Air Serbia continues consolidation drive
Air Serbia has continued to consolidate its business as the airline looks to further save costs. Last week, the carrier signed a deal with the Emirati-owned Airport Belgrade Catering (ABC) company to outsource its in-flight catering and sale services, as well as duty free products. ABC was fully acquired by the Emirati-owned Cirta Group, a consortium of companies supported by the UAE government entity Khalifa Fund for Enterprise Development - KFED. The new catering agreement was signed by the Chairman of the Cirta Group, Abdulla Al Shammari, and Air Serbia's CEO, Duncan Naysmith. Under the terms of the agreement, ABC will provide the Serbian carrier with catering services and logistics solutions for a period of eight years. The deal is renewable for a total period of fifteen years. ABC is the largest independent provider of airline catering services in Serbia. Located in Belgrade's airport zone, the company has a production capacity of up to 10.000 full meals per day. Apart from Air Serbia, it has also entered into a deal with Etihad Airways. "The agreement underwent rigorous processes to ensure that it met the industry requirements and complied with the existing regulations in the domestic airport and aviation sectors", the two parties said.
The Serbian carrier has not specified how the new agreement will affect its own catering unit - Air Serbia Catering. The company accounts for 92% of all meals served on Air Serbia's flights and in 2017 provided catering services for seven other airlines. That same year, Serbia's Finance Minister, Siniša Mali, who was the Chairman of the Air Serbia Supervisory Board at the time, said, "We are working on outsourcing ground handling and catering in order to reduce costs and increase revenue. This is part of a business plan which will boost profitability. All of these measures are standard and part of a process where you try to reduce your losses on one side, and increase profits on the other". Since then, the company has transferred over 300 of its employees from Air Serbia Ground Services (ASGS) to Belgrade Nikola Tesla Airport's handling unit. The five-year deal gives Belgrade Airport responsibility over the airline's ground handling until 2022.
Air Serbia adopted a five-year development plan in 2017 and a restructuring plan in 2018, which was cleared by the Serbian Commission for the Control of State Aid. Consolidation measures over the past two years included the reduction of the company's headcount, the closure of its retail stores in several cities across Serbia, the listing for sale of obsolete general aviation aircraft, as well as engines, the sale of property located outside of Serbia and the introduction of a range of ancillary services. Air Serbia has posted a profit since 2014 but has also received state funds. It generated a record sixteen million euro profit in 2017. Its 2018 financial performance is expected to be made public in the coming days. Mr Mali said in April the country's national carrier had operated with a profit last year.
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