Air Serbia plans to offer 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 coronavirus pandemic. Furthermore, employees have been told their wages will be reduced starting from December 2020 until March 2021. The amount will depend on the employee’s pay grade. The company informed its staff last week that it has been reducing its costs for the past eight months in order to mitigate the effects of the pandemic but that it is no longer able to take on such high expenses, resulting in voluntary redundancies and pay cuts. The airline introduced a hiring freeze in March.
Over the past few months, Air Serbia has rationalised its fleet and renegotiated leasing terms for its aircraft, with power by the hour contracts concluded, where leasing costs are accounted based on the number of hours the aircraft has been utilised rather than a fixed rate. The company has reduced airport fees at a select number of destinations and managed to defer air navigation tax payments until 2021. It launched a program entitled “Deliver” back in March, aimed at reducing capital investments and services which are not of vital importance for the company. Furthermore, it has used the suspension of slot rules in Europe and the United States, as well as its primary markets, to secure the same slots for 2021. The Serbian carrier has secured credit lines from commercial banks up until December 31 and has deferred deposit requests from several airports.
The situation on the market remains unstable as many countries go into a winter lockdown, while evolving travel restrictions continue to reduce demand. As a result, Air Serbia has halved its network of 63 destinations. However, the company has said it is satisfied with load factors on a number of routes, which have in some cases reached 80% during the third quarter. “Thanks to our flexible and swift response, during the third quarter, Air Serbia managed to improve its average cabin load factors compared to the competition. On selected routes, loads reached 80%, which can be considered a good result during the biggest crisis in the history of commercial aviation”, the airline said in a statement. The Serbian government is expected to grant Air Serbia aid of around 150 million euros this year, although the state is yet to announce an official figure.
Lack of flights to Italy has really hurt JU. In summer they were planning on having 8 to MXP, 7 to FCO and 4 to VCE. That's a big loss right there.
ReplyDeleteMany markets are gone unfortunately. Not just Italy.
DeleteYeah, he realizes that, but he's talking about Italy here.
DeletePlus JU was to launch a 2 pw FLR rotation from BEG. JU also has/had a 2 pw rotation to BLQ from INI.
DeleteCurious as to why Italy became such a huge market for them.
DeleteThis is logical decision.
ReplyDeleteI thought they would rationalise their workforce cost earlier than nearly a year into the pandemic.
ReplyDeleteThey held off for a very long time.
DeleteBecause there were government measures for all companies like the state paying part of the salaries and so on. Although those ended a few months ago so I'm also surprised they managed to hold off from firing people up until now.
DeleteIt's not like there has been no trimming. Future cabin crew that was selected and undergoing training when covid hit (remember this year there was supposed to be another huge expansion) all got dismissed.
DeleteLogical. Same thing happened at all the mid-east carriers too. Those that were in training were the first ones to be let off.
DeleteAnon @ 9:12 Correct. Those amateurs who went public attacking Air Serbia for not trimming workforce earlier once again failed to understand forces at play. It was no secret government wanted to avoid or at least postpone those actions as much as possible.
DeleteHow many employees does JU have?
ReplyDeleteI think 1,400
DeleteThat's not the case anymore. They had that figurea few years ago with all the subsidiaries. Some of which have been more or less closed like ground support which has been transferred to BEG and catering which is now handled by the UAE company which bought BEG Airport catering.
DeleteDidn't know that
DeleteOfficial number of employees according to what they submitted to the APR is:
Delete2017: 1.466
2018: 1.370
2019: 1.439
As for state aid, I don't think JU was eligible for it as it was meant only for micro, small and medium sized companies. I think Air Serbia qualifies as a large one though I might be wrong.
BEG also started reducing its workforce, they have a scheme going on right now.
So based on that number they are basically firing 20% of their workforce.
Delete@ 09,13
DeleteA few years go, with all the subsidiaries that you mention, they had around 2.500 employees.
They will have just over a 1000 now.
DeleteWaiting for the OS situation is really bad and TK offering only water and LH complicated situation.
ReplyDeleteWell, today's headline proves how grave the situation is with the aviation industry. Probably the hardest crisis ever.
Wonder which routes have 80% LF
ReplyDeleteZurich
DeleteIST as well.
DeleteThe TK codeshare must be helping this route quite a bit.
DeleteNew York doing good too.
DeleteAlthough JU's flights to JFK had the best CLF for JFK, average was around 67%.
Deletehttps://www.exyuaviation.com/2020/11/air-serbia-tops-new-york-jfk-load-factor.html
I would say LCA had decent loads considering how quickly they increased frequencies, upgrading some flights to the A320.
Please read the news as clearly indicated LF for September only is 67%. JfK over somer time was around 88%.
DeleteExpected.
ReplyDeleteGood to see they are taking some concrete action.
ReplyDeleteIt's going to be a difficult few months.
ReplyDeleteMore like years.
DeleteJU will be ok in the long run.
DeleteJU has survived much worse than Covid. So I think it will be fine.
DeleteJU"s gonna change the name again ,just watch
DeleteThey will pull through this.
ReplyDeleteThe show must go on.
ReplyDeleteGood!
ReplyDeleteI doubt you would say that if you worked at JU.
DeleteI meant good that they are taking other measures like reducing costs. Redundancies are inevitable at every single airline.
DeleteThis was to be expected.
ReplyDeleteWhat else is to be expected?
DeleteIf they were able to secure credit lines it means banks are generally satisfied with their finances and ability to pay off debt, contrary to what people write in the comments here.
ReplyDelete+1
DeleteI would rather expect the banks are satisfied with the collateral they received while lending to JU and in particular with state guarantees they received.
DeleteNowadays without state guarantees there would either be no credit for most of the airlines or the terms of that credit (in particular regarding interest rates) would be unsatisfactory. So you basically think that KLM or AF need state guarantees to be able to lend on the market at satisfactory terms, but ever loss making JU does need that?
If JU lent money without state guarantees, then the interest rate is much above the rates from the famous Etihad Partners loans. That is not a good solution.
You mean if JU received money.
DeleteI don't think there are many who will voluntarily leave especially because they did this when JU relaunched a few years ago. So not many people about to retire.
ReplyDelete150 million in aid is a lot!
ReplyDeleteIt is good and right that states bail out their ailing airlines now.
DeleteI agree but it's not good that all ex-Yu airlines are bailed out each and every year.
DeleteGenerally speaking its bad all around. I was speaking to a friend who works for LCA and she told me that ATH performs the best and those have between 80 and 100 passengers. EK, LH, OS... all have between 20 and 30 passengers per flight. There was one BLL-LCA flight that arrived with 2 passengers.
ReplyDeleteNext summer will be even worse as many won't have enough money to travel. What matters is for airlines to wait for the storm to pass and to get their house in order. After all, businesses like JU can use this opportunity to trim some fat which they couldn't do before.
Agree with you. That is why airlines that can rely on strong government support will do much better.
Delete"Businesses like JU can use this opportunity to trim some fat". Couldn't agree more with you NEMJEE. Well said all the way.
DeleteNot only trimming some fat but also taking the opportunity to re-organize, re-prioritize, get better rates for various services (which they have done) and generally be ready to go when the time comes. Be the first out of the 're-starting' blocks with new energy and strategy.
DeleteTrue dat!
DeleteOn top of there being little demand, the travel restrictions must be having a big impact on their bottom line unfortunately.
ReplyDeleteI'm curious to see what their loss will be in 2020.
DeleteYou will have to wait till August 2021 to find out.
DeleteGood luck to every Ex-Yu-Airline in this crisis! Hopefully everybody will survive this!
ReplyDeleteThis is more than expected and the losses will be seen by all airliners.
ReplyDeleteThat is good news for JU!
ReplyDeleteHow can this be good news???
DeleteHe probably meant because they need to cut their bloated workforcs anyway
DeleteSad :(
ReplyDeleteFlight crews will be most affected.
ReplyDeleteThat has been the case all over the world.
DeleteBase sallary for JU crew isn't that big so this reduction will hurt. Especially since there is little duty time. Those that can New York are lucky because they get hours (plus a nice long layover in Manhattan).
ReplyDeleteWhat is the base salary for JU crew?
DeleteBase salary for JU crew isn't big comparing with other airlines but in which branch in Serbia you can compare salaries with those in western countries?
DeleteI realize that but just interested (as someone from Serbia) what it is approximately, if someone knows of course.
DeleteI believe around 500 euros.
DeleteSo much for the government's dreams how covid will be a big opportunity for Air Serbia.
ReplyDeleteThis is very mean comment in the time when people are losing their jobes.
DeleteEveryone knew that no airline can make positive results in these challenging times and honestly I have never heard that Government has ever said that.
I would be thankful to you if you could post a link proving it.
The Serbian Minister for Construction, Transport and Infrastructure, Zorana Mihajlović, has said talks could soon begin over the acquisition of additional aircraft for Air Serbia. “We are thinking about starting negotiations for the acquisition of some aircraft. This is the right time, because there will never be an opportunity like this where prices on the market will be so low”, Ms Mihajlović said. She added that new opportunities on the market would present themselves to the airline as some carriers in the region will inevitably go bankrupt.
DeleteEarlier this month, Serbia’s Finance Minister said, “We are currently in discussions with the management [of Air Serbia] and drafting a business plan. We might use this opportunity to acquire another aircraft which could be used to fill the void on the market left by the number of airlines going into bankruptcy, which Air Serbia won’t. Therefore, we will examine how we can even better position the carrier following this crisis”.
https://www.exyuaviation.com/2020/05/right-time-to-acquire-aircraft-for-air.html
I think you misunderstood.
DeleteIt is the opportunity to lease an airplane for a better price and it is a chance to have more flights with more planes AFTER the crisis but it is not now the big opportunity for Air Serbia.
As you quoted
"Therefore, we will examine how we can even better position the carrier FOLLOWING this crisis”."
Certainly during the crisis it can't be taken as a chance but a big problem as due to the less flights and income some employees need to be fired.
The situation is absolutely dire everywhere in the world. Just the other day Etihad fired another round of people (mostly cabin crew and pilots).
ReplyDeleteNumber of crew at EY will go down from 5000 to just 1500.
DeleteTerrible. Feel sorry for all those affected.
DeleteOnce the current situation subsides, the potential to rehire the current batch of laid off workforce will become very likely, as the induction and training costs that accompany brand new staff will not be present with them.
ReplyDeleteHope so.
DeleteI am sorry for staff that will be fired, hopefully they will get a compensation. In the long run, JU had a lot of staff, some trimming is good for the future though.
ReplyDeleteThey will
Delete"Air Serbia plans to offer 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 coronavirus pandemic."
Why would they care. The government will bail them out.
ReplyDeleteActually today's article shows they care very much and that the company does not rely only on state subsidies
DeleteExcellent comments, anon 11:45!
DeleteIt seems that some people make just copy and paste of certain comments made related to other air carriers in the region.
Oh yes because only OU and YM got aid while JU never get anything.
DeleteI did not see OU and YM did anything except asking for financial help from Government to improve its current situation.
DeleteUnlike JU.
If you didnt see that doesnt mean it doesnt exist. Also that doesnt matter in wrong information from Anon 12:05 which litearally says only OU and YM got subsidies.
DeleteWhat did OU do except asking for millions of EUR?
DeleteSame as JU, negotiating about power by hour lease contratct, reducing seasonal workforce, cutting operations, finding charter business, providing mainteince to new airlines, conserving aircrafts...
DeleteAlso deferning payments for aiplane lease
DeleteJU did not reduce "seasonal" workforce.
DeleteOU charter division if very, very minor especially comparing to Air Serbia. They could not even open base in LJu despite it was announced after Adria went belly up.
To which airlines did they provide maintenance?
In last 12 months they got more than 90 mil EUR cash just to survive!
There were numerous articles here on the measures OU took to cut costs.
DeleteAnyone considering paying 70k+ eur for pilot training at this point in time: stay away!!!
ReplyDeleteThere are approximately 10000 unemployed experienced pilots on the market in Europe. The probability of getting a job in the next couple of years is about the same as being struck by a lightning.
True unfortunately
DeleteWhat is happening with the two former Adria Airbus A319 aircraft that recently arrive in BEG? YU-APM and YU-APL?
ReplyDeleteOne of them did some flying over Belgrade last week.
DeleteSo perhaps that means it will be joining the fleet soon.
DeletePossible
DeleteAt least it seems that in all three ex-Yu countries with national carriers there is a consensus that the national airlines must survive.
ReplyDeleteAs they should
all governments across the world are saving their airlines.
Airline is a big contributor to the tourism industry. This summer the season would have been even worse without them. They deserve for the losses to be covered. They could have easily parked planes to save costs but then many other industries would have struggled even more.
Ako su već ispregovarali da lizing aviona plaćaju po satu letenja,zašto ne iznajme još jedan A330 i budu spremni za dugolinijsku ekspanziju po okončanju korona krize?
ReplyDelete