The Serbian government is preparing a state aid package for its national carrier in order to minimise the effects the coronavirus pandemic has had on the airline. Last week, the state informed the International Monetary Fund’s (IMF) mission in Serbia of its plans to assist the company, noting it was currently the only state-owned enterprise which would receive aid. Commenting on the plans, which are yet to be fully revealed to the public, the IMF said, “The authorities agreed that close monitoring of revenue and expenditure risks will be critical going forward. At this stage only Air Serbia had been identified as in need of government support. The mission underscores that state support for troubled state-owned enterprises, including Air Serbia, should be offered in a transparent way. It suggests using the Fund’s technical assistance to help monitor possible losses on bank loans backed by state guarantees”.
The Serbian government had previously said it would provide wide-ranging support for its national carrier. The Minister for Finance, Siniša Mali, noted the government would assist Air Serbia with the repayment of two loans, valued 52.9 million US dollars and 63 million dollars, labeling the airline as being of national interest. The company will see the first of the two loans mature this month. Mr Mali said, “We are negotiating with the creditors. While I can’t reveal the contents of those talks, I can say that we will certainly help Air Serbia. We are working towards resolving this problem together with our partners at Etihad Airways”.
The Ministry for Construction, Transport and Infrastructure has drafted four strategies to financially assist the country’s national carrier. According to the ministry, the country will provide direct fiscal support as its main mode of assistance. The amount will depend on the final financial fallout from Covid-19. It said it was difficult to approximate an exact sum the state would invest in the national carrier but noted the assistance would be continuous and in line with the government’s priorities, needs and possibilities. Mr Mali said that a joint business plan has been drafted with the airline’s management, adding that the current situation in the global air transport sector might be used to acquire another aircraft for the company.
If YM is getting 133 million, I wonder how much Air Serbia will receive.
ReplyDeleteMy guess up to €200 million. Don't forget that unlike YM, JU actually fired employees and resumed flying to most destinations. Charter business is also booming which helps. September will see strong demand for charter traffic which is a lifesaver at this moment for the airline. A lot of bookings are actually new.
DeleteJU did not fire employees.
DeleteJust a few weeks ago there was a whole thing how they didn't fire anyone during the crisis.
DeleteYup JU did fire employees.
DeleteAt the end of the day, neither the people saying they did can prove it and neither the people saying they didn't can prove it. So the discussion is pointless.
Delete3 charters a day is definitely not a lifesaver for JU or any other airline.
DeleteAccording to APR, these are the number of employees at JU.
Delete2017: 1.466
2018: 1.370
2019: 1.439
I also heard that some people were let go, a lot of them in the administration department which is good anyway.
Anon 09.12
DeleteWhat about 10 which was the case on Saturday?
Anon 09:13
DeleteI am sure going back and forth to MN is what keeps the lights open. LOL!
Zurich as well.
DeleteThough the market seems to be stabilizing right now. Almost 50 departures today, no charters, and even some foreigners seem to be doing well like Belarvia (B737-300), Turkish Airlines (A321)...
The article only mentions that repayment of loans is starting this month but no news about the renegotiation with the lenders about a haircut.
DeleteAny news on that front?
^ it's still in the process of negotiations.
DeleteI also believe JU will get around €200 million. But let's wait and see. We will know soon enough.
DeleteThis will be the huge aid...
DeleteIt is a huge amount of money but I am afraid it is not enough to cover the two loans that are 123 million € and the loses for 2020 with the Corona situation.
DeleteA lot more money is needed for this year's losses. And then we should keep in mind that 2021 will also be a tough year for the airline sector and return to 2019 levels of traffic is 3-5 years away.
@Petar, the government will not cover the costs of the entire loans. If you read the article, you will see they are being renegotiated. On top of that the debt will be paid in instalments. Not a lump some.
Delete@10:57 even if the debt is reduced it will have to be paid in one lump-sum payment because it is maturing this and next month.
DeleteTo pay it in installments you need to make a new loan that allows for installments.
Because for this loan we were "only" paying the annual interest rates.
The principal of the loan remains intact.
You don't have to make a new loan, you just have to reprogram the one you have. This will most likely happen here.
DeleteThe current ones is maturing in September (Etihad Airways Partners I BV) and October (Etihad Airways Partners II BV). That is it. What you are suggesting is a different type of loan, one that instead of paying only interest rates until maturity like a bond you are paying down the loan in monthly payments for its duration.
DeleteWrong Petar the second one matures in October 2022. Not next month.
DeleteGood. The government should provide aid.
ReplyDeleteSame thing happening across the world.
DeleteYes because the IMF is not a shady and problematic institution on its own.
ReplyDeleteWell the good thing is the government agreed with their assessment so we should all be happy.
DeleteThe main question will be whether Etihad remains a part owner
ReplyDeleteI highly doubt that's the main question in this whole story.
DeleteWhat's the main question for you?
DeleteWell more important questions than the EY one are:
Delete1. how much aid will JU get.
2. what will they use the money for since they reimbursed their passengers.
3. will they get aid to renew their fleet.
I don't see how EY is more important than any of these.
If EY remains the owner of 49% then they should provide 49% of the money to pay back the 123 million Euro loans plus whatever subsidies provides it.
DeleteIMF pocking its nose to the aid could be bad news. The EU Commission may decide to do so as well in order to help EU airlines by limiting competition.
DeleteWhile I agree that Etihad should cover some of the debt, people here should learn that just because you hold a certain share in a business does not mean you receive that percentage of the profits or cover that percentage of the losses.
Delete@9.15. They are not pocking their nose it's part of monthly talks with IMF mission in Serbia.
DeleteAnon 09:17 if one stockholder (Government) provides money then so must the other.
DeleteIf they don't that is a direct subsidy to them for no reason. So if EY is not willing to provide 49% of aid they should have their shares diluted. Simple as that.
@9.14. In that case Air Serbia should pay 49% of all the annual profits they receiveed to Etihad. It doesn't work that way.
DeleteWhat profits are you talking about Anon 09:28???
DeleteThe ones they made the last years.
DeleteI know it sounds shocking to you but ASL hasn't had a profitable year yet.
DeleteIt is loss making and the state alone provides annual subsidies.
And prepare to be shocked again, subsidies are not profits! Shocking right?
That's not what the business registry says. Please be so kind to inform them of their mistake, I am sure they would really appreciate it.
DeleteSMFH! The business registry shows that the government has provided subsidies to the airline every year to cover their losses. Sorry if you finding upsetting that nobody believes your fairy tales!
DeleteBusiness registry shows a profit, end of discussion. If you have something against that then you have to take your concerns directly to them.
DeleteReality is bad. People too, they are not all 5-year-olds to believe in fairy tales!
DeleteLOL
Like I said, the business registry says one thing, they are far more reliable than random Anons who use words like LOL.
DeleteYou are the only one that says JU is profitable and thus does not need subsidies from the state to cover losses.
DeleteThat is why you are so funny!
Etihad should definitely pay a portion of the money. It wanted 49% of the ownership and has 49% of the obligation. If not in $$ then in assets (i.e. aircraft) of which it has many sitting around for months parked and with no use for them in the coming years and certainly no buyers. It would be nice to see a few newer models owned by JU as part of the fleet.
DeleteVlada će sigrno pomoći AS. Ono što mene ineresuje je obnova flote. Da li stiže drugi A330 s obzirom da sada najam za 2 mogu plaćati koliko su plaćali za 1?
ReplyDeleteAirline is in big problems and it is definitly not time for a expansion, especialy for long haul one.
DeleteI hope that it will be well investrd in the fleet renewal.
DeleteI would use this opportunity to do a complete fleet renewal or at least remove old atrs and purchase or lease new ones.
DeleteAid will be used to cover huge losses cause by the coronavirus. Only when that is covered can you start thinking of investing aid in other areas to improve your business.
DeleteThat aid will go to cover the two loans (120 mill. Euros) and the loses for this year due to Covid.
DeleteFleet renewal right now is like painting a house that is burning.
Agree with last anon. Flat renewal is not a priority at the moment.
DeleteIt is good and right that states bail out their ailing airlines now. The question that will be much harder to answer will be for how long and to what extent.
ReplyDelete+1
DeleteIt will be a disaster if the Serbian government again puts money in JU and the Arabs invest nothing.
ReplyDeleteIt seems like they want EY involved. "We are working towards resolving this problem together with our partners at Etihad Airways”.
DeleteEvery national airline in ex-Yu is going to get money. No big deal.
ReplyDeleteIt depends on the amount and terms and conditions.
DeleteIf you read a text, you will understand that aid is not a problem but amount of it is. Nobody knows how much money they want.
DeleteI wouldn't get their hopes up concerning transparency.
ReplyDeleteLOL, so true!
DeleteGood luck
ReplyDeleteI fear much more state involvement in the airline after this is over.
ReplyDelete+1
DeleteI'm still hoping it won't get nationalised
ReplyDeleteIt's being operated as if it was never partially privatized.
DeleteSo the government should give the money for free while the UAE pays nothing?
DeleteI dont think that is true. Etihad invested more in JU then they will ever make from JU.
DeleteWhat was EY's monetary investment in JU?
DeleteAnd how much they have made by consultancy fees, way above market rate lease for YU-ARA and interest rates of 6.96% for the Etihad Partners loan?
YU-ARA lease was renewed and the amount was almost halved. So we can drop that argument, also it's not Etihad that collected lease payments so that argument is pointless.
DeleteAlso what was the alternative without Etihad? Jat?
YU-ARA lease was collected by an airline owned by EY.
DeleteYU-ARA lease rate was from day one way more expensive than market rate for an aircraft of this age.
YU-ARA renewal of lease is still more expensive than current market rate for An A332 of this age.
Without EY we could still have an ASL 100% owned by the state which wouldn't be donating its money to the Arabs for zero positive input from them.
Unless of course you consider the boutique airline concept and Wi-Fly positives!
I consider as positive 50+ destinations at affordable prices and a good number of frequencies while still having the choice to fly with a low cost airline based at the same airport if want to.
Delete"+ destinations at affordable prices and a good number of frequencies" has nothing to do with the EY participation.
DeleteIt is a choice and is paid for completely by us, not the Arabs.
But you knew that already...
Yes, I'm sure is by "us".
DeleteWell JU has been a catalyst at bringing tourists to Serbia so it was us who profited more than the Arabs.
DeleteYes, it is by us. There is no rich uncle from Australia sending us millions every month via Western Union.
DeleteEvery single dinar the state is spending comes from taxes.
Yeah, I'm sure it's YOUR taxes.
DeleteDo you all have such short memory - how can you ask what they have done. Do you remember Jat during the last few years before Etihad came? The fact the company still exists is purely Etihad's accomplishment, to begin with.
DeleteTechnically it's SNS' accomplishment because they were the first government to do something concrete about JU.
DeleteThey deserve this aid.
ReplyDeleteI don't see what's funny.
DeleteIs isn't just funny, it's hilarious!
DeleteTake a chill pill.
DeleteConsidering how many airlines are getting state aid (even the big ones in the US) it makes sense.
ReplyDeleteKost US and EU companies have already received the corona aid.
Delete*most
DeleteI support the government and the aid. Better spent than for railway and public transport that have never turned a profit.
ReplyDeleteNeither has ASL. So why you prefer to be spent on an airline instead of public transport that is used by many, many more people? People who all of them live in the country.
DeleteGet your priorities right!
Railway is a disaster and a black hole, on top of that, it is fully substituted by profitable bus transport.
DeletePublic transport is more of a social measure, predominantly for older people to move around. And it may sound harsh but they do not create value. Air transport means investments, connectivity, business. Even the gastos bring billions of cash to the country every year. Therefore I think the RoI of air transport is the highest.
But what about all the people who are going to work with trams, buses, trains in Belgrade, Novi Sad.... They are not older people?
DeleteSimply ignore the Troll. There are more people using public transport in a day than they fly with JU in 6 months!
DeleteThe Troll things that everyone under the age of 65 only drives around and also wants to travel by plane every 15 days.
I dont consider him a troll, just a guy which has wrong oppinion. But it is true what you said, public transport is much more usefull for the people than air transport.
DeleteTransport costs to work in Belgrade is paid as part of the salary yet even with that GSP loses millions each year. We are talking about a loss making business here. Public transport in Belgrade is not a profitable company
DeleteAnd some people here were claiming how the government wouldn't help.
ReplyDeleteGovernment aid is about the only thing that was 100% certain.
DeleteI said it before and I'll say it again. It's crazy how much money is being spent on this airline!
ReplyDeleteLH got billions.
DeleteAnd people are again using LH as an exuse for all these years of getting aid by the goverment at JU, OU... is it really hard to understand that in this crisis literally every airline got something, even in free market countries like Hong Kong, USA, Chile or South Korea???? Or people on this blog are really so stupid ?
DeleteGermany's GDP is 4 TRILLION dollars a year!
DeleteSo they can afford to give aid to LH once and they are getting stocks and many other concessions in return.
All ExYu airlines are permanently loss making and they receive state subsidies every single year. All of them with no exception.
So please, stop comparing apples and oranges.
Tarom got close to €150 million.
DeleteairBaltic got €250. YM got €133 million.
So what's the problem with JU getting it? Haters.
How much did A3 got? U2? LX? FR? W6?
DeleteDon't know about the others but the Swiss government has given Swiss 1.5 billion Swiss francs ($1.54 billion).
DeleteW6 got €300 million from the British government. Same with U2.
DeleteI'm surprised the government still hasn't given aid to Air Serbia when most airiness across the world have already got it.
ReplyDeleteI guess because of this
Delete"The amount will depend on the final financial fallout from Covid-19."
They are waiting to see how the situation will unfold.
It's not bad at all to have someone monitor the aid, so this is a good development.
ReplyDeleteDid IMF monitor Austrian Airlines while it was government owned and while being taken over by Lufthansa?
DeleteThey are not monitoring anything. Read the article and what they said.
DeleteQuestion about OS is still valid.
DeleteWell the Austrian government was very strict in preventing OS from shrinking. This goes to show how necessary national carriers are. OS is pretty useless today in VIE since the market has FR and W6. However Austrians know how unreliable this alternative is so they are sticking to something they can directly or indirectly control.
DeletePublic libraries are not profitable. Revenues made by libraries are not enough to cover salaries, maintenance, book purchases and building of new libraries. Libraries are so important for education, culture and knowledge that societies are not focused solely on profitability and are willing to use taxpayers money to support libraries.
ReplyDeleteGovernment airlines in some small countries in Europe have critical role in those societies. Profitability of those airlines is not and must not be the only measurement of their economic impact. Those airlines should be subsidized and provided regulatory environment to succeed.
They can be successful and without goverment aid. But only problem are bad managnment and bad owners. Nothing else. This is not Buthan or Kiribati where airlines can do nothing with goverment aid.
DeleteKo moze da bude uspesan bez drzavne pomoci, biblioteke? Ako mislis na Er Srbiju prvo objavi tvoj plan kako bez drzavne pomoci da pa da ti se svi divimo.
DeleteToday there were only 29 new cases in Serbia. Let's hope EU decides tomorrow to remove the ban on Serbs. If this happens then JU will profit massively from that.
ReplyDeleteWhat I do not understand is how Air Serbia is "a kind of slow" of introducing additional flights/aircrafts for TATL flights...I mean, yes, aircrafts cost money, but currently their JFK flights are FULL and leasing decreased up to 60% (they can get A330 for appx.250.000 USD per month).
ReplyDeleteWithout any trouble they could use 2 aircrafts to fly 7PW New York and 3PW Miami/Chicago/Washington for start.
No idea why so slow. They burn money anyhow and US allows non-restricted flights from Serbia (even if u r Schengen citizen but have been 2 weeks in serbia before flight) and i know a lot of people usingthis opportunity to fly to BEG and meet relatives from USA.
Great opportunity, not used at all, which is quite questioning taking into consideration how proactive Air Serbia is in general