EX-YU carriers feeling the coronavirus crunch

The International Air Transport Association (IATA) foresees 2020 revenue losses in numbers above $100 billion for the global air transport industry as a result of the coronavirus Covid-19 health emergency which has led airlines to suspend flights and ground aircraft. Some carriers are planning to completely suspend operations this week. The three national carriers in the former Yugoslavia are continuing to run flights, albeit at a significantly reduced rate. However, all three will be severely affected by the ongoing situation as each one relies on government support to stay afloat even in the best of times.

Air Serbia has cancelled hundreds of flights. The Serbian government on Sunday declared a state of emergency, banning all foreigners from entering the country, which will further impact the carrier’s operations. The airline is already the beneficiary of state subsidies. The national carrier is one of 63 companies “of special importance” which will share eighty million euros in subsidies among themselves this year. Although the exact amount of funds has not been specified, the airline was the beneficiary of 20.8 million euros "from premiums, subsidies, grants and donations" both in 2017 and 2018. In addition, Air Serbia will pocket five million euros for subsidised operations out of Niš this year and 2.7 million euros for its services from Kraljevo, both of which are currently suspended.

Croatia Airlines has cancelled all international flights from the country’s coast and has begun cancelling select services from Zagreb. The carrier’s privatisation process, which was expected to boost its liquidity and investments in fleet and network, has been suspended until further notice. Croatia Airlines will be the beneficiary of the second instalment of the government’s 33.7 million euro cash injection this year, which was aimed at stabilising the carrier prior to its privatisation. The airline will receive 20.2 million euros this year which will go towards aircraft maintenance, debt and loan repayments, as well as other essential investments. However, the figure will have to be repaid within two years.

Montenegro Airlines has suspended the majority of its flights, with services to one of its most important market - Serbia - to be further affected by the country’s state of emergency. Late last year, the Montenegrin government adopted a bill “for the investment and consolidation of the national carrier”, granting 155 million euros to the airline over a six-year period. The government noted that 105 million euros would be used to cover the airline’s debt, while fifty million would be utilised for the acquisition of new aircraft. The state emphasised that the bankruptcy or closure of the carrier would have a negative impact on the Montenegrin economy and its tourism sector. In early March, the airline adopted a decision to shut down its representative offices in Moscow, Paris, Vienna, Frankfurt and London by the end of this summer, as well as reduce its workforce by 50% at its Belgrade office. The carrier has also begun talks with unions over reducing its overall headcount. These measures were adopted prior to the full impact of the coronavirus.

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