Program of Restructuring of Air Serbia to be Adopted by the End of the Year

The program of the restructuring of the national airline carrier Air Serbia will be adopted by the end of the year, Serbian Finance Minister Sinisa Mali stated today at the National Assembly of Serbia.

– We have been working on that program for months, using the examples of airBaltic and others, considering that the state can’t help Air Serbia in any way unless a restructuring program that is in line with the EU state aid regulations is adopted – Mali said.

Until the Covid-19 crisis, Air Serbia had operated successfully, so the state will only help Air Serbia when it comes to the losses incurred since the pandemic began, Mali emphasized in response to a speech made by the president of the Fiscal Council, Pavle Petrovic.

Mali said at the National Assembly’s Finance Board that “the Fiscal Council is obsessed with Air Serbia, because it mentions the company as many as 80 times in its report on the 2021 draft budget, although the company poses no fiscal risk for the citizens and the state of Serbia”.

He claims that “a lot was said that is untrue and arbitrary” about Air Serbia.

– When you look at the losses you are talking about, the day of December 31, 2013, is the date when Air Serbia was formed and when the company’s negative capital was EUR 235.9 million, which was inherited from Jat Airways.

Mali also claims that Air Serbia did not start from zero, but from a minus, and that the profit made in the past six or seven years was used to cover this negative initial capital.

– On the day of December 31, 2019, the negative capital of Air Serbia was EUR 129.5 million, so it’s 106 million less than in 2013, so it’s not true that the losses are piling up – Mali claims.

He points out that the restructuring program for Air Serbia will be adopted by the end of the year and then sent for approval to the state aid control agency.

– We are then sending it to the EC for approval and it will be clear how much is spent and on what. I believe that it’s clear to everyone that we will not abandon our national airline, but help it.

According to him, Air Serbia will not be able to work at the same capacity and the same way it did, as is the case with every airline carrier in the world which is affected by the coronavirus crisis and which seeks state aid and needs to be restructured, from reduced salaries and the number of employees, certain destinations…

– The state has not done anything more or less than is defined in the contract with Etihad. The contract is available on the government’s website and is fully public and transparent. Everything the government did matches what’s written in the contract – Mali claims.

Fiscal Council in Favor of Restructuring Air Serbia

The position of the Fiscal Council is that Air Serbia needs to be restructured and not pushed into bankruptcy, but it is crucial for the state of the company to be determined publicly and with precision and for it to operate transparently in the future, said Pavle Petrovic, the president of the Fiscal Council.

At the session of the National Assembly’s Board of Finance, State Budget and Control of the Spending of Public Funds, he said that the Fiscal Council and the wider public could only guess how much of the taxpayers’ money would be set aside to help Air Serbia and that the Fiscal Council’s estimate was that it would amount to EUR 200 million in 2020 and 2021, N1 reports.

– Our estimate is that less than 50% of these costs are caused by the pandemic. Since 2015, Air Serbia has reported profit in the books, but when state aid is excluded from this, it is clear that it has incurred losses and debts, twice from Etihad Partners, each time for EUR 50 million, for this and next year, plus EUR 20 million for transaction costs, at a high rate of 7% – Petrovic warned.

He said that the 2020 budget rebalance and the 2021 budget proposal led to the conclusion that the state would repay Air Serbia’s debts, by all indications, using the model that had been used for Srbijagas, whereby the state takes over the debts and then repays them for years.

Petrovic said that the position of the Fiscal Council was that Air Serbia should be restructured and not pushed into bankruptcy, but that the requirement for this was to determine the role of the strategic partner Etihad and to have Air Serbia operate transparently in the future.

– Air Serbia does not publish financial reports on its website, unlike the great majority of airline companies in the world. If it is getting money from the state and the taxpayers, its business operations should be transparent – Petrovic emphasized.

Air Serbia ad Beograd

Fiskalni savet Republike Srbije

Air Serbia

Fiscal Council of Serbia

European Commission

airBaltic

Air Serbia restructuring program

Air Serbia aid

coronavirus

Covid 19

Sinisa Mali

Air Serbia operations

Pavle Petrovic