Archive | March, 2013

Dnevni Avaz: B&H Airlines to cease operations?

According to the “Dnevni Avaz” newspaper, the Federation government of Bosnia and Herzegovina has decided to shut down its national carrier B&H Airlines. Cabinet members of the Federation government are set to vote in favour of the airline’s closure as it can no longer support B&H which has accumulated significant debt for its relatively small size. The government forks out 3.5 million euros for the carrier on an annual basis. Dark clouds began to gather over the airline early last year when Turkish Airlines relinquished a 49% stake in the carrier, blaming the government for its inability to develop the Bosnian carrier. Similarly, the government has blamed Turkish Airlines for leaving B&H in a worse state then prior to the acquisition.

B&H Airlines has not commented on the news which has been circulated across other media in the region. The airline is still selling tickets and operating services normally. Recently, B&H was grounded for over a week after its bank accounts were frozen due to outstanding debt on loans taken out for the purchase of two ATR72s, only one of which is active in the B&H fleet. The Bosnian carrier has plans to lease a jet engine aircraft and launch flights to Skopje from May 1. A source from the Bosnian government told the “Avaz” newspaper that several airlines showed interest in taking a minority stake in the carrier late last year but all abandoned such plans once they saw the state B&H was in. Last week Turkish Airlines and B&H ended all cooperation after the Bosnian carrier ceased code sharing on Turkish Airlines flights to Istanbul.

B&H Airlines employs 108 people. It marks the second attempt at a national carrier in Bosnia and Herzegovina. Its predecessor, Air Bosna, operated services from 1994 until 2003 before it went bust due to outstanding debt. B&H Airlines launched flights in 2005. Besides Air Bosna, only two other national carriers from the former Yugoslavia have ceased operations. They are Palair Macedonian Airlines and MAT Macedonian Airlines.

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B&H Airlines resumes normal operations

B&H resumes normal operations

B&H Airlines has resumed normal operations after the Hypo Alpe Adria Bank unblocked its accounts. “Unblocking our accounts was the condition for us to resume operations. Without it we would be unable to do business. After this we can breathe more easily”, Amir Jažić, the acting CEO of B&H Airlines says. Mr. Jažić claims the blockade of its accounts on behalf of the Hypo Group was uncalled for. He adds, “We still haven’t made flight plans for next week but we will operate services to three destinations (Istanbul, Zurich and Copenhagen). We will look into boosting our frequencies”.

Since March 1, B&H Airlines’ services have been affected by the blockade of its accounts. Hypo claims the carrier has outstanding payments on its loan for the purchase of two ATR72s. With the help of the Federation government a deal has now been struck, although no further details have been revealed. B&H Airlines had plans to lease a jet engine aircraft this summer season and intends to launch flights to Skopje from April 1. One of B&H’s ATRs is currently in Germany undergoing maintenance. The carrier has deposited 30.000 euros for the aircraft to be serviced.

B&H Airlines’ CEO says passengers have not been affected by the carrier’s recent troubles. Most passengers were rerouted onto other airlines, most often Croatia Airlines and Jat Airways. B&H also payed for accommodation for its passengers when it was required. The CEO says, “None of our passengers experienced any trouble. They were even treated to more comfort”.

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B&H to resume flights tonight

The national carrier of Bosnia and Herzegovina plans to resume flights tonight by operating its service to Zurich after cancelling flights to Copenhagen and Istanbul today. The cancellations come as B&H’s bank accounts have been frozen due to mounting debt and unpaid loans. The airline’s only ATR72 in Sarajevo has been on the ground for more than a week, the only exception being a flight to Istanbul operated on Wednesday. B&H’s other ATR is in Germany undergoing maintenance. The Federation government of Bosnia and Herzegovina is determined to save the carrier but has warned it faces bankruptcy if its issues with Hypo Alpe Adria Bank are not resolved soon.

Enver Bijedić, the Federation Minister for Transport and Communications, explains that flights have been suspended due to debt to the amount of 3.5 million euros owed to Hypo Bank. Furthermore, the airline owes 2.8 million euros on a leasing loan for two ATR72 aircraft and a 767.000 euro rehabilitation loan. Mr. Bijedić said B&H Airlines had deposited collateral of roughly the same amount with the bank. Under a 2005 contract with Hypo Alpe Adria, B&H Airlines bought two ATR72s worth a total of fourteen million euros. “The company has paid back 11.4 million under the leasing loan, while these two planes are today worth 6.8 million euros”, Mr. Bijedić said. He blamed the airline’s previous management for its current financial problems.

B&H Airlines has offered to settle its issues with the bank by selling the two aircraft, topped with a further half a million euros from the government. B&H Airlines receives an annual government subsidy of 1.3 million euros, as well as proceeds from departure taxes at Sarajevo Airport.

 

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B&H Airlines grounded

B&H Airlines has been grounded again for the time being as the Hypo Alpe Adria Bank announces it has blocked all of the carrier’s accounts. All flights have been cancelled for today and tomorrow. Yesterday, the airline resumed operations after more than a week by carrying out its afternoon service to Istanbul. The airline has maintained it had suspended flights due to a technical issue with one of its ATR72s.

“Blocking B&H’s accounts was our last resort. The reason for such action was the accumulated debt B&H Airlines has towards Hypo Alpe Adria in Bosnia and the outstanding payments the airline has on its loan for the financial lease of the ATR aircraft”, Ana Jurković, from Hypo says. She adds the bank did not make the decision lightly but noted that it must treat B&H like all of its other clients. The bank’s representatives, including the country’s Minister for Transport and Communication, Enver Bijedić, met up on Monday in an attempt to resolve the issue which has grounded the Bosnian national carrier. “B&H Airlines has been offered several models to restructure its payments. Unblocking the accounts will depend on whether a common agreement can be reached. Hypo expects for B&H Airlines’ management to act responsibly and consider all of the options so the current situation can be resolved”, Ms. Jurković says. She adds, “It is not in our interest for B&H to declare bankruptcy”.

Last year, in February, B&H Airlines found itself in a similar situation when Turkish Airlines decided to pull out of the carrier’s ownership structure. One of its ATRs was in Germany for maintenance while the other was grounded in Sarajevo for some time. However, even then it was reported that the carrier was not making payments on the loans it took out for the financial lease and eventual purchase of the ATR72s. The latest grounding comes just three weeks prior to the 2013 summer season. B&H Airlines is providing alternative transport for all passengers which have been affected by the cancellations.

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B&H Airlines to resume flights

After more than a week, B&H Airlines is expected to resume services this afternoon. The carrier has been forced to suspend all flights after its ATR72 experienced technical problems and had to undergo maintenance. B&H’s other turboprop, which is in Germany, is also in maintenance and is expected to return to the fleet during the 2013 summer season. As a result, the airline has been forced to cancel flights to Istanbul, Zurich, Banja Luka and Copenhagen. “We are expecting to hear from our colleagues from aircraft maintenance and I can’t give any further information. One aircraft is in Germany while the other is in Sarajevo which has to undergo small scale repairs”, Edin Hrapović from B&H Airlines says.

However, the Minister for Transport and Communication in the Federation government, Enver Bijedić, said yesterday the airline is grounded because its account at the Hypo Alpe Adria Bank is blocked. B&H has accumulated significant debt towards the bank, mostly during the time it was run by Turkish Airlines. The Ministry for Transport and Communication says it is negotiating with the bank in order to solve B&H’s problems. Late last year several airlines expressed interest to purchase a minority stake in B&H, however, Mr. Bijedić says, “Once their delegations payed a visit to B&H Airlines, they never came back”.

B&H Airlines’ suspensions couldn’t come at a worse time for the airline. Its signature Istanbul service is in big danger following the successful launch of Pegasus Airlines’ flights between the city and the Bosnian capital. Pegasus now plans operate a sixth weekly flight between the two cities during the summer. Despite its problems, the Bosnian national carrier is sticking to plans to launch flights to Skopje from April 1. Whether it will lease a jet engine aircraft by the end of the month, as was previously planned, remains to be seen.

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