Air Serbia drafts future strategies as state adopts aid plans

The Serbian government has adopted a draft of its 2021 state budget which foresees “investments of special importance” amounting to 118.1 million euros in ten companies, amongst which is Air Serbia. The sum will be shared between them, although the exact figure each company will get has not been disclosed. The airline was the beneficiary of 20.8 million euros "from premiums, subsidies, grants and donations" each year over the past three years. The Serbian government has previously said it would provide direct fiscal support to the airline in order to mitigate the effects of the coronavirus pandemic. Last month, it adopted a decree which enables the state to recapitalise companies such as Air Serbia with over 250 million euros in funds. The policy foresees assistance for both state-owned a private enterprises which were profitable at the end of last year and can prove they would go bankrupt or be in significant hardship without the recapitalisation. 

Air Serbia is currently offering financial incentives to encourage employees to voluntarily resign, with the company seeking to reduce its headcount by some 300 staff members as a result of the pandemic. Furthermore, some employees will endure pay cuts, with wages for pilots and cabin crew to be reduced 20%, while staff members from lower paygrades will see their monthly income slashed by 15%. Employees which are part of the two lowest paygrades will not have their wages reduced. “Due to well known difficulties caused by the coronavirus pandemic, the company did not achieve the goals it set for 2020. In order to preserve our business, we are forced to reduce wages. This measure is temporary and will come into effect from December and last until March of next year”, Air Serbia told its employees. 

The Serbian carrier recently said it was is in the process of devising a long-term strategy for the coming years based on several different scenarios and is in discussions over its plans for 2021. “The uncertainty of what kind of travel conditions will be in force puts a serious limit on long-term planning, however, we are working on making some plans and developing several business scenarios for the coming years. We have already held negotiations for next year, but it is very difficult to make concrete plans when travel conditions are unknown and constantly changing. This means we must think fast and act within short deadlines. We often say it is easier to make a plan for the coming month than for next year”, the company said. It added, “Constant monitoring of bookings is crucial right now. This is the basis for further decisions and flights. If we see bookings increasing rapidly on certain routes, we react by increasing the capacity of those flights, allocating larger aircraft. Flexibility is currently the key issue in our business”.