Air Serbia steps up internal consolidation

Air Serbia has confirmed it will be reducing its headcount and is considering other measures as the airline transitions towards a hybrid business model. It comes just days after its part-owner, Etihad Airways, posted a 1.87 billion dollar net loss for 2016, fuelled by the underperformance of its equity partners (primarily Alitalia and Air Berlin) and one-off impairment charges. The Chairman of the Air Serbia Supervisory Board, Siniša Mali, said yesterday that thirty employees have been made redundant in its commercial sector. "This is part of a business plan which will boost profitability. All of these measures are standard and part of a process where you try to reduce your losses on one side, and increase profits on the other. Air Serbia is a stable company. We have improved in all metrics compared to last year, both in profitability and passengers carried".

Local media have reported that further redundancies are expected among the airline's flight crew. Mr Mali added, "We are working on outsourcing ground handling and catering in order to reduce costs and increase revenue". Asked whether the carrier's New York service, which is believed to have put pressure on finances, could be cancelled, Mr Mali answered there are no such plans as the route has proven popular with passengers. As part of its internal consolidation measures, Air Serbia will also close its retail stores in Novi Sad, Niš and Užice in Serbia in the coming days. So far this year it has also suspended several routes, refitted its narrow-body Airbus fleet with slimline seats, reduced its on board catering offer and introduced ancillary revenue streams such as a Belgrade Airport check-in fee and Premium Lounge passes at a fee for economy class passengers or those flying on other airlines. The carrier also plans to lease out three Airbus A319 aircraft over the winter.

In a statement issued yesterday, Air Serbia said, "It is true that a number of changes are taking place at Air Serbia with the aim of achieving a more economical business, bigger savings and increased profitability in a very competitive industry, which faces numerous challenges. This is not only occurring at Air Serbia but at a number of airlines worldwide. The rules of the game are changing and the ones that best adapt to them will come out successful". It added, "The consolidation measures will contribute to better organisation, in addition to the optimal use of human resources and savings. The aforementioned measures will in no way affect the timely conduct of business activities and will not impact on the quality of service offered to guests". Furthermore, the airline drew attention to its stronger operational performance for the first half of the year.

Air Serbia rebuffed media reports that the airline is in the process of becoming a low cost carrier. It said, "Air Serbia is not transforming into a low cost company. Air Serbia serves and continues to serve primary global airports, such as JFK in New York, Heathrow in London, Charles de Gaulle in Paris and others. Low cost companies mostly use smaller alternative airports. Air Serbia also boasts a state-of-the-art Premium Lounge at Belgrade Airport, the best in the Balkans, which is not the case with low cost airlines. Air Serbia has its own frequent flyer programme - Air Serbia Etihad Guest - which now counts over 110.000 members. Low cost companies fly from A to B (point-to-point), while Air Serbia offers tickets to 42 destinations via its hub in Belgrade, as well as hundreds of other cities through its codeshare partners. Therefore, Air Serbia cannot in any way transform into a low cost company".