State approves Air Serbia subsidies for 2020

The Serbian government has approved a draft of the country’s state budget for 2020 which foresees subsidies for Air Serbia. Although the exact amount of funds has not been specified, the national carrier is one of 63 companies “of special importance“ which will share eighty million euros in subsidies among themselves. The airline was the beneficiary of 20.8 million euros "from premiums, subsidies, grants and donations" both last year and in 2017. The figure has been significantly decreased from 41.8 million euros in 2016 and is in line with the transaction agreement between the Serbian government and Air Serbia’s minority shareholder Etihad Airways.

The Serbian government maintains these funds are being used to pay off old debt owed by Air Serbia's predecessor Jat Airways, however, the accuracy of these claims has been contested. In August, the Serbian Prime Minister, Ana Brnabić, noted, "The Government of the Republic of Serbia did not give a single dinar, euro, dollar or any other currency to subsidise Air Serbia. What you see as income from premiums is to pay off the debt accumulated by Jat, which we have taken upon ourselves. Their [Air Serbia's] financial reports will display these payments until 2023 because this is debt owed by Jat".

This summer, the now-bankrupt Adria Airways filed a complaint against Air Serbia with relevant European institutions over what it sees as illegal state aid provided by the Serbian government to its national carrier. The Serbian Finance Minister, Siniša Mali, noted that Jat's debt amounts to 380 million dollars, which was taken over by the state in 2013 and will take a decade to pay off. "We did not have 380 million dollars to pay off Jat's debt straight away. Instead, we will be making payments over a ten-year period. We process the loan as debt repayments either through Air Serbia or directly. However, none of the money goes into Air Serbia itself", Mr Mali, who previously headed the company's Supervisory Board, said.

The Prime Minister has vowed the government would stand by the carrier in the years to come. "The government of Serbia will maintain its strong support for Air Serbia. This support will be in line with European Union regulations, as it has been so far, however, no one can prevent us or limit our support for Air Serbia", Ms Brnabić said. She added, "Air Serbia plays an important role in the development of tourism, improves our economic ties with numerous countries and strengthens our country's brand. It has been an important driver of economic growth and I am certain that we will see even better results ahead since there are good prospects for further growth". Air Serbia has justified the support by noting it gives back one billion dollars to the Serbian economy each year and that it plays an instrumental role in the country's economy. "The contribution that Air Serbia makes to the national economy and the job market in Serbia cannot be overstated. We support thousands of jobs directly, through our airline operations, and indirectly, through the powerful domino effect that Air Serbia has on stimulating economic activity throughout the country”, the airline previously said.

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