Air Serbia to restructure


Air Serbia will restructure its business for a second time in six years in order to produce savings and enable the government to provide state aid to cover losses incurred during the coronavirus pandemic. The Serbian Finance Minister, Siniša Mali, said a plan for the restructuring program will be adopted by the end of the year. “The airline has been working on a restructuring program for months, similar to the likes of Air Baltic and other European carriers. The government can not help the airline with a single penny until the restructuring program is adopted, which is in line with European Union regulation on state aid. The Serbian carrier was profitable up until the start of the Covid-19 pandemic, so the government will only cover the losses resulting from the crisis”. 

Mr Mali said that once the restructuring program is adopted, it will be reviewed by the Serbian Commission for State Aid Control, after which it will be sent for approval to the European Commission. Although Serbia is not a member of the European Union, as a candidate state it must adhere to European Union regulation in order to progress in its negotiations to join the block. “Once we send it to the European Commission for approval it will be clear to everyone exactly how much money will be given and for what. I think it is clear that we will support our national carrier”, Mr Mali noted. 

Restructuring entails reorganising the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organised for its present needs. Air Serbia previously drafted a restructuring program in 2016, which saw the company transform from a full fare into a hybrid carrier. It included the termination of unprofitable routes, reorganising parts of the business to produce savings and increasing other revenue streams. The program was approved by the State Aid Commission in 2018. “Every country has provided support for their national airline. So, there is no difference between what the Serbian government plans to do and what other European countries have done so far. We will not allow for the national carrier to fail. Air Serbia is restructuring, the number of employees is being reduced, wages have been slashed and unprofitable routes terminated”, Mr Mali said.




Comments

  1. Anonymous09:02

    It's a shame that instead of the planned massive expansion this year we will see a reduction in frequencies and routes.

    ReplyDelete
    Replies
    1. Anonymous09:04

      That is reality everywhere. Only people on the Balkans think that now its a expansion time and how JU will profit from it.

      Delete
    2. Anonymous09:17

      Reality is that the aviation sector won't come back to 2019 levels until 2024.

      Delete
    3. Anonymous09:35

      or even later (or might never)... many companies realized that online meetings are totally doable and can save you a lot of time and money (same as working from home)

      Delete
    4. Anonymous10:03

      That's absolutely true, not to mention the online universities and some schools.
      Plus, the vaccine that will take a long time if efficienct to be widespread and the passenger confidence. The new reality is here.

      Delete
    5. Anonymous10:25

      And rail will slightly start to take over on short haul and regional. It is already going on in Germany, Italy etc.

      Delete
  2. Anonymous09:03

    Rupa bez dna

    ReplyDelete
    Replies
    1. Anonymous09:13

      Као неко ко је радио у хостелу у Београду не могу да се сложим. Већина наших клијената су били млади Турци или Немци који су углавном долазили Ер Србијом. Они су нама били рупа без дна у смислу константног довођења клијената.

      Delete
    2. Anonymous09:24

      Bravo anon 09:13!

      Delete
    3. Anonymous09:28

      Bravo anon 09:03!

      Delete
    4. Anonymous09:51

      Anon 09.13
      +1

      Delete
    5. Anonymous12:03

      you mean Pegasus

      Delete
    6. Anonymous17:34

      @Anonymous 09:13

      Baš su Turci dolazili sa Air Serbiom.
      Verovatno zato je AS pre nekoliko godina ukinula liniju za Istanbul, nisu mogli da se odbrane od navale turskih turista. :-)

      Delete
    7. Anonymous17:57

      Anon 17.34

      А ко онда лети са ЈУ ако не туристи који долазе у Србију? Слободно погледај број турских туриста у Србији након што је ЈУ увела летове за Истанбул. Бројке су почеле поново да расту након благе стагнације проузроковане ограничењима из међудржавног споразума.

      Иначе, ово је ваздухопловни портал, научите кодове.

      AS = Alaska
      JU = Air Serbia

      Delete
    8. Anonymous23:31

      Meni nije problem da povežem da AS znači Air Serbia na ovom blogu o ex-yu avijaciji.

      Delete
    9. Anonymous06:28

      Кључна реч: авијацији.
      У авијацији, или ваздухопловству, користе се посебни кодови који означавају авио-компанију о којој се ради, дакле JU је Air Serbia а AS је Alaska.

      Delete
  3. Anonymous09:06

    Maybe this is the chance to finally address the fleet and restructure it as well.

    ReplyDelete
    Replies
    1. Anonymous09:08

      If your aim is to save money, expanding the fleet isn't a viable option.

      Delete
    2. Anonymous09:10

      I didn't say expand, I said find the best aircraft that suit their current needs and retire dinosaurs from the fleet.

      Delete
    3. Anonymous09:15

      JU needs an aircraft like A220 or Embraer E190 for the majority of its routes.

      Delete
    4. Anonymous10:24

      Agree

      Delete
  4. Anonymous09:10

    2 restructurings in 6 years. Great success.

    ReplyDelete
    Replies
    1. Anonymous09:14

      Maybe it's time to reconsider the role of Marek and Naysmit. I mean the second one is in court in Italy on corruption charges.

      Delete
    2. Anonymous09:16

      ^^^
      True dat!

      Delete
    3. Anonymous09:16

      And EU will not allow this. By EU rules y
      ou can restructuring once in 10 years.

      Delete
    4. Anonymous09:17

      ^ You might want to read the updated rules. People here act as if corona hasn't happened. Open your eyes people.

      Delete
    5. Anonymous09:21

      Agree with Anon@9.14am 100% ! If after 7 years of EY management and oversight they have not developed any succession planning for future leaders that come from within the company (or frm within Serbia) - then what a failure it has been and the govt should move them on and take a bold decision with someone who they believe can do the job. Afterall, they are footing the bill for everything, so it shouldn't matter what EY thinks any more.

      Delete
    6. Anonymous09:53

      @9.17 Many people here live in a parallel universe.

      Delete
    7. Anonymous10:18

      @9:14 Agree with Naysmith, time for change, but I think Jiri is doing quite a good job as CCO!

      Delete
    8. Nemjee13:20

      I don't agree. In my opinion Jiri also has to go. Recently they were promoting their new code-share with SU via IST as a great thing while times are absolutely horrible. From what I remember you arrive at around 17.00 to IST and then the flight to Moscow is at 02.30 or the next day at around 16.00.
      This is just one of many examples. Other things include an absolutely atrocious corporate program and a lack of a frequent flyer program.

      Delete
    9. Anonymous15:37

      Wasn't Jiri the one who opened so many new routes in 2019 and announced for 2020?

      And wasn't he the one who reacted promptly after Atlas left BEG?

      Also wasn't he the one who actually made LJU work as soon as JP collapsed?

      Isn't it his result that JU signed code share with TK?

      Naysmith yes, Jiri no

      Delete
    10. Anonymous16:03

      No. No and no. He signed off on it but it wasn't his initiative. TK codeshare was the government who made it happen. Don't forget every airline he worked for went bankrupt in end. Why LO didn't call him back when they start growing again?

      Delete
    11. Anonymous16:46

      Isn't there a legal action against Naysmit in like Italy?

      Delete
    12. Anonymous16:48

      Yes, there is.

      Delete
    13. Anonymous17:36

      Hopefully the government starts looking for alternatives, they should start with an ad on Infostud.

      Delete
    14. Anonymous20:07

      anon 16:03

      He never worked for LO, so I don't understand your point.

      Delete
    15. Anonymous21:25

      Probably that's why it didn't go bankrupt. :D

      Delete
    16. Anonymous06:30

      He worked for LO and for OK and for MA and for AZ. Not a good list of businesses in my opinion.

      Delete
    17. Anonymous07:27

      You are joking. At what positions he supposedly worked at these companies? Luggage handler? Vacation trainee?

      Delete
    18. Anonymous07:37

      His former jobs: PwC 1999-2001, government of Dubai 2002-2004, Etihad Airways 2005-2014, Alitalia 2015-2017. So stop spreading fake news. By the way, a good bio.

      Delete
  5. Anonymous09:16

    This doesnt sound good

    ReplyDelete
    Replies
    1. Anonymous09:20

      In these kind of circumstances it would not sound good if any airline wasn't restructuring and looking at ways to reduce costs. You know, there has been this thing called corona that has devastated the aviation industry.

      Delete
  6. Anonymous09:19

    I don't see an issue.

    ReplyDelete
  7. Anonymous09:21

    It is the case with all airlines

    ReplyDelete
    Replies
    1. Anonymous09:30

      Exactly

      Delete
    2. Anonymous09:37

      It is not. There are differences between restructuring and state aid.

      Delete
    3. Nemjee09:56

      Well Germany insisted LH not fire anyone in order to get state aid. Once the government became a shareholder LH announced it would fire 29.000 people this year with another 10.000 next year. Government got a reality check once they became part of the 'problem.'
      In other words every country looks to protect its airlines for s good reason.

      Delete
    4. Anonymous10:00

      And? There are still differences between restructuring and the state aid.

      Delete
    5. Anonymous10:03

      I don't see what sort of point you are trying to make?

      Delete
    6. Anonymous10:07

      When something happens to JU, you guys immediately jump to either LH, OS or RO. Jesus Christ.

      Delete
    7. Anonymous10:09

      I don't see who has jumped at anything. It's an aviation site. We are discussing airlines which are all in the same sort of problems at the moment. What should I jump to? The railway company?

      Delete
    8. Anonymous10:27

      The EC has said that in order for airline to receive aid to cover Corona losses they need to restructure. This is happening or will happen at every European airline.

      For example, Air Baltic, which is used as an example by the minister has received 250 million. Their restructuring plan includes reduced fleet and changes to route network. They called their plan Destination 2025 CLEAN.

      Delete
    9. Nemjee13:24

      Well the point is that almost all governments in the world have done their best to keep their national airlines alive. Germany and Lufthansa are a good example of that phenomenon. German government, which basically has full control over LH, is allowing for so many people to be let go. Two days ago LH even announced the closure of their crew base in Bangkok. Serbia must stand by JU as it stands to lose the most from its bankruptcy.

      Delete
    10. Anonymous15:48

      "Two days ago LH even announced the closure of their crew base in Bangkok. "

      LH had a base in Bangkok?

      Delete
    11. Anonymous16:04

      He wrote crew base.

      Delete
  8. Anonymous09:47

    Srećno AS

    ReplyDelete
  9. Anonymous09:54

    Since his mentioning Air Baltic, how much have they gotten in aid?

    ReplyDelete
  10. Anonymous09:57

    In order for European Commission to approve (which it will) government has to give the amount that does not exceed corona losses. Air Serbia can simply display what it wants as loss incurred from corona.

    ReplyDelete
    Replies
    1. Anonymous09:57

      Furthermore if government wants to give more aid it can recapitalize the company like what Croatia will do next week with Croatia Airlines.

      Delete
    2. Nemjee10:01

      Or Mali can just quote the Italian minister who said the other day Alitalia deserves a SECOND chance.
      EU will approve no matter what Serbia sends them. They were already desperate enough for good PR during covid crisis. They are not going to risk their reputation even more especially at a time when China is becoming increasingly active here.

      Delete
    3. Anonymous10:32

      well the "corona loss" is quite easy to quantify. Just compare sales from March 2019 onwards to the end to the year with the same period in 2020. They are losing like 2 million pax times 120 eur on average (one-way). Subtract the variable costs missed (the unburnt fuel, unused airport and airspace usage fee, all the way to the unserved meals included in the ticket price) and voila. Maybe the calculation is not exactly like this, but whatever it includes and excludes is defined by EC and since everything is written down in an airlines ERP software, calculating the "corona loss" is quite easy. None can try to fake an exense.

      Delete
    4. Anonymous11:33

      There is big number of online finance courses you should take one.

      Delete
  11. Anonymous09:58

    They will be fine money wise. What they need is good management to steer the recovery process. I think they have done well in 2019. They took good opportunities. Hopefully this continues.

    ReplyDelete
  12. Anonymous09:59

    Well they still managed to launch a new route in the middle of corona (Oslo) and increase frequencies compared to pre-covid era on other routes (New York, Istanbul).

    ReplyDelete
    Replies
    1. Anonymous10:24

      I believe OSL has worked out well for them.

      Delete
    2. Nemjee13:26

      They are also doing well in LCA, there are flights with 100+ passengers.

      Delete
    3. Anonymous15:29

      IST is doing very well around the New Year. On 2nd of January Air Serbia flight to IST is sold out.

      Delete
    4. Anonymous15:31

      Sorry, it's not actually full, my mistake

      Delete
  13. Anonymous10:00

    Good.

    ReplyDelete
  14. Anonymous10:00

    Absolutely EVERY airline in the world needs to restructure.

    ReplyDelete
    Replies
    1. Anonymous23:14

      Wizz Air doesn't.

      Delete
    2. Anonymous23:21

      Not yet. Their expansion was a disaster even before COVID-19 and they had some pretty bold predictions during spring that came crashing down. Plus, since they're not a state-owned carrier we may never learn how much liquidity they got from their investors.

      Delete
  15. Anonymous10:01

    Like the article says. "Restructuring entails reorganising the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organised for its present needs. " Present needs of airlines have drastically changes to what they were in the past. So it's completely normal for this process to take place. It would be more concerning if it didn't.

    ReplyDelete
  16. Anonymous10:13

    Actually what's good is that the Serbian Commission for State Aid published all restructuring documents publicly. So we will be able to see exactly what Air Serbia plans to do.

    ReplyDelete
    Replies
    1. Anonymous10:24

      That would be an interesting read

      Delete
  17. Anonymous10:52

    More money for the UAE. Not surprised.

    ReplyDelete
    Replies
    1. Anonymous10:54

      Don't be

      Delete
    2. Anonymous10:58

      How is this more money to the UAE?!?!?

      Delete
  18. Anonymous10:52

    These are all desperate measures

    ReplyDelete
    Replies
    1. Anonymous10:55

      Desperate times request desperate measures

      Delete
    2. Anonymous10:58

      It's a desperate situation for the entire global aviation industry.

      Delete
  19. Anonymous10:53

    I wouldn't say that this is unprecedented. Most airlines are doing it.

    ReplyDelete
    Replies
    1. Anonymous10:58

      Exactly. Don't see what the fuss is about.

      Delete
    2. Anonymous11:36

      The changes are necessary

      Delete
  20. Anonymous10:53

    Does Air Serbia still have their own line maintenance or is it done by Jat Tehnika? If they do, this could be a source of savings.

    ReplyDelete
    Replies
    1. Anonymous11:29

      is JAT Tehnika really cheaper (and more efficient) than other maintenance facilities?
      Places like Turkey offer good rates, JU has done its A330 there in the past, I have a feeling JAT Tehnika is not as efficient as it could be to support JU growth

      Delete
    2. Anonymous11:35

      Didn't they just conclude deal with MTU?
      https://www.exyuaviation.com/2020/11/mtu-inks-contract-with-air-serbia.html

      Delete
    3. Anonymous16:39

      Yes, Air Serbia Line Maintenance handle the whole JU fleet on the line, exept B737 which is handled by Jat Tehnika. As soon an aircraft gets into the hangar for maintenance, it will be done by Jat Tehnika

      Delete
  21. Anonymous11:34

    I do think that the aviation sector will recover way faster than anticipated. More than ever, once all of this will be over next year, people will be willing to travel again after such a long period of restrictions. Plus, yes, technology does help with conf calls, e-meetings, but the reality is that nothing will ever replaced the efficiency of a face-to-face meeting. We are experiencing it in my organization as well. Therefore, business travel will also come back. Nevertheless, this will speed-up the process for many airlines to get rid of many inefficient (old) aircraft & to go for newer, more efficient ones, which is not a bad thing at all for the nature & from a passenger comfort perspective.

    ReplyDelete
  22. Anonymous11:36

    Really unfortunate

    ReplyDelete
    Replies
    1. Anonymous11:38

      Yes, corona has been an unfortunate thing to happen to the world.

      Delete
  23. Anonymous11:43

    Restruktuiranje:
    -Smanjenje flote (izbace Boinge što je i u planu za sledeću godinu)
    -Smanjenje destinacija (ne pokrenu linije planirane za ovu godinu)
    -Smanjenje radne snage(već su pokrenuli odlazak kroz socijalni program)
    Rekonstruisanje uspešno,država može da pomogne.

    ReplyDelete
    Replies
    1. izlgeda da planiraju promenu ownershipa, to je ono što će biti najzanmljivije ovde

      Delete
    2. Anonymous12:58

      +1 Petar, Definitely

      Delete
    3. Anonymous13:38

      ties with Etihad are probably gonna end

      Delete
    4. Anonymous14:29

      "ownershipa" hahahahah .... good one.

      Delete
    5. Anonymous15:41

      A šta je trebao da napiše, vlasništvo?

      Delete
    6. Anonymous16:24

      He should have written vlasništvo

      Delete
    7. Anonymous16:44

      Yeah, but I'm not sure how cool that would have been.

      Delete
    8. Anonymous18:34

      Требало је да напише ,,власничка структура''. Република Србија и даље остаје већински власник само повећава своје удео у Ер Србији.

      Delete
  24. Anonymous12:15

    Time to focus on charters and cargo only. This will be the future. Aviation will neva be the same again.

    ReplyDelete
    Replies
    1. Anonymous13:51

      Yea right

      Delete
    2. Anonymous15:05

      Yes, I'm sure all airlines will stop regular passenger flights and will only fly cargo and charters.

      Delete
    3. Anonymous15:42

      Don't feed the trol.

      Delete
    4. Anonymous18:05

      ove komentare za cargo ako ne piše veselin lično, evo ne znam

      Delete
    5. Anonymous18:41

      ???

      Delete
  25. Anonymous15:05

    I think we will farewell EY soon.

    ReplyDelete
  26. Anonymous16:42

    JU should make out of the two B737 cargo aircrafts with the big door on the side

    ReplyDelete
    Replies
    1. Anonymous17:38

      Might not be a bad idea, but how much more life do those B737s have in them?

      Also, how much would that refurberation cost, and is there a demand for that much cargo, to/from Serbia?

      Delete
    2. Anonymous18:21

      Those 737s are already 35 years old. Even cargo 737s in Africa are newer than that, not to mention that many cargo operators around the world are already moving to NGs.

      Delete
    3. Anonymous18:40

      OK, but does that mean JU could not get another 5 years out of them as Cargo transporters?
      Considering that they would not be in everyday use.

      Delete
    4. Anonymous18:54

      Cargo conversions of 737s would probably cost around 2-3m USD per aircraft.

      Converting such an old aircraft to cargo, only to expect it to scrap it in 5 years makes no financial sense.

      Delete
    5. Anonymous19:08

      Ok, thanks for that info.

      Delete
  27. Anonymous18:24

    So this is the new Alitalia?

    ReplyDelete
    Replies
    1. Anonymous18:35

      No, for that we need at least 60 years of mismanagement and a single year of profitability (I think 1997).

      Delete
  28. Anonymous19:05

    Bravo JU! Despite EU's xenophobic policy towards so-called "candidate" states that they claim they super want in the union you still managed to transport a lot of pax.

    ReplyDelete
  29. Anonymous21:10

    300 milion euros (and counting) later and Air Serbia is still on the verge of bankrupcy...but Serbian state is obviously so much richer than Hungary for example and "must" have national carrier...

    ReplyDelete
    Replies
    1. Anonymous21:28

      Say that to the Poles, I guess they should should down LO.

      Delete
    2. Anonymous22:17

      Or to OU

      Delete
    3. Anonymous23:22

      Hungary seems to be so rich that they are funding Wizz through discounts at BUD. Such larger discounts that the airport cannot turn a profit despite 8 digit pax count.

      Delete
    4. Anonymous23:40

      BUD is not owned by Hungary but privately held.

      Delete
    5. Anonymous06:32

      BUD is being taken over by local businesses after the airport failed to turn a real or big profit in over 10 years. They might be miles ahead of BEG in terms of passenger numbers and size, but in terms of profitability they are LIGHT YEAR behind us.

      Delete
    6. Anonymous07:45

      So you agree that until now, for years BUD was owned by private investors and not by Hungary. And you seem to think that these private investors were pumping up Wizz, losing a chance of making huge profit at BUD? Get real.

      By the way: compare a discount structure at BUD and BEG and you will see what subsidies for a local carrier mean.

      Delete
  30. Why no ryan air in beg

    ReplyDelete

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