Serbian Flag Carrier JAT Airways Mulls Ordering up to Five New Boeing Aircraft - Media

Serbia will most likely seek four or five new passenger jets as it has no money for more, Belgrade-based news outlet Politika (www.politika.rs) reported over the weekend, quoting an unnamed source from the airline company.

The upcoming negotiations with the Boeing executives, scheduled to arrive in Belgrade this week, are the main reason why Serbia's Infrastructure Minister Milutin Mrkonjic last week gave the management of the troubled airliner seven days to flesh out a forward-looking business plan, Politika said.

Jat Airways currently owns 16 planes for the transport of passengers and cargo on domestic and international lines: ten Boeing 737-300s, one Boeing 737-400 and five ATR 72-200s, according to data from the carrier's website.

In April, local media reported that the average age of the fleet is 20 years.

Politika also said that JAT Airway still has a $24 million (34.9 million euro) deposit with commercial jet maker Airbus furnished back in 1998 when it was considering placing an order for eight A319 aircraft. Airbus will pocket the deposit if the contract is cancelled, which means that JAT, while pursuing a deal with Boeing, will also have to conduct parallel talks with the European jet maker on resolving that matter, the source told Politika.

The renewal of the carrier's ageing fleet is just one of the issues dogging the management of the company as it must also figure out a way to get back into shape a business that hasn't been profitable in years, Politika said.

The Serbian flag carrier has some 2.0 billion dinars in receivables to collect, but the bigger challenge for the company is getting back on customers’ good side and filling up its planes. A growing concern is JAT's performance on the Montenegrin market where it is losing turf to Montenegro Airlines, Politika said.

JAT Airways is likely to cut its loss to between 20 million and 25 million euro in 2009 under a worst-case scenario, from a loss of 29 million euro in 2008, local media reported last week.

The carrier boarded 540,900 passengers in the first seven months of 2009, down 19% year-on-year, data of the Association of European Airlines showed.

($=0.6865 euro)