Air Serbia: the new wings of Europe

Just one year ago, Serbia’s flag carrier, Jat Airways, was in a critical condition. One of the world’s oldest operating airlines, Jat had been a solidly based business up until the 1990s. However, the violent breakup of Yugoslavia and international sanctions against Serbia led to a catastrophic loss of market share, from which it struggled to recover.

During the following decades, the company’s fleet and network of routes kept shrinking, long-haul flights were abandoned and the operations were in constant loss.

Air Serbia is demonstrating that foreign direct investment into Serbia works. And if there is more investment, there will be more jobs, and that can only be a good thing.

By 2013, what had once been one of the world’s top 30 carriers was reduced to 5 operational aircraft. Its financial position was completely unsustainable. The end seemed to be approaching for the debt-burdened, loss-making airline.

However, through an equity partnership with Etihad Airways, the continuous support of the Serbian Government and a new, effective management team, the airline has been renamed, reborn and is working toward profitability in just one short year. “Our immediate goal was to stabilize the company and to refleet, retrain, resize, rebrand. That is a four- or five-year journey for many airlines,” says Air Serbia CEO Dane Kondić. “With a talented management team, a clear plan and lots of hard work, we have achieved this in 12 months, and this is a signal of how we intend to go forward.”

Read the full article to find out how Mr Kondić and his team have turned the airline round and achieved the following (indicators for the first half of 2014 compared with the first half of 2013):

  • Revenues increased by 82% from €56m to €102m
  • Number of passengers increased by 70% from 555,000 to 944,000
  • 300 new jobs created in Serbia
  • Passenger carrying capacity increased by 85%
  • 10 Airbus aircraft leased
  • 11 new routes opened

The benefits of success will go far beyond the airline itself. Independent research company Oxford Economics undertook a study to calculate the value for Serbia of Etihad Airways’ investment in the airline. Its report suggested that Air Serbia would contribute approximately US$700m to the economy in 2014, which is about 1.5% of the country’s gross domestic product.*

“This enterprise and project between these two stakeholders – the Serbian Government and Etihad Airways – is a great advertisement for what the Government is capable of doing,” says Mr Kondić.  “Air Serbia is demonstrating that foreign direct investment into Serbia works. And if there is more investment, there will be more jobs, and that can only be a good thing.”

* www.etihad.com/nl-nl/about-us/news/archive/2014/five-months-of-progress-delivers-new-network-new-fleet-new-jobs/, accessed December 2014.

The complete article was written by:

  • Luke von Kotze
    Journalist, EY, UK

Read the full articlepdf531.8 kB

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