At the moment, the Republic of Serbia owns 51 percent, and Etihad Airways from the United Arab Emirates with 49 percent.
Air Serbia, like probably all airlines in the world, has suffered a severe financial blow by landing the fleet since March 19, when commercial traffic was suspended in Serbia (except for emergency flights for the return of Serbian citizens from abroad and the delivery of medical supplies). Wwith the latest news, it will return to regular commercial flying on June 15.
The estimates of the Ministry of Transport are that the entire air transport sector in Serbia, including airports, will suffer damage of 190 million euros this year, while Minister Mihajlovic made public statements that the damage to Air Serbia could be greater than 60 million euros.
So, there is no doubt that Air Serbia needs help, but it seems that one of the two co-owners does not intend to provide that help.
Plans for the state to increase its stake in the company can be interpreted as an intention for the state to recapitalize Air Serbia either through a financial investment or through the purchase of an airplane that was mentioned in public, while Etihad would not invest anything and thus change the ownership relationship.
By the way, it is not surprising that Etihad is passive in this partnership, because since 2018, even its withdrawal from Air Serbia has been mentioned.
Namely, the strategy of buying minority stakes in airlines around the world proved to be wrong, so Etihad has already come out of all partnerships except Air Serbia, mostly leaving airlines bankrupt.
Since 2016, they have recorded losses of 5.62 billion dollars. Last year, the loss amounted to 870 million dollars, which is even an improvement compared to previous years. The Covid 19 pandemic forced one in three huge Gulf air operators to keep 80 percent of the fleet grounded.
IATA (International Air Transport Association) estimates that Middle Eastern airlines will suffer as much as 19 billion dollars in lost revenue this year compared to 2019.
In such conditions, it is not surprising that they are not very interested in helping Air Serbia. Economists have no doubt that some capital must be invested in the national airline, but also that the benefits of the company from the synergy with the Arab co-owner should be analyzed.
Milan Kovacevic, an investment consultant, says that, above all, Air Serbia’s balance sheets should be taken a good look, especially since it had business problems even before the pandemic.
“Now, Air Serbia will certainly need money and it can come in the form of recapitalization or a loan that could be converted into capital, but I do not believe that anything will come from the Etihad. They have been looking for a long time to get some benefit from Air Serbia, and I don’t believe that they are satisfied with the company’s business,” Kovacevic said, adding that the question is whether Air Serbia could be pulled out without recapitalization or cheap loans.
He also reminds that Air Serbia also had high costs for flights during the pandemic for the delivery of medical material and passengers, BiF reports.
