Jat Airways, a Serbian public company awaiting privatisation, has in the first eight months of this year carried a total of 903,000 passengers, with the highest ever annual cabin load factor. Remarkable results were also achieved in charter traffic.
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Mr. Starčević, this year Serbia’s national air company has recorded the best business results in the past sixteen years. Would you elaborate as to what these results concretely imply?
"It is true that the Company has recorded the best operation and business results in the past sixteen years. This year, we expect a record number of passengers and an annual cabin load factor exceeding 63.2 percent. We are not yet fully satisfied but there is marked progress.
We had a splendid season as regards charter traffic coupled with excellent financial effects. All this is the outcome of improved organisation and quality of preseason preparations, as well as a greater commitment of everyone in the Company to offer an appropriate response to increasingly fierce outside competition."
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For the past two years, Jat has received IATA’s IOSA flight safety certificates, thus topping the flight safety list. Still, the Jat 16-plane fleet – its most recent arrival being the fifth leased ATR-72 aircraft – is in need of renewal. In interviews, you have often mentioned that with the existing fleet the Company can be profitable three more years. Is there a solution for fleet renewal?
"For two years in a row, the Company has passed IOSA audits with flying colours, without a single objection, and has joined the circle of companies with impeccable safety reputations. This all goes to show that we are valued and enjoy much higher respect than we value and respect ourselves, and this naturally is pleasing in itself. However, we cannot escape the fact that we are operating a rather old fleet, thus incurring increasing technical maintenance costs, which is reducing our competitiveness. For this reason, we see fleet renewal as the only way out of this situation and hope that this issue will be dealt with accordingly through the sound privatisation of the Company."
The Serbian government gave the go-ahead in August, and the Agency for Privatisation selected Rothschild as the Company’s privatisation advisor. As Jat Airways director general and member of the commission that chose the privatisation advisor, what are your expectations as regards further proceedings?
"I expect the privatisation advisor, in keeping with its good business reputation and within the set timeframe, to do its share of the work, and propose to the government the best way to go ahead with the privatisation process."
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In your opinion, what is the realistic starting price that may be expected in connection with the tender, and, do the already-mentioned interested parties (Aeroflot and Air India) still figure as potential favourites or will Rothschild name some other air company as a potential buyer?
"Rothschild will certainly not advise with whom to conclude a business arrangement. Their role is to conceive an optimal course and manner of action regarding privatisation. Who will subsequently appear in connection with the tender is an open question. Also, it is too early as yet to speak about price because we don’t know what percentage of the Company will be offered in the privatisation process, and how this will be carried through. One thing, however, is certain, the Company is worth much more now than two years ago, and management is proud of this fact." |
When can Jat privatization be expected and according to which model, and what can, in your view, certain Company operation sectors and employees expect after privatization?
"I believe that Jat Airways will be privatised through an international tender that will probably be made public by the end of the current year, while the final stage of the procedure will probably occur in the first three months of 2008 at the latest. The employees, in my view, need not be concerned as I am deeply confident that after privatization Jat will be much firmer and stronger than at the present time."
This year, the one millionth passenger on a Jat flight flew as early as September. In the first eight months of this year, Jat has carried seven percent more passengers than in 2006. Does this imply that passengers from countries of the region, regardless of that fact that a large number of air companies use Belgrade airport – especially low-cost air carriers – still prefer Jat?
"Exactly. For the first time since the breakup of the former Yugoslavia, Jat Airways carried its one millionth passenger as early as mid- September. This goes to show that air travellers have continued to prefer our services and that we have not lost our market share, and moreover have a realistic chance of increasing this share. We have always been proud of this particular type of loyalty among our passengers and have done our best not to disappoint them in any way, ever."
To what extent and in what way will the Open Skies agreement that our country has signed, but not ratified, affect Jat?
"Certainly, realisation of this agreement will significantly affect our business. The skies are opening and competition in our country will be incomparably greater and more aggressive. On the other hand, we have never feared competition. We are the only public company forced in its day-to-day operations, and on all markets, to compete with scores of the biggest and strongest foreign companies without – as you set out – ceding our position on the market to others. We, therefore, believe that opening the skies would present for us merely another incentive to continue raising the level and quality of our services."
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