No company the size of Air Serbia buys planes – Economy

In addition to the 30 million euros of damage so far, Air Serbia expects many more losses by the end of the year, so it is not surprising that government representatives are talking to the leaders of the national airline these days about how the state can help them.

Although it does not know how or how much for now, the state, as announced by Finance Minister Siniša Mali, will certainly help Air Serbia.

“Talks are underway, maybe we should buy another plane,” Mali said two days ago, after reminding the public that without Air Serbia, we would have no way of bringing our fellow citizens back, or bringing masks and respirators.

Flights from Serbia will officially start on May 18, it will certainly be an easy start, because a higher frequency of flights is not expected before June 1. At its peak, pre-pandemic, Air Serbia, like other global airlines, cannot expect it to be soon. Hence the estimates that the number of passengers will be cut in half this year.

State proposals to help the national airline went from recapitalization, through the purchase of corporate bonds that this company would issue to the last one: the purchase of planes.

How much is the latter really necessary at the moment the state takes “first aid” measures and if it is feasible, the foreign investment consultant Milan Kovacevic says for our newspaper that it would be normal for the initiative to buy the plane to come from Air Serbia?

“The fact that Air Serbia planes flew according to government instructions was in a state of emergency that has now been lifted and we must now look at the general situation and see how they need help, whether to buy or rent planes , or liquidity loans. ” Kovacevic points out.

It remains to be seen, as he says, how much a minority investor participates in it, if the ownership structure changes.

Kovacevic points out that it has long been known that Air Serbia is shaking and that, especially now that the crisis has shaken everything, we should expect the government to help, but be transparent.

“Do not buy a plane under the grain, because otherwise, Air Serbia planes are obviously operated by the Government, so now, during the state of emergency, eight planes left here for Italy unnecessarily, when the goods they could be put in a truck and spend cheaper, “said Kovacevic. .

If the government wants to buy a plane for itself, then, he points out, it should be clear that if it is bought for Air Serbia, then studies and analyzes must be done to see what help is needed.

The editor of the Tango Six portal, Petar Vojinović, says that the purchase of planes is now very, very unlikely, because otherwise airlines will rent planes of this type.

“They will probably rent planes because no airline of this size buys planes in this condition,” says Vojinovic for Danas.

Before the coronavirus outbreak, Air Serbia, as he says, needed new planes because the number was inadequate for this company’s latest expansion strategy. Now, those strategies may no longer exist, mainly, as he says, due to dramatic changes in the market.

“Previously, there was an expansion that they needed planes for, and this may now refer to the story of a wide-body aircraft that could fly to China.” Renting could be cheaper now, so perhaps the time is right to do it on more favorable terms, “says Vojinović.

He says Air Serbia can never think about buying planes, because it is not profitable.

“This is done by the largest companies in the world, which receive discounts and more favorable payment terms with large purchases, and even if Air Serbia were much stronger financially, it would not be profitable to buy a plane again,” said our interlocutor.

The only planes that Air Serbia has now, without being leased, are, as he says, Boeing 737s that need replacement and that we use for charter flights.

Vojinovic has no doubts that the state will help Air Serbia because the situation is now ideal because there is no more control over the airlines as before.

“The European Commission has rules on subsidies and state aid, where all airlines participating in the Open Skies Agreement are banned, which means that states cannot provide both state aid and subsidies. However, in this situation, all airlines, whether state or private, low-cost or large, that requested and received state aid, therefore began to violate that rule. It will soon be officially approved at the EC level, “says Vojinović. He cites the example of the Wieser company, which received great financial aid from Great Britain on the basis of the aid program.

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