Air Serbia Reports Net Profit of EUR 2.7 Million for 2014

Air Serbia, the national airline of the Republic of Serbia, has reported a net profit of EUR 2.7 million for 2014.

In its first full year of operation, the airline’s revenues rose by 87% to EUR 262 million, marking the strongest results in the existence of the national carrier.

Audited by KPMG, these financial statements also reflect strong growth in passenger traffic and cargo volumes.

A total of 2.3 million passengers travelled with the airline in 2014, 68% more than in 2013. Air Serbia’s passenger carrying capacity, measured in Available Seat Kilometres (ASKs), increased by 74% to 3.3 billion by the end of 2014. Despite this increase the airline’s seat load factor rose by three percentage points from 64% in 2013, the last year of operation as Jat Airways, to 67% in 2014.

Air Serbia Cargo also performed significantly better in 2014, carrying 2,700 tonnes of freight, a 67% increase on 2013. Cargo services continue to be a major area of growth for Air Serbia.

In a significant improvement on the performance of the former Jat Airways, Air Serbia's average on-time performance was 78%%, which is now in line with the industry average for airlines in Europe.

Dane Kondić, Chief Executive Officer of Air Serbia, said, “These results are a great achievement validating the effectiveness of our strategy. We are proud to have been able to deliver on our mandate which was to achieve strong growth, to become the region’s leading carrier and, most importantly, to do so as a commercially viable and profitable enterprise, while becoming a key driver of economic growth in Serbia. The profit we have delivered in 2014 is, above all, a great sign for the future, as it lays a solid foundation going forward and is proof positive, of what can be achieved when the right strategies and governance structures are put in place. We owe a debt of thanks to our two shareholders – the Government of the Republic of Serbia and Etihad Airways for their ongoing support. I would also like to thank our staff for their contribution and hard work, without which, none of this would have been possible.”

Siniša Mali, President of the Supervisory Board of Air Serbia, added, "The profit is a wonderful result for our national airline and for the future of aviation in Serbia and the Balkan region. Air Serbia has enhanced the image of our country. Our national airline is often the first contact for visitors and investors who come to Belgrade and Serbia. The level and quality of service, the look and ambiance of the aircraft, are the images of a modern Serbia we would like to send to the world. We will continue to consolidate Air Serbia's position by making investments that will allow the airline to continue on its current trajectory of further growth.”

Air Serbia published the final annual financial results of the former JAT Airways in May 2014, prepared for the first time in the history of the airline, according to International Financial Reporting Standards (IFRS), which were independently audited by KPMG. For 2013, the airline reported a loss of EUR 73 million.

The 2014 financial statements of the airline were also audited by KPMG which issued an unqualified audit opinion.

Since Air Serbia’s launch on 26 October 2013, the airline has undertaken a number of initiatives outlined in its turnaround plan to rebuild the national carrier and transform it into a profitable, stable, reliable and strong airline to serve Serbia and the broader Balkan region.

The airline was rebranded and ten new generation Airbus aircraft were introduced, with eight A319 and two A320 added to the fleet. As a result, the average age of the jet fleet has decreased from 25 to 10 years, delivering greater reliability and significantly lowering the costs of operation.

During 2014, Air Serbia’s network of direct routes grew to 40 destinations in 30 countries, the last of which was the highly symbolic launch of flights to Zagreb in December, re-establishing a link between Zagreb and Belgrade, last flown 23 years ago. The airline also expanded to 35, the number of destinations served with codeshare partners – airberlin, Aeroflot, Etihad Airways, Etihad Regional and Tarom. Coupled with the introduction of a modern and reliable fleet, the network expansion strategy has been a key driver of the significant growth in passenger numbers and cargo volumes.

Air Serbia also established a dedicated charter brand – Aviolet - which operates four rebranded and refurbished Boeing B737-300 aircraft. Aviolet operated over 520 return flights during the 2014 summer season and transported over 90,000 tourists to popular vacation destinations in Turkey, Greece, Egypt and Italy, among others.

Air Serbia's growth has created a significant number of new jobs for Serbian nationals. During 2014, the airline grew its workforce by more than 400 new professionals. The technical department of Air Serbia has employed 44 engineers and technicians to establish the line maintenance facility at Belgrade’s Nikola Tesla International Airport. A number of new pilots were hired in the first half of 2014, including three of the airline's first female pilots. The airline's largest ever global drive for pilots was launched in September 2014, and resulted in the recruitment of over 40 new pilots by the end of the year. A nation-wide recruitment drive for cabin crew attracted nearly 1,700 candidates - the highest in the history of the airline, indicating that the national airline not only inspires confidence, but that it has become an employer of choice among young Serbian nationals.

Presently, over 1,900 employees work at Air Serbia, including its subsidiaries Air Serbia Catering and Air Serbia Ground Services.

Recognizing that human capital is a crucial component in its transformation, Air Serbia also invested significantly in the development of its workforce, introducing a range of training programs for its employees. The airline also rolled-out the first phase of its comprehensive graduate management development program, in collaboration with Etihad Airways. Nine young Serbian professionals have currently completed a nine-month intensive theoretical and practical course involving all aspects of the airline business and are now placed across various operating divisions in the airline.

Air Serbia is committed to maximising its contribution to the national economy. A study conducted in late 2013 by Oxford Economics, a leader in global forecasting and quantitative analysis, estimated that Air Serbia would generate an amount equivalent to 1.5% of Serbia's annual GDP through the aggregated effects of its contribution to the development of business opportunities, tourism, trade, investments and global connectivity. The airline is currently working with Oxford Economics to measure its performance against forecast.

Equally committed to its community, Air Serbia was proud to make a significant contribution to Serbia’s humanitarian effort during the floods of May 2014 which devastated the country. Air Serbia transported a total of 154 tonnes of humanitarian aid in the cargo holds of its aircraft to Belgrade and also to Banja Luka in Bosnia and Herzegovina.

Air Serbia launched a ground-breaking multi-channel advertising campaign in October, with the tag-line "Air Serbia. The New Wings of Europe", to boost awareness of the airline and position Belgrade and Serbia as an attractive destination and a convenient European air transport hub. The success of the campaign was recognised by the Association of Advertising Professionals of Serbia (UEPS), receiving two golden awards.

Mr Kondić said, “While the 2014 results are a sure sign that we are on the right path, we must not rest on our laurels and, entering 2015, we are committed to accelerating our growth. We will do this by continuing to grow our route network both organically and through an expansion of our codeshare partnerships. We will also continue to invest in our products and services to ensure that we provide the best possible guest experience both in the air and on the ground. As Air Serbia consolidates its position as the region’s leading carrier, it is proud to play an increasingly important part in supporting the further growth of the Serbian economy, particularly in developing tourism and trade, while creating employment opportunities for Serbian nationals across the broader economy.”