Aviogenex goes into liquidation

State protectionism blamed for Aviogenex’s fate

The Serbian government has sent its struggling charter airline, Aviogenex, into liquidation, together with another 187 state-owned companies, as it looks to lay off 5.000 workers. The long-promised move is aimed at meeting the terms of a one billion euro loan deal with the International Monetary Fund. The government says the charter airline, once the former Yugoslavia’s busiest, will be liquidated since no interest was shown for the company when it was listed for privatisation mid last year. However, JetVision Balkan from Serbia, GLT Overseas (Middle East) from the United Arab Emirates, Euroswiss Investment Holding from Switzerland and Arctica Airlines from Russia all submitted letters of intent for the purchase of Aviogenex in August 2014.

GLT Overseas has contradicted the Serbian government’s version of events, explaining that the state failed to respond to any of its investment proposals. “Our investment and development team visited Belgrade in December 2013 and held talks with Aviogenex’s management”, the UAE-based company says. It adds, “In the summer of 2014 we held talks with Serbia’s Privatisation Agency and submitted a formal letter of intent”. According to GLT, the company proposed to register two wide-body aircraft in Serbia worth sixty million dollars and invest fresh capital into Aviogenex. “We would have employed several hundred people and given them the opportunity to inherit the vast experience accumulated at Aviogenex over the years”, the company says.

Prior to the break-up of Yugoslavia, Aviogenex was the busiest charter airline in the country, handling over half a million passengers per year in the late 1980s. However, the carrier has fallen on hard times with a single and aging Boeing 737-200 jet grounded at Belgrade Airport and 39 employees, which includes pilots, cabin crew, ground engineers and flight dispatchers. The company says its privatisation process has been mishandled by the government so as to protect the Etihad-backed Air Serbia. Its employees claim that the state does not want to create additional competition for its national airline. Over the weekend, the acting CEO of Aviogenex, Bojan Nikolić, sent an open letter to the Serbian Prime Minister, urging him to reconsider the government’s liquidation decision.

Aviogenex was set up by one of Yugoslavia’s leading foreign trade giants, Genex, in April 1968. It operated its first commercial flight between Belgrade and Dusseldorf on March 30, 1969 with a Tupolev Tu-134 aircraft. Aviogenex clocked up 2.166 hours of flying time and carried 51.178 passengers during its first year. The company grew at a moderate pace, solely as a charter airline, catering for the needs of Yugoslavia’s largest tour operator, Yugotours (which has also been listed for liquidation by the government). In 1983, Aviogenex began modernising its fleet by purchasing three Boeing 727s and later two B737-200s. The airline saw its busiest year on record in 1990 when it carried 633.932 passengers with a fleet of ten aircraft. Ironically, its B737-200, which has been grounded in Belgrade since February 2014, is younger than most of Air Serbia’s remaining Boeing 737-300 jets operating under the Aviolet charter brand. Under liquidation, Aviogenex’s assets and property will either be sold or redistributed before the company is officially dissolved by the liquidator.