State approves Air Serbia subsidies for 2022
The Serbian government has approved a draft of the country’s state budget for 2022 which foresees subsidies for Air Serbia. Although the exact amount of funds has not been specified, the national carrier is one of over sixty companies “of special importance” which will share just over 170 million euros in subsidies among themselves. The airline was the beneficiary of 20.8 million euros "from premiums, subsidies, grants and donations" each year since 2017, with exception to the Covid-hit 2020, when the government recapitalised the carrier to the tune of 100 million euros. With exception to last year, the overall value of the subsidies has been significantly reduced from 41.8 million euros in 2016 and is in line with the transaction agreement between the Serbian government and Air Serbia’s minority shareholder Etihad Airways.
The Serbian government has maintained that these annual funds are being used to pay off old debt owed by Air Serbia's predecessor Jat Airways, however, the accuracy of these claims has been contested. The Serbian Prime Minister, Ana Brnabić, previously noted the payments would persist until 2023 to pay off Jat’s historic debt. Last year, Air Serbia repaid a 57.6-million-dollar Etihad Airways Partners loan it took out in 2015, followed by the repayment of a further 63 million dollars this year for a second loan from the special purpose funding vehicle. The airline maintains the loans were repaid independently “thanks to responsibly running its business before the coronavirus pandemic, as well as extensive austerity measures at all levels during the greatest crisis in the history of civil aviation, resulting from the pandemic”.
In 2020, the Serbian carrier registered a loss of 77 million euros, ending six consecutive years of profit. Since the pandemic took hold, the airline has undertaken a number of measures to reduce costs, including rationalising its fleet and renegotiating leasing terms for aircraft, as well as reducing airport fees and taxes at select destinations. The carrier has also launched its “Deliver” program, aimed at reducing unnecessary costs and non-vital services which has “strongly contributed to the company’s liquidity”. The airline has renegotiated more affordable pricing for utilised IT services and has used the slot suspension in Europe and the United States to its advantage. At the end of last year, Air Serbia hired independent experts in order to estimate the economic impact the national carrier has on the country’s GDP and the development of tourism in Serbia. “The company’s management continuously assesses the objective losses caused by the coronavirus pandemic in 2021 on a quarterly basis, as well as its ability to meet all obligations towards creditors and suppliers”, Air Serbia said.
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