A decade ago, governments across the former Yugoslavia were looking abroad for investors in their national airlines. Serbia brought Etihad Airways into its flag carrier, while Croatia and Montenegro sought strategic partners of their own. Today, all three carriers are under state control and privatisation is not under consideration.
The 2013 deal that transformed Jat Airways into Air Serbia gave Etihad a 49% stake. State recapitalisations during the pandemic diluted the Emirati carrier’s holding to 16.42%, which Serbia acquired in November 2023. As Etihad’s stake shrank, Belgrade remained open to bringing in another foreign airline. In 2023, then Serbian President Aleksandar Vučić said he had asked Qatar’s emir in Doha whether Qatar Airways would consider becoming a strategic partner, arguing that an investor could help shield Air Serbia from future risks. Qatar Airways ruled out taking a stake two months later.
Air Serbia CEO Jiri Marek told “Aviation Week” last month that the benefits of consolidation “can be only unlocked if you integrate fully”. Mr Marek noted, “We believe we have something too unique to offer and we are open to a partnership. It doesn't matter if it's just informal or whether it’s interlines, culture, joint ventures; equities, whatever makes sense for both parties, we are always open to talk”.
A recent analysis in Strategic Air Gap compared the paths taken by Air Serbia and Kenya Airways after both brought in foreign airline investors. It suggested Kenya Airways could draw on aspects of Air Serbia’s approach, including greater strategic independence, aligning its fleet with its network and developing its hub.
Croatia’s first attempt to sell a stake in Croatia Airlines drew no bids in 2013. A renewed search in 2019 attracted interest from Aegean Airlines and Air Nostrum, but the pandemic put the process on hold. Transport Minister Oleg Butković has since said the government could revisit privatisation and the search for a strategic partner in the future, once the airline completes its fleet renewal process, which is expected next year. However, the airline’s financial performance has deteriorated over the past few years.
Montenegro earmarked its former flag carrier, Montenegro Airlines, for privatisation and held talks with Etihad in 2015 and 2016. The two airlines signed a commercial cooperation agreement, but Etihad never took a stake. After Montenegro Airlines ceased operations, the government set up Air Montenegro, which began flying in 2021 and remains wholly state-owned. Podgorica has announced no search for an equity partner in the new carrier. Air Montenegro has pursued commercial partnerships of its own, including a codeshare with Turkish Airlines. However, it has also invested heavily in the carrier and this winter will directly fund close to 50% of the airline’s network through its Public Service Obligation contract.
Considering the situation in the industry, I doubt any foreign airline will be interested in any ex-Yu carrier.
ReplyDeleteYou never know. Lufthansa seems to be buying airlines left and right. And it seems EU has no issues over competition regulations when the same airline buys most of the leading carriers on the continent. Perhaps at some point they will be interested in this region. Buying OU makes little sense. They already do everything they are told.
DeleteSIT, STAY, DOWN, HEEL, COME...
Delete^ stop shouting.
DeleteOn a serious note I really do wonder how Lufthansa has no regulatory issues buying every single airline in Europe
DeleteAnd when Korean bought Asiana they had to make a whole number of concessions to the EU to get the deal approved.
DeleteYou believe in open market?
DeleteI do. But the EU is very selective as to who can enjoy that open market.
DeleteTime to join it then.
DeleteHave no illusions, joining the EU doesn't mean equal treatment for all member-States. There is a hierarchy which gives LH an unfair advantage over everyone else. It has never been a fair playing field. Any attempt to trivialize fact that is just trolling.
DeleteAt least it gives a voice at the table.
DeleteWhat Joint Ventures does Air Serbia currently have? What is the status of Menzies Air Serbia Joint Venture?
DeleteIf you just put in professional management as they have done at one of these airlines, great things can happen.
ReplyDeleteFully agree.
DeleteAnd it wasn't even fully professional management at JU, but a mix of professionals and party appointees.
DeleteHopefully the new government enables the company to get rid of any dead weight.
any political appointees had no say in airline's strategy or development.
Delete...and it should stay so.
DeleteI am not sure if Air Serbia needs any privatisation at this moment.
ReplyDeleteThey are very successful, they never had bigger fleet, they fly to over 100 destinations and they are profitable.
We will see the real financial situation only after the new government takes power.
Delete^ hope dies last for you.
DeleteNone of the state owned Airlines should be privatised. It is best to keep them all state owned. In the UK the government is starting to renationalise companies it previously privatised such as Water, Railways , Buses etc. If you privatiseban Airline all the non profitable routes will be scrapped but yet are important routes . Relying on Wizz, Ryanair or easyJet is not the way to go!
ReplyDelete^ Although the UK has a VERY privatised aviation market and the among the largest and most dynamic in Europe. I don't think any buses have be nationalised, rather far better regulated.
DeleteThat being said I agree with you that certainly the Serbian government shouldn't try to privatise JU. It has proven that it can achieve excellent success despite Serbia's less than smooth political landscape and sometimes confused geopolitical stance. That should be cherished and strengthened.
This might be unpopular but out of this three I think Air Montenegro is in the worst position. If it enters the EU in 2028 I don't see a chance for them competing properly. I know they are dreaming of flying intra Europe (between different EU markets) but this has almost never worked, and Adria is a good example of it. Almost 50% of all flights now directly being funded by the government is crazy..
ReplyDeleteAt least Air Montenegro is profitable.
DeleteI wonder how OU, as national carrier of EU member, can be tolerated by EC as they are being endlessy sponsored by their Government.
Good political standing of current PM among current EU decision makers.
DeleteLCCs will absolutely destroy the yields on Serbia-Montenegro routes after MNE joins the EU
Delete^ people were also saying how LCCs would RUSH to launch Zagreb-Dubrovnik once Croatia joins the EU..
Deletethat's true. I am not so confident that LCCs will run to start BEG flights from TGD. Zivi bili pa videli as they say.
DeleteI think Wizz will definitely start it, but how successfully remains to be seen. For example ATH-LCA comes to mind where they haven't done particularly amazing. And of course JU will still have plenty of transfers to rely on.
DeleteWell we are while off from knowing.
DeleteI can see why Croatia would want to finish the fleet renewal before approaching investors again. But if the losses are still there once the transition is complete, which seems inevitable, what exactly is the government expecting a partner to fix?
ReplyDeleteLet's be real here...nobody wants to buy them.
DeleteThey can approach whoever they want...pointless.
Now, two possibilities exist: 1. Croatia has a potential buyer (delisting from the stock exchange). 2. They are just doing a bit of daydreaming.
DeleteMy guess is they just want less scrutiny of their financial reports.
DeleteI really hope someone is interested in buying but I just don't see who and why would be interested.
DeleteIf we assume that someone, let's say, bought Croatia Airlines, it's likely that there won't be routes like Dubrovnik-Zagreb, Zagreb-Split, Zagreb-Skopje, etc., anymore... Some time ago, Mr. Bedić said that one of the tasks of the national carrier is also to operate routes that almost have no passengers. However, he added that some routes have to be supported by the state precisely for this reason.
DeleteWhy is ZAG-SKP a national carrier task?
DeleteI think the 15:13 was trying to say that a national carrier's job is to provide and maintain connectivity on routes that might not be commercially viable for other airlines. I guess that is what they were trying to say.
DeleteZAG-DBV and SPU should be profitable though.
DeleteAegean was the most interesting name in the Croatia Airlines process for me. Both airlines have to plan around a big summer peak on the coast. I winder what Aegean would have done with Zagreb in winter.
ReplyDeleteI don’t mind the state owning the airline if the accounts are transparent. How much does it cost the taxpayer each year, and what connectivity are we getting for that money? Same questions for all three carriers.
ReplyDeleteWell for JU you already have the answers.
DeleteAirline by itself in last couple of years paid to Government's budget at the same time building huge connectivity out of Belgrade.
For the other two...especially OU...good question.
The next time Air Serbia sits down with a potential partner, it’ll have much more to offer than Jat did in 2013.
ReplyDeleteExactly.
DeleteDoes anyone remember this?
https://www.exyuaviation.com/2011/09/airbaltic-expresses-jat-interest.html
And now Air Serbia and airBaltic both have almost the same number of passengers while financial picture looks incomparably better at JU.
Crazy how much times have changed
DeleteThere was also interest from Air Asia at one point but the government had by then chosen Etihad as a future partner and completely ignored that interest.
DeleteYou are right, I completely forgot it.
Deletehttps://sg.finance.yahoo.com/news/air-asia-talks-buy-serbias-jat-airways-report-005536291--finance.html
For those interested in the Air Asia story, it was actually much more serious than the media suggested. Here is a recount of the whole story (only in Serbian though)
Deletehttps://ibb.co/sdZP9nwK
https://ibb.co/39V4V68P
^ Thanks for that! Did not know that
DeleteVery interesting indeed. I wonder where things would have landed if that happened. Considering Air Asia's financial problems.
DeleteAnyone remember Garuda wanting to buy OU?
ReplyDeleteIndeed
DeleteEven Air India, if I remember correctly.
DeleteAnyone wanting to buy OU needs to give their head a wobble
ReplyDeleteAnd the first airline sold to a foreigner was B&H Airlines to Turkish and it collapsed.
ReplyDeleteWell it didn't just collapse. Turkish exited and then it collapsed after a year or two.
DeleteSame with national airline in Albania.
DeleteIt seems that TK, here on Balkans, is not the best partner to build airline with.
They have proven terrible wherever they invested.
DeleteThe three cases are quite different. Serbia bought out its partner, Croatia put its search on hold and Montenegro started again with a new airline. It would be interesting to see which government would actually entertain an offer if one landed on the table tomorrow.
ReplyDeleteCertainly all three would entertain an offer.
DeleteNot so sure Serbia would entertain the offer for Air Serbia. It is absolutely better if it stays government owned.
DeleteSome sort of partnership such as codeshare etc would sound interesting, but there is no benefit for Serbia to sell the airline or significant percentage of it. Unless, of course, some neoćaci from the new government decides it would be better for Serbia to sell the airline. That would be game over for Air Serbia.
I agree that its better to keep it in state ownership. But we have plenty of historical evidence that shows that one day some politicians will pop up and think...'ah, how much money can we make from this' and then indeed things might change. But for now i think JU is safe in state hands (and god there is not much that has been!).
DeleteKind of sad that neither of these three airline cooperate with each other.
ReplyDeleteJU certainly doesn't need it
DeleteJU actually offered cooperation to both.
DeleteYep they offered codeshare to Croatia Airlines and Air Montenegro.
Delete@09:41 its kind of sad the three governments take every opportunity to not cooperate with each other on other aspects of connectivity and too...
DeleteNot only do they not cooperate, but several regional airlines have attempted to trip up JU:
Deletehttps://www.exyuaviation.com/2024/08/delta-croatia-object-to-jetblue-air.html
https://www.exyuaviation.com/2019/06/adria-files-eu-complaint-against-air.html
https://balkaninsight.com/2016/01/15/air-serbia-flies-in-croatia-despite-unfair-competitor-charges-01-15-2016/bi/all-balkan-countries/
^ Everyone against us.
DeleteNo, just in this case they did seem to be and I have provided links.
DeleteStates and airports resist things all the time, don't read to much into it.
DeleteThe last link just shows how desperate Croatians were trying to stop JU expansion.
DeleteSad.
It is very interesting that JU these does have code share with JetBlue.
DeleteSo, one more attepmt to stop Air Serbia, but in vain.
The claim by the Croatian CAA is one of the most ludicrous things I have ever read. I'm really wondering who told them it was a good idea to argue this.
DeleteThey just embarrassed themselves.
DeleteGood for them. When Serbia did the same against Wizz, they were right for protecting their glorious market and taxes.
Delete^ only you and a couple of imbeciles thought so. Funny how nationalists like you from both sides are so much alike.
DeleteAF-KLM would soon get AirSerbia to their network. No alliance and partners since many years ago.
ReplyDeleteIf JU was ever to be sold i would rather its sold to IAG.
DeleteJust not Lufthansa Group.
DeleteIn the late 90s BA had close cooperation with Malev, even at one point discussing a stake in it back in the good old days of 736's and Fokkers. Having a coverage in central/eastern/Balkans would be good both for Oneworld and IAG. However I'm of the believe that JU should remain independent for as long as possible because its the best way of 1. keeping its developments accountable to the taxpayer 2. navigating Serbia's geopolitical situation which looks likely to reamin for many years to come.
DeleteTimes have certainly change. 15 years ago it was most important to see if anyone would buy your airline.
ReplyDeleteBetter that they stay state owned
ReplyDeleteStrongly disagree. Just states should be real states rather than partitocracies full of rotten people, corruption, and muddy deals
DeleteWasn't reading carefully. Read "better thaN they stay state owned". Apologize and change strong disagree to fully agree. Providing "states" change to better
DeleteI wonder if Croatia Airlines’ new fleet makes a sale easier or harder. An airline group with a big A220 fleet might see a good fit. A group with a different fleet might put a lower value on the whole deal.
ReplyDeleteAgain, plethora of meaningless tirade. They own only several Heathrow slots.
DeleteReaching out to Qatar Airways for investment? Didn't age well. Reaching out to QR or AA for information regarding support for oneworld membership? That would make some sense, if JU can see clear advantage in joining the alliance. However without transatlantic joint venture, I don't see significant benefit for Air Serbia becoming oneworld member. Seems better if they stay away for now.
ReplyDelete