Serbia will assist the national airline JAT in acquiring new planes after an attempt to find a buyer failed, a government official said on Wednesday.
The tender competition for the sale of a 51% stake in JAT was published in July setting the minimum price at €51 million ($72 million). But not a single company met the September 26 deadline for buying tender documents, which was a pre-condition for sending binding bids, Nebojsa Ciric, a state secretary in the economy ministry said. “The lack of interest is mainly due to high fuel prices as well as to the world financial crisis,” Ciric said, adding that the government will remain the majority stake owner of JAT. “We will have to wait a little bit before publishing a new tender for the sale of JAT, considering the global crisis in the airline business.”
At one time the national airline of Yugoslavia, with a home market of more than 20 million people, JAT was hard hit by the sanctions imposed on Serbia for its role in the wars of the 1990s. Today passengers are often squeezed into old planes and business class is a set of the same seats separated by a tiny curtain from the rest of the aircraft. JAT last bought new planes in the early 1990s and its entire fleet was grounded for most of that decade. It employs 1,700 people. “The government must help JAT financially to get new planes that will make the company competitive,” Ciric said adding that the Economy Minister Mladjan Dinkic will meet JAT management soon to decide on future steps.
Although it is now back in the black -- posting a profit in 2006 and 2007 after 15 years of losses -- JAT has seen its market share slip to 45% of all traffic through Belgrade last year from around 60% in 2002. It needs investment in a new fleet to reclaim its place, as well as to cope with the difficulties all carriers face over high fuel prices.
Serbia initiated the sale of JAT last year but the process was stalled due to months of political instability that eventually led to new elections. Russian airline Aeroflot had expressed an interest in buying JAT in the past but pulled out.
JAT has 209 million ($295.2 million) of debt but its assets, a 20-year-old fleet of mainly Boeing 737 planes plus real estate, are estimated by analysts to be worth $150 million. “The prospects of selling JAT would have been much better if the tender hadn’t been delayed for so long,” said Milan Kovacevic, a foreign investor consultant. “JAT is not a very attractive buy for investors -- it is burdened with debts and needs lots of investments,” Kovacevic said. (Reuters)