Air Serbia has reported a loss of 77 million euros during the pandemic-stricken 2020, ending six consecutive years of profit. The result does not take into account the 100-million-euro recapitalisation provided by the Serbian government in late 2020, which saw it increase its ownership stake in the company to 82%. From the onset of the pandemic, on March 8, until December 31 of last year, Air Serbia was forced to cancel 23.079 flights, which had a significant impact on the airline’s revenue. Despite the financial hit, the company maintains its liquidity has remained stable, with the airline meeting all obligations to staff, providers and creditors.
Commenting on the result, Air Serbia noted, “The company cannot predict the complete impact or when the situation could improve and return to pre-crisis levels. The company’s management is actively following the situation and responding adequately to all challenges related to the Covid-19 pandemic, which will depend on a number of international factors, such as testing requirements, vaccinations, entry requirements and the risks posed by new variants”. Since the pandemic took hold, the airline has undertaken a number of measures to reduce costs, including rationalising its fleet and renegotiating leasing terms for aircraft, as well as reducing airport fees and taxes at select destinations. The carrier has also launched its “Deliver” program, aimed at reducing unnecessary costs and non-vital services which has “strongly contributed to the company’s liquidity”. The airline has renegotiated more affordable pricing for utilised IT services and has used the slot suspension in Europe and the United States to its advantage.
| Year | Net profit / loss (million €) |
|---|---|
| 2013 | ▼ 73 |
| 2014 | ▲ 2.7 |
| 2015 | ▲ 3.9 |
| 2016 | ▲ 0.9 |
| 2017 | ▲ 16.0 |
| 2018 | ▲ 12.3 |
| 2019 | ▲ 9.5 |
| 2020 | ▼ 77 |
During 2020, Air Serbia operated 89 special flights in order to transport medical equipment and health workers, carry over 5.000 stranded Serbian citizens and 1.800 foreign nationals back to their countries, as well as ferry millions of doses of Covid-19 vaccines. The airline has continued to transport vaccines throughout 2021 as well and “remains at the disposal of the Serbian people and its government”. At the end of last year, Air Serbia hired independent experts in order to estimate the economic impact the national carrier has on the country’s GDP and the development of tourism in Serbia. “The company’s management continuously assesses the objective losses caused by the coronavirus pandemic in 2021 on a quarterly basis, as well as the its ability to meet all obligations towards creditors and suppliers”, Air Serbia said.
This year's results will be interesting.
ReplyDeleteIt will probably be a loss but at a smaller rate.
DeleteWhy don't they publish Q1 and Q2 results?
DeleteCan someone knowledgeable re-create the table from the article, but showing the real picture instead of the 'profit'? Thanks.
ReplyDeleteThey get around €20 million from the state every year so you can do the maths.
DeleteNot visible this time for 2020.
DeleteDuh obviously since 2020 was a special year when every airline out there got aid from their government. Even Wizz Air got a loan from the UK and they never disclosed how much they were paid by Orban to fly to China.
DeleteI did not say they did not get the help. They got around 100 mil EUR.
DeleteBut it is not the point. The point is that this time they did not inclue the money they received from state in order to present how successful was their previous business year. This time the real loss of 77 mil EUR is presented.
And I find it quite acceptable taking in consideration all the cisrcumstances.
Data for the table was created by accountants and was audited. There is no 'real picture ' in accounting. Same comment every year.
DeletePandemic affected many airlines and big loss is normal.
Well, I understand it's normal in accounting. But how you interpret the numbers on the balance sheet is pretty irrelevant to me. I care about how much money is being invested in this airline, that could maybe be invested in other things. That's all.
DeleteRe 09:26 €20 million is the visible part of the financial support to the company. In addition, there's the hidden - unrealistic BEG support, given on landing, lighting, bridge use, passenger fee, etc. based on volume, remained from the pre-Vinci era (most likely there's a verbal agreement between Vinci and government, to keep these discounts for some period i.e. 1-3-5 years). That makes an additional €20 million annual.
DeleteDo you have a source for that? As in that those discounts JU gets amount to €20 million a year. BEG is a highly profitable airport and I highly doubt they would be recording such huge profits if they were giving away €20 million a year.
DeleteFor those who are really interested in how much money is invested, you could have finished some accounting course instead of repeating same question every year. It doesn't take 7 years to get it.
Deleteit is too bad that this board doesn't support images
Deletei would put a picture of money being thrown into the fire
Picture of money being thrown into fire would be much bigger for Lufthansa and others,
Delete"I care about how much money is being invested in this airline, that could maybe be invested in other things."
DeleteIf you're a concerned Serbian taxpayer, there are at least 20 other state-owned companies and state-sponsored projects that require your attention much more urgently. Air Serbia doesn't even register on the scale of some bottomless pits.
Re 09:51 Check incentives listed on BEG web site, item no.5: Incentive for the total no. of passengers. You can find all rates there. The trick is, although it is called incentive, it is just a simple discount designed for JU, repeating every year. No growth needed to trigger the discounts, no target, no validity period. Just a huuuge discount whenever X carrier handles more than 900k one-way passenger annual.
DeleteIf Wizzair keeps adding aircraft and expanding operations they will soon get the same discount. So much for that argument.
DeleteI do not mind state aid at all, on the contrary, I support it since when looking at the greater picture Air Serbia is indeed contributing a lot to Serbian economy.
Delete@anon 19:57. You are right. The Serbian government didn’t discover state aid and when we look at countries that have given billions of dollars to their airlines over the years, I think that Air Serbia pales in comparison. If they have no aid and it went belly up, we’d hear complaints of mismanagement and why the government didn’t step in to support. You just can’t win. This reasonable funding at the end of the day is not just to keep the airline in the sky but also to keep the calls answered in the call centre, the attendants on the flights, and the service crew maintaining the aircraft. To name but a few.
DeleteIf having a national airline wasn't a big deal then why are countries like Italy, Belgium, Austria, Latvia... all looking at saving their own in stead of letting them go down the drain? National carriers are an asset and at times having its make a small loss is better than suffering economic consequences of not having one. Just look at what happened in Slovenia.
DeleteIn the end, JU will become profitable or at least it will come close to breaking even. What matters is that the benefit of having JU outweighs the small losses it makes every year.
Hopefully JFK, charters and recovery of certaim markets will help them reach negative 15 million this year. First five months of the year were very difficult.
ReplyDelete+1
DeleteAmerican Airlines 50bn $,
ReplyDeleteUnited 28bn $,
Delta 26bn $ in debt. There is no logical way that any of them will ever be able to pay it yet they will continue to fly and keep buying new planes. I guess the situation with ASL is similar. As long as there is a steady cash flow combined with state support they will fly and loss will just be more or less tolerable number.
2019 profits for listed airlines: Delta $4bn, United $3bn, American $3bn.
DeleteAnd that's profit, not revenue. Mind you, they aren't owned by the US government nor subsidied by it (outside of Covid times).
They managed to record billions in profits because the US government allowed them to buy out their competition. Look at how many airlines were either bought or pushed into bankruptcy: TWA, Northwest, US Airways, American West Airlines, Air California, Continental...
DeleteThe last time a new US airline was formed and survived was in 2000 when jetBlue was created. Mind you, that was over 2 decades ago.
"Mind you, they aren't owned by the US government nor subsidied by it" 11:40
DeleteThey are "subsidised" BIG time through recycling of US Petrodollar as reserve currency back into US stock market. Its a very "creative" way but in long run it was abused and in the end it will collapse.
Even if every year JU gets 20 millions for support, lets be honest, its money well spend!
ReplyDeleteI mean, government invests billions in different projects (highways, high speed railways, public companies...), so if Railways of Serbia can receive 100 millions each year for doing crappy job, JU can (and SHOULD!!!) receive 20 millions per year for doing, actually, pretty great job!
At least until we join EU, and after that, slaughterhouse
+1
DeleteWhy didnt JU charge for the tickets for bringing people home during Lockdown?
ReplyDeleteDid they get the money back from the state? Why should other people pay for repatriation flights?
Because it is the humane thing to do. Just because some western countries showed the worst lack of compassion, human rights and dignity does not mean their lead should be followed. You have countries like Australia banning their own citizens from entering the country. Crazym
DeleteI am a taxpayer from one of those countries that organised repatriation flights from all around the world and asked people to pay for the tickets, if they want to use them. I do not get what is wrong with people paying for their tickets?
DeleteIf somebody is on holidays, lets say, in Australia or Argentina, why should me as a taxpayer fund his comeback home? We are talking about wealthy people travelling around the globe mostly for pleasure and not about a poverty stricken old lady that does not have cash to fly to attend a funeral of her deceased only son that died on foreign soil.
+100 for anonymous 14:14
DeleteYour perspective is very narrow, which is why you are wrong. You see, repatriation flights were not only used by casual travellers. They were used by people in many different situations which had justifiable reasons to board those flights. Besides that, we all pay taxes or have paid in the past. Therefore, we invested in our country for the purpose of it protecting us. This is one of the reasons taxes exist, why we have countries at all. It's the same as if you said people should not get health care because you paid for it. Hate to break it to you, we all did. I may not need health care, but I need a repatriation flight funded by what I paid for earlier.
DeleteAs I mentioned, I am not a Serbian taxpayer, so I have no right to tell you what to do with your taxes. The only reason I replied was your statement about other countries not showing enough compassion, so I wanted to give you my perspective.
DeleteAnd indeed I think in some cases it is normal that we expect protection from our country via repatriation flights and get it free of charge.
In 2008 a close colleague of mine was evacuated with a military plane from Georgia. He was on a trekking in Georgian mountains, when he got an SMS from the embassy saying that Russian troops invaded Georgia and that he should asap contact the embassy and head to Tblisi as at a specified time a plane would be departing from there, flying him safely home. Obviously he was not charged with any costs. The same with nationals of other countries that were evacuated on this occassion (countries do such favors to each others hoping for reciprocity and as a taxpayer I fully understand this).
This spring there were two repatriation flights to my country from India each time for a diplomat that had severe phase of covid and needed advanced hospital treatment that he could not get in India because of their medical system being overstrained. Again I fully understand that: these people worked there for their country and when they found themselves in need, they had to receive all necessary help, no matter the cost (the costs were actually not that high).
And I could give you some even more strange examples.... but for me if somebody is in Cancum or Varadero on vacations and there is covid outburst that does not threaten him directly, he should pay for flying back to home rather than expect everybody will meet part of this cost via their taxes.
Yeah, you're clearly not from our region. You can count on your fingers the number of people who found themselves in Cancun at that time. Serbia, all of Balkans, are a poor region. We don't just randomly hop to Cancun or whatever.
DeleteBesides that, the government didn't send planes to each and every places where someone was located. They sent planes to major diaspora hotspots where they knew many people would be stranded and in trouble due to loss of work or whatever.
The JU repatriation flights went via requests from Serbian Embassies. Families with children were given priority.
DeleteIt's interesting how quickly we forget what happened to millions of people just a year ago. It was not just people on holidays who were stranded in various countries. Some people did have options to purchase their own way home, and did so. Some people were good with their current reservations and travelled mostly unchanged. There were situations where purchased options were constantly being canceled and a JU flight via a request through the Serbian Embassy was the only home.
It's a rare moment I say our government did something good.
@ 11,57
We pay taxes for various things we may not use but others do: schools, hospitals, infrastructure etc. By your logic, I dont go to school and I don't have children so why should my taxes be used for education?
This is great compared to how Croatia Airlines performed.
ReplyDelete"The carrier recorded a 47.3 million euro loss, however, it factored in 11.7 million euros in direct state aid and 33.2 million euros granted to the company as an equity loan by the government. The company was also recapitalised by the state with a 46.2 million euro cash injection".
You probably do not understand that the loan does not increase or reduce losses (except that interest on a loan increases costs and thus worsens net result). The same with equity injection. So why do you comment?
DeleteIt is used as creative accounting to reduce the loss. The airline even says so word for word in their financial report. Read it!
Delete@13.44 so it is not accounted for OU yet everyone here is discussing Air Serbia's "real results" in past years because in Air Serbia's case state aid is accounted in final result. Sure.
DeleteI am speechless. So many people commenting here have no basic understanding of accounting... And yes, I am pointing to you, anon 13:47.
DeleteThankfully you are here to explain to us how one set of rules applies for Croatia Airlines accounting and the other for Air Serbia.
DeleteI am not going to explain basic accounting to someone that does not want to learn it.
DeleteTo other folks, a couple of helping hints.
1.
Comparing results of different companies is extremely difficult, because very often they use different accounting standards (in most cases they use their national accounting standards). It is like all of them playing by different accounting rules.
OU uses Croatian GAAP, JU uses Serbian GAAP, LH or OS use international accounting standards etc.
An example: TK is using Turkish GAAP and for years it is showing profit, while it is more or less clear that if they did their financial statements according to international accouting standards, they would be constantly in a loss.
2.
Subsidy -> increases income, increases profit or reduces a loss
Loan -> does not increase income, does not increase profit/does not reduces loss (except that interest is an accounting cost and therefore reduces profit/increases loss)
Equity injection -> does not increase income, does not increase profit/does not reduces loss
Loan and equity injection help with cashflow, but not with the financial result.
@An14.26
DeleteI am not participating in this discussion because I know absolutely nothing about accountance. But are you sure Croatia as EU member is allowed to use its own national method of accountance, and not EU /international /standard one? To me, it seems strange, and would appreciate answer if you are sure to know it. Thanks!
Basically EU Regulation 1606/2002 requires only listed companies (ie companies whose shares are admitted to trading on a regulated market) to have their financial statements prepared in accordance with international financial standards (now called international financial reporting standards, IFRS). For this reason LH and its subsidiary OS both report according to international financial standards and OU does not (unless the respective requirement would be put onto it by Croatian national legislation, which I doubt).
DeleteWhether Croatian GAAP is materially different than international accounting standards is something I do not know (I am not a Croat). Typically the differences for airlines relate mostly to accounting for leasing. Sometimes small tweaks here may result in substantial differences in figures.
To sum up, people on this site should not compare something that could be apples and oranges (ie net result of the company under different accounting standards).
And most importantly, net result is itself BS. It is so dependant on the way a given company is financed, that any comparisons even between companies subject to the same accounting standards based on net result make ABSOLUTELY no sense.
anon 14.26
Thanks for the explanation! 😃
DeleteCould have been nuch worse
ReplyDeleteThe important thing is that they managed to pay off that Etihad partners loan
ReplyDeleteThey have one more. It is due this year.
DeleteIt was due last month. I assume they paid it?
DeleteAlmost the same as 2013 lol. Crazy how much the airline used to loose money.
ReplyDeleteWell no one in their right mind could expect a good result.
ReplyDeleteProbably everyone in Serbia does. Detached from reality.
DeleteI find it interesting that in Serbia people get peeved about subsidies or state support for Air Serbia but not to the dozen of other state owned dinosaurs who get the same assistance or even more.
DeleteProbably because they were made to believe that after Etihad takes over there would be no more need for state assistance.
DeleteHonestly, no one beyond this blog even cares or knows about JU subsidies. We only discuss them here because it's an aviation website. Also I think it's a tiny and very loud group of people that doesn't like JU getting subsidies.
DeleteAnyone know the operational results. Pax numbers?
ReplyDeleteHow come no other airline in the region transported vaccines? Just curious. Good job on Air Serbia operating all those repatriation and special flights. Helped many.
ReplyDeleteAir Serbia shipped things other than vaccines, such as masks, gloves, antiseptic fluids and most important - mechanical ventilation units.
DeleteThis is bad.
ReplyDeleteWell it's not really surprising. It's not like any airline had a good result...
DeleteYes the loss is big but it is not as bad as I thought it would be.
ReplyDeleteHow much did you think it would be? 77 million is quite a lot.
DeleteSo around 3.5 million euro.loss per aircraft?
ReplyDeleteWell losses aren't calculaied that way.
DeleteMoney being pumped into the airline, given the circumstances, I get. No airline will be immune from handouts
ReplyDeleteAt least we have seen some positive steps from the recapitalization. 3 new routes during corona, record number of charter flights, more frequencies, replaced the A330, added 2 A319s. At least something positive has been done with the money.
DeleteWhat about the operational results? How many passengers did they have, avarage LF etc?
ReplyDelete2020 was a BAD year for everyone.
ReplyDeleteExpected
ReplyDelete"Air Serbia was forced to cancel 23.079 flights"
ReplyDeletewow
The sad thing is 2020 probably would have been a record breaking year for JU on all fronts.
ReplyDeleteThe first three months performed very well for Air Serbia.
DeleteWhy am I not surprised.
ReplyDeleteWhat a shame but completely understandable. At least passenger number are now improving. I just fear delta variant will ruin the rest of the summer season.
ReplyDeleteNow we are waiting to see how much money Montenegro Airlines lost. Despite them being bankrupt now, they still operated flights until 25th December of last year. So almost a full year.
ReplyDeleteInteresting, only we Slovenia couldn't be bothered to save its own national carrier. I guess we know something that the rest don't.
ReplyDeleteAir Serbia was nowhere near any profitability even before covid.
ReplyDeleteNot true, just look up the table. If you want to dispute results for 2014, 2015, 2016 etc we finished those discussions years ago. Results are negative for 2020. Do you have something relevant to say about 2020 results?
DeleteCan you please add more colour to that statement?
DeleteThank you Mr.Expert for accounting, business and aviation!
DeleteYou opened our eyes.
Anyway, I want to say that I am Serbian tax payer and I also fly AirSerbia often and I support every euro or dinar given to them because they do great job, they help promoting Serbia worldwide and they help our economy much more than what we give to them.
So, I say and I really believe in it, public interest of having AirSerbia is wort of support given to them. You may not agree with me, but you should take all factors and arguments before making any conclusion.
Not good.
ReplyDeleteGetting better.
DeleteI agree, situation is improving, which we can see from the amount of flights, the fact that furloughed crew have been called back, that they had to actually lease a plane for the summer.
DeleteWill Etihad sell remaining 18% stake in JU?
ReplyDeleteDoubt it. They have nothing to loose now.
DeleteWho would have thought this would be Etihad's last remaining investment.
DeleteMy guess is Etihad will leave around October. In September the last Etihad Group loan has to be paid off and it will probably be paid by the govrnment. After that EY will leave.
DeleteIf Etihad leaves, does anyone knows what happens with the Air Serbia - Etihad Guest program?
Delete^ You are right, my mistake. I do wonder what has happened with the repaument though.
DeleteWhat I find hilarious is aviation enthusiast on an aviation site routing for airlines not to be supported by the state. What would you rather?
ReplyDeleteAir Serbia will be fine and is doing fine all things considered.
ReplyDeleteWithout state support, Air Serbia would go bust
ReplyDeleteNational carrier is vital for the economy. It is contributing immensely.
DeleteReally?
DeleteWithout state support, Lufthansa would also go bust in pandemic. Many other major airlines. Really.
DeleteLet's not forget how Germany refused to suspend Air Berlin's AOC until Lufthansa was ready to take over the market. AB was actually breaking the laws because it had less than the legal minimum of liquidity yet Germany remained quiet.
DeleteAlso let's be mindful of the fact that Germany is restricting MEB3 access to Germany to protect its precious LH.
So why shouldn't Serbia support its national carrier?
Hopefully things will improve
ReplyDeleteThey already are.
Delete"At the end of last year, Air Serbia hired independent experts in order to estimate the economic impact the national carrier has on the country’s GDP and the development of tourism in Serbia."
ReplyDeleteWhat a waste of money
Interestingly OU did the same. I wonder outside 'experts' are necessary.
DeleteWell not really. OU hired a company to do an analysis of their destination network, competition and businesses. Not how they are contributing to the economy.
DeleteCan you please show us some evidence that indicates that is a waste of money? Companies and governments around the world hire external consultants to provide similar reports on a regular basis. Can you show that only Air Serbia report is a waste of money, but not all the others?
DeleteAs a majority owner of Air Serbia and 100% owner of Belgrade airport, any owner (in this case government) would be prudent to gauge wider impact on the economy and tourism. Those international experts exist for that reason. They have other customers including other airlines and governments wanting the same feedback. If others are not wasting money on the same reports why only single out Air Serbia?
DeleteReport like this can and should be used to justify opening new routes, for example next year to China. If that route can significantly grow number of tourist arrivals from China it will have a positive effect not just on Air Serbia but hospitality industry and tourism in Serbia, etc.
Does Air Serbia published information about revenue in 2020 and 2019? If answer is yes, then how much is it?
ReplyDelete