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.
It's a shame that instead of the planned massive expansion this year we will see a reduction in frequencies and routes.
ReplyDeleteThat is reality everywhere. Only people on the Balkans think that now its a expansion time and how JU will profit from it.
DeleteReality is that the aviation sector won't come back to 2019 levels until 2024.
Deleteor 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)
DeleteThat's absolutely true, not to mention the online universities and some schools.
DeletePlus, the vaccine that will take a long time if efficienct to be widespread and the passenger confidence. The new reality is here.
And rail will slightly start to take over on short haul and regional. It is already going on in Germany, Italy etc.
DeleteRupa bez dna
ReplyDeleteКао 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.
DeleteBravo anon 09:13!
DeleteBravo anon 09:03!
DeleteAnon 09.13
Delete+1
you mean Pegasus
Delete@Anonymous 09:13
DeleteBaš 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. :-)
Anon 17.34
DeleteА 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
Meni nije problem da povežem da AS znači Air Serbia na ovom blogu o ex-yu avijaciji.
DeleteКључна реч: авијацији.
DeleteУ авијацији, или ваздухопловству, користе се посебни кодови који означавају авио-компанију о којој се ради, дакле JU је Air Serbia а AS је Alaska.
Maybe this is the chance to finally address the fleet and restructure it as well.
ReplyDeleteIf your aim is to save money, expanding the fleet isn't a viable option.
DeleteI didn't say expand, I said find the best aircraft that suit their current needs and retire dinosaurs from the fleet.
DeleteJU needs an aircraft like A220 or Embraer E190 for the majority of its routes.
DeleteAgree
Delete2 restructurings in 6 years. Great success.
ReplyDeleteMaybe 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^^^
DeleteTrue dat!
And EU will not allow this. By EU rules y
Deleteou can restructuring once in 10 years.
^ You might want to read the updated rules. People here act as if corona hasn't happened. Open your eyes people.
DeleteAgree 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@9.17 Many people here live in a parallel universe.
Delete@9:14 Agree with Naysmith, time for change, but I think Jiri is doing quite a good job as CCO!
DeleteI 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.
DeleteThis is just one of many examples. Other things include an absolutely atrocious corporate program and a lack of a frequent flyer program.
Wasn't Jiri the one who opened so many new routes in 2019 and announced for 2020?
DeleteAnd 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
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?
DeleteIsn't there a legal action against Naysmit in like Italy?
DeleteYes, there is.
DeleteHopefully the government starts looking for alternatives, they should start with an ad on Infostud.
Deleteanon 16:03
DeleteHe never worked for LO, so I don't understand your point.
Probably that's why it didn't go bankrupt. :D
DeleteHe worked for LO and for OK and for MA and for AZ. Not a good list of businesses in my opinion.
DeleteYou are joking. At what positions he supposedly worked at these companies? Luggage handler? Vacation trainee?
DeleteHis 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.
DeleteThis doesnt sound good
ReplyDeleteIn 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.
DeleteI don't see an issue.
ReplyDeleteIt is the case with all airlines
ReplyDeleteExactly
DeleteIt is not. There are differences between restructuring and state aid.
DeleteWell 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.'
DeleteIn other words every country looks to protect its airlines for s good reason.
And? There are still differences between restructuring and the state aid.
DeleteI don't see what sort of point you are trying to make?
DeleteWhen something happens to JU, you guys immediately jump to either LH, OS or RO. Jesus Christ.
DeleteI 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?
DeleteThe 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.
DeleteFor 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.
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"Two days ago LH even announced the closure of their crew base in Bangkok. "
DeleteLH had a base in Bangkok?
He wrote crew base.
DeleteSrećno AS
ReplyDeleteSince his mentioning Air Baltic, how much have they gotten in aid?
ReplyDelete€250 million
DeleteIn 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.
ReplyDeleteFurthermore if government wants to give more aid it can recapitalize the company like what Croatia will do next week with Croatia Airlines.
DeleteOr Mali can just quote the Italian minister who said the other day Alitalia deserves a SECOND chance.
DeleteEU 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.
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.
DeleteThere is big number of online finance courses you should take one.
DeleteThey 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+1
DeleteWell 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).
ReplyDeleteI believe OSL has worked out well for them.
DeleteThey are also doing well in LCA, there are flights with 100+ passengers.
DeleteIST is doing very well around the New Year. On 2nd of January Air Serbia flight to IST is sold out.
DeleteSorry, it's not actually full, my mistake
DeleteGood.
ReplyDeleteAbsolutely EVERY airline in the world needs to restructure.
ReplyDeleteWizz Air doesn't.
DeleteNot 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.
DeleteLike 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+1
DeleteActually 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.
ReplyDeleteThat would be an interesting read
DeleteMore money for the UAE. Not surprised.
ReplyDeleteDon't be
DeleteHow is this more money to the UAE?!?!?
DeleteThese are all desperate measures
ReplyDeleteDesperate times request desperate measures
DeleteIt's a desperate situation for the entire global aviation industry.
DeleteI wouldn't say that this is unprecedented. Most airlines are doing it.
ReplyDeleteExactly. Don't see what the fuss is about.
DeleteThe changes are necessary
DeleteDoes 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.
ReplyDeleteis JAT Tehnika really cheaper (and more efficient) than other maintenance facilities?
DeletePlaces 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
Didn't they just conclude deal with MTU?
Deletehttps://www.exyuaviation.com/2020/11/mtu-inks-contract-with-air-serbia.html
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
DeleteI 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.
ReplyDeleteReally unfortunate
ReplyDeleteYes, corona has been an unfortunate thing to happen to the world.
DeleteRestruktuiranje:
ReplyDelete-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.
izlgeda da planiraju promenu ownershipa, to je ono što će biti najzanmljivije ovde
Delete+1 Petar, Definitely
Deleteties with Etihad are probably gonna end
Delete"ownershipa" hahahahah .... good one.
DeleteA šta je trebao da napiše, vlasništvo?
DeleteHe should have written vlasništvo
DeleteYeah, but I'm not sure how cool that would have been.
DeleteТребало је да напише ,,власничка структура''. Република Србија и даље остаје већински власник само повећава своје удео у Ер Србији.
DeleteTime to focus on charters and cargo only. This will be the future. Aviation will neva be the same again.
ReplyDeleteYea right
DeleteYes, I'm sure all airlines will stop regular passenger flights and will only fly cargo and charters.
DeleteDon't feed the trol.
Deleteove komentare za cargo ako ne piše veselin lično, evo ne znam
Delete???
DeleteI think we will farewell EY soon.
ReplyDeleteJU should make out of the two B737 cargo aircrafts with the big door on the side
ReplyDeleteMight not be a bad idea, but how much more life do those B737s have in them?
DeleteAlso, how much would that refurberation cost, and is there a demand for that much cargo, to/from Serbia?
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.
DeleteOK, but does that mean JU could not get another 5 years out of them as Cargo transporters?
DeleteConsidering that they would not be in everyday use.
Cargo conversions of 737s would probably cost around 2-3m USD per aircraft.
DeleteConverting such an old aircraft to cargo, only to expect it to scrap it in 5 years makes no financial sense.
Ok, thanks for that info.
DeleteSo this is the new Alitalia?
ReplyDeleteNo, for that we need at least 60 years of mismanagement and a single year of profitability (I think 1997).
DeleteBravo 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.
ReplyDelete300 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...
ReplyDeleteSay that to the Poles, I guess they should should down LO.
DeleteOr to OU
DeleteHungary 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.
DeleteBUD is not owned by Hungary but privately held.
DeleteBUD 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.
DeleteSo 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.
DeleteBy the way: compare a discount structure at BUD and BEG and you will see what subsidies for a local carrier mean.
Why no ryan air in beg
ReplyDelete