Serbia launches JAT Airways privatization

After weekly of speculation among industry analysts, the Serbian government has officially launched the privatization process of the country’s national carrier, JAT Airways. Serbia will now sell a 51 percent majority stake in the airline for a total of 51 million euros, according to a Forbes report. As an added incentive, government officials have indicated that there may be an option to purchase up to 70 percent of the shares in the near future. Airlines that may be interested in submitting a bid will be required to do so no later than September 26, 2008 and they must also have a proven track record in the industry. Serbia requires all bidders to have carried a minimum of 1.3 million passengers last year.

Although JAT Airways has seen a nine percent spike in its own passenger figures, it still only transported a very modest 580,000 travelers in 2007. Additionally, one of the airline’s main problems is that it is burdened by a massive debt of 247 million euros. JAT lived through challenging times during the 1990s, when the carrier all but collapsed due to the Yugoslav Wars and foreign sanctions. Much of the airline’s international network disintegrated and its fleet size shrank considerably from the 40 planes that it operated prior to the demise of Yugoslavia. Since then, the carrier has never fully recovered and its fleet stands at only 17 aircraft. There are also signs that further staff cutbacks may be necessary to make the airline profitable. Some analysts believe that the carrier may be employing up to 40 percent more people than would be required.

Thank you to Forbes and Thomson Financial News for the initial report.

www.jat.com