Difficult Times for JAT

By: Rina Mihajlovic

Novi Sad, Sept. 18, 2009 (Serbia Today) - Serbia’s troubled national airplane company JAT Airways is looking at losses between 20 and 25 million euros by the end of this year ($29.1 million - $36.4 million). This is a worst-case scenario that could happen, finishing last year 29 million euros in the red. The loss will remain if nothing positive happens these 4 last months of the year 2009.
JAT General Director Srdjan Radovanovic said “Unless we break even by January 11, 2011, we will be in a big trouble”. The company is facing difficult times and is in a situation from which it is very hard to come out.
Last year JAT transported 1.3 million passengers compared to 1.1 million that was expected this year.
In July JAT transported 118,300 passengers which is 15.9 % fewer than previous years and 540,900 passengers in the first seven months, 19 % less from the previous years. Right now the occupancy is 60 percent which is the weakest result among the companies.
The reason for the poor performance is JAT’s outmoded business model that dates back 25 years. It is a model made on the model of the seventies and eighties of the last century. While all other companies improved their way of doing business and their equipment it seems that JAT stayed a quarter of a century back.
Another issue is the price. The tickets are rather pricey and not affordable at all and not to mention that for that specific price the customers don’t get adequate service. Moreover, the service is not that good in quality, there is no good promotion and the company doesn’t leave a good impression on passengers and other consumers.
Radovanovic said that JAT will manage to transport about 1.5million passengers next year counting on visa abolishment from next January that has been announced recently. White Shengen will make it possible for more people to travel more easily and the ones who didn’t travel because of visa difficulties will not be facing the same problem again. Also, JAT is planning to modernize itself because it is the only way to keep up with the rest of the world.
The main goal of the company will be to increase the number of passengers on their flights, to improve their services, keep the air hostesses smiling and become more competitive. Other companies such as German wings are becoming more aggressive and JAT has to see to it.
Radovanovic also said that JAT is dealing hard with the situation and handling the crisis with difficulty. The company profit declined by 20 percent and the last year’s loss had a huge negative impact on the company as well. Also, JAT took on a 10 million euro loan from the government in February this year for salaries and investment.
JAT is supposed to present its business plan this week to the government. It is something unexpected not only for the public but also for many directors within the company and Board of directors who had no idea that the business policy is about to change. What company has on its mind will be revealed soon and many suspect that one of the goals will be to upgrade its planes, to modernize everything.