Serbia’s JAT airline to axe 700 jobs


Belgrade – Serbia’s ailing flag carrier JAT will slash nearly 40 percent of its workforce next year in an effort to return to profit after its stalled privatisation, its general manager said in an interview.

Serbia tried to sell a majority stake in the troubled airline in July, but not a single company expressed interest.

The government blamed the global financial crisis and said it would wait for better conditions before publishing a new tender, in the meantime bankrolling a restructuring plan to make JAT more competitive.

General manager Sasa Vlaisavljevic told Reuters that with the privatisation off the cards for now, the carrier had to apply measures that would allow it to post a profit in 2009.

“We need to cut the number of employees from the current 1,800 to 1,100,” Vlaisavjevic said. “We have already reached an agreement with unions.”

He said the company was in talks with commercial banks for a 7.5 million euro loan and had asked the government to provide the guarantees for it.

“Part of that money will be used for redundancy pay for workers we plan to lay off,” he said, “and part of it will be spent to fix five planes that are currently not operational because we don’t have money to buy spare parts.”

In the times of socialist Yugoslavia, JAT was a thriving national airline with a domestic market of over 20 million people and a loyal following among the expatriate community.

It was heavily hit by United Nations sanctions imposed on Serbia for its role in the wars of the 1990s, and was banned from flying to any international destinations throughout that decade.

It last bought new planes in the early 1990s.


Vlaisavljevic said the government is expected to provide guarantees to JAT soon.

“If it doesn’t happen, we will need to sell the real estate assets that we own abroad in London, Milan, Amsterdam and Montenegro,” Vlaisavljevic said.
He noted that the company had already undertaken a series of measures to cut costs by 11 million euros per year.

“We have reduced the number of airports we are flying to, we have cut salaries,” he said. “We also reduced catering offer in the planes.”

JAT has 209 million euros ($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.

As carriers like Austrian Airlines and Lufthansa entered the market, JAT has seen its market share slip to 45 percent of all traffic through the capital Belgrade last year from around 60 percent in 2002.

Serbia initially planned to sell JAT in 2007 but the process was stalled due to months of political instability that eventually led to new elections.

Vlaisavljevic said the continuous setbacks to the airline business did not leave room for optimism that the sector would recover any time soon.

“The business had suffered because of high fuel prices for a long time,” he said. “When fuel prices started going down, the business was struck by global financial crisis that makes it difficult to find cash for recovery.”