had been shown many functions moved from AUH to BEG since and in general Etihad's role in decision making at Air Serbia has only been reduced since.

      Efforts to paint Etihad as a key decision maker at Air Serbia in 2020 sure sound like fake news to me.

      Delete
    15. Anonymous10:25

      Anonymous@4.18 - not quite sure what you are on about, but your random ramblings are classic symptoms of insomnia, as evidenced by your post at 4am in the morning. I suggest you get a good night's sleep first, so as to pull together some cohesive and factual thoughts before you post next time ...

      Delete
    16. Anonymous18:32

      If you are not quite sure then learn more about it before posting a comment as you may sound dumb. For example learn that it's not 4am everywhere on the planet...

      Delete
  7. Anonymous09:25

    Future strategy seems to be government money.

    ReplyDelete
    Replies
    1. Anonymous09:34

      That seems to be everyone's plan.

      Delete
  8. Anonymous09:34

    This money for 2021 is not a lot. Basically the same as last few years. I don't think that will be all they get.

    ReplyDelete
    Replies
    1. Anonymous09:38

      Definitely

      Delete
    2. Anonymous09:42

      This is key

      "The Serbian government has previously said it would provide direct fiscal support to the airline in order to mitigate the effects of the coronavirus pandemic. Last month, it adopted a decree which enables the state to recapitalise companies such as Air Serbia with over 250 million euros in funds. The policy foresees assistance for both state-owned a private enterprises which were profitable at the end of last year and can prove they would go bankrupt or be in significant hardship without the recapitalisation. "

      Delete
    3. Anonymous23:25

      Bingo

      Delete
  9. Anonymous09:38

    There is only so much you can plan for in situations like these.

    ReplyDelete
  10. Anonymous09:42

    Good to see they are taking some concrete action.

    ReplyDelete
    Replies
    1. Anonymous23:24

      Who? Government or airline?

      Delete
  11. Anonymous09:46

    Would like to see what their plans are.

    ReplyDelete
  12. Anonymous09:47

    Good

    ReplyDelete
  13. Anonymous09:47

    Is ZRH still performing best for them now with all these restrictions still in place?

    ReplyDelete
    Replies
    1. Anonymous09:50

      I would assume IST too.

      Delete
    2. Anonymous09:50

      ZRH, JFK, IST.

      Delete
  14. Anonymous09:54

    Let's see how much money they get, and if Etihad will be kept as a partner.

    ReplyDelete
    Replies
    1. Anonymous10:08

      Shouldn't Etihad as a partner also invest some money??

      Delete
    2. Anonymous10:13

      I don't think Etihad is in a position to give anyone money.

      Delete
    3. Anonymous10:41

      Investing usually means you are getting something in return (normally profit).

      How much profit or other gain would Etihad gain by investing any funds into JU?

      Delete
    4. Anonymous11:02

      Etihad never made profit from its investments. Thats why they are in such position.

      Delete
    5. Anonymous23:27

      I'm pretty sure EY will stay if Serbian government will pump more money.

      Delete
    6. Anonymous04:00

      Is this some evidence-based commenting or just talking out of your a** again? When jat had no partners government was pumping money into it. Before EY AZ deal government was pumping money into AZ. Now that EY is out government is still pumping money into AZ. In other words, with or without EY, government airlines are supported.

      Delete
  15. Anonymous09:56

    The good news is the state is willing to help.

    ReplyDelete
    Replies
    1. Anonymous10:00

      That was never in doubt.

      Delete
    2. Anonymous10:00

      They've said they would help Air Serbia from the day corona struck.

      Delete
  16. Anonymous10:03

    Fingers crossed for the best outcome.

    ReplyDelete
  17. Anonymous10:14

    I doubt the Serbian government will put money in without increasing their stake. The question is, will Etihad also put some money in to keep their stake and whether the government would only take say 20% of the share and leave Etihad as a symbolic shareholder.

    ReplyDelete
  18. Anonymous10:14

    I really like to see how well JU is managed during these terrible times. Much, much better than many other airlines, especially those in the neighbourhood.

    ReplyDelete
  19. Anonymous10:19

    This was to be expected

    ReplyDelete
  20. Anonymous10:33

    Dobro je videti da imaju plan B i plan C.Zaista je pohvalno što AS poslednjih godina brzo reaguje na novonastale situacije.

    ReplyDelete
    Replies
    1. Anonymous10:47

      So true, Alaska did well to buy Virgin America because through it they got access to the highly lucrative SFO market. They also seem to be profitting greatly from the AA code-share. Like you said, they have been quite responsive to what has been going on around them.

      Delete
    2. Anonymous11:02

      Anon 10:47
      +1000

      Delete
    3. Anonymous14:21

      Hahaha this is great <3

      Delete
    4. Anonymous14:43

      Nekako mi se cini da na ovom forumu ima sve vise dece koja se loze na ovakve gluposti. Kao sad je on gluplji ili sta god jer nije iskoristio JU nego AS iako svi znamo o cemu se radi.

      Grow up or stop trolling.

      Delete
  21. Anonymous23:24

    Do we know yet who paid for the EAP loan? Did the government give money? Etihad? bank loan?

    ReplyDelete
    Replies
    1. Anonymous23:26

      No one knows. My guess is the government gave the money.

      Delete
    2. Anonymous23:31

      Government for sure.

      Delete
    3. Anonymous04:02

      We all know it wasn't the government money except the fake news generator in the form of amateur analyst. Repeating fake news doesn't make them less fake.

      Delete
  22. Anonymous23:28

    So aid could be quarter of a billion euros or more. Wow!

    ReplyDelete
    Replies
    1. Anonymous23:30

      Or it could be less...

      Delete
  23. Anonymous02:13

    Prsla Air Serbia i pored svih potrosenih stotina miliona evra narodnih para... A narod osto gladan...

    ReplyDelete
    Replies
    1. Anonymous04:06

      Sedam godina se dno nada da je Er Srbija prsla, ali im surova realnost kvari racune jer je sve jaca. Da li je narod bio gladan kada su jos vece pare bez ikakvog plana i cilja trosene na jat? Statistika kaze da je narod manje gladan nego u to vreme, pa sad pukni od besa ako hoces.

      Delete
    2. Anonymous09:03

      Ja nit gladan, nit mislim da su pare bacene. A, zamisli, ni ne jedem sendvice.

      Delete
    3. Anonymous01:27

      Anonymous 04:06

      Očigledno niste čitali članak
      koji komentarišete o otpuštanju velikog broja zaposlenih uprkos ogromnoj novoj dotaciji iz budžeta ....a što ste tiče procenta siromašnih u Srbiji on se jasno povećao po statistici Svetske banke

      Delete

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