The state recapitalized Air Serbia with 100 million euros and acquired an ownership share of 82 percent in this company, while Etihad’s co-ownership share dropped to 18 percent. Will the minority partner and in what way participate in the management of our national airline, since the current CEO Duncan Naismith, as well as the previous Dane Kondic, was appointed by Etihad, when he had a 49% stake in the company – we did not receive answers yesterday in the ministries of finance and economy.
Back in June, the President of Serbia, Aleksandar Vucic, announced that the state was ready to enter Air Serbia with its own money and to recapitalize it.
Then followed the decree on recapitalization of state-owned companies affected by the crisis in October, according to which the state can help companies by acquiring an ownership share in the company in exchange for funds, where by buying bonds or other securities the state becomes a partner without management rights, but with profit sharing.
A company that receives this type of assistance can buy the state share at any time, but the state can also sell its share to someone else at any time. Until they repay the debt, companies cannot distribute dividends, and until they repay 75 percent of the debt, there are no bonuses for management and employees.
State aid to companies that did badly due to the corona virus pandemic can go up to 250 million euros. According to the calculations of the Fiscal Council, the state has allocated around 200 million euros for Air Serbia.
Milojko Arsic, a professor at the Faculty of Economics, says that he does not know what the intentions of the state are with Air Serbia, but that in general, in such times as the crisis, some decisions such as bankruptcy should not be made.
– It is good that the company has been preserved, but immediately after the end of this crisis, the arrangement with Etihad, which worked poorly from the very beginning, should be reconsidered and probably terminated. The state provided assistance to the company and there is an impression that the co-owner was not essentially interested in the development of Air Serbia. It would be good, if there are options, for the state to find a new owner who would be more interested and invest more in that company, says Arsic.
But there are various restrictions on who can own an airline in Europe. The European Union imposes that, explains and reminds that Etihad behaved irresponsibly from the very beginning, and they did not achieve good results in other arrangements in Europe either.
They also withdrew from other arrangements, which were larger and more important. Mostly in companies in which they were owners or co-owners – failed.
– Air Serbia should reduce costs, so that losses are as small as possible, since revenues will not be large this year. They can hardly sell the airline when the volume of air traffic activities is much smaller than before and there is probably not much interest in taking over the company – Arsic thinks.
At the end of December 2020, Etihad announced that it would cancel the direct flight between Abu Dhabi and Belgrade. Due to the crisis caused by the pandemic, the company suspended flights to Belgrade on October 14. It was originally planned to re-establish this line at the end of December, but on the eve of the New Year, travel agencies received a letter that the line be permanently canceled, the specialized site Aviatika reported.
In addition, it is stated that Etihad suspends all commercial activities in our country.
Milan Kovacevic, an investment consultant, believes that the increase in the ownership share in Air Serbia was paid dearly and that the current value of the company is extremely highly estimated. According to him, these 100 million euros are a form of subsidy to preserve the airline.
– Until now, even when we had a share of 51%, we got the impression that a foreign investor is extremely important to us. He did not make any great contribution. It remains to be seen what will happen to his 18 percent and where and how we will go. It is difficult to comment when we do not know what the government intends to do. But he certainly has to find another way to manage – says Kovacevic.
According to him, restructuring, which always includes reducing costs and increasing labor productivity, requires a serious study. Because it remains to be seen what will be done with other creditors and when and with what dynamics Air Serbia will reach a profitable business. Without that, individual measures cannot hit the right target, Politika reports.
