Yugoslavia's flag carrier could reduce its 5,000 workforce in an effort to cut costs

JAT Yugoslav Airlines will undergo a complete restructuring this year in a bid to break even in preparation for eventual privatisation.

JAT will be restructured in all aspects from "technical to its organisation and ownership structure", says Ljiljana Stepanovic, deputy manager planning and development. First to be "re-shaped" are JAT's non-flight operations subsidiaries. JAT subsidiaries overall are set to make a small loss this year, although JAT Hotels, JAT Agricultural Aviation and the airports at Podgorica and Tivat are forecast to be profitable. JAT is also considering reducing its 5,000 workforce to improve profitability in the current slowdown.

The airline is forecasting break-even this year on earnings of around $139 million, although Yugoslavia's 20% inflation and rising fuel costs and other charges could put it in the red. JAT is predicted to carry 1.02 million passengers this year, down 2% from last year's 1.04 million, with domestic traffic expected to decrease by 26%.

The airline is looking to resume services to the USA and has applied to the Department of Transportation to operate between Belgrade and Chicago. Last year the airline applied to resume Belgrade-New York services, which were suspended in 1992 when the USA placed sanctions on the country. A decision has yet to be made, but last week the carrier amended its application to add twice-weekly McDonnell Douglas DC-10-30 services to Chicago via New York. JAT predicts that US services could generate net revenues of $1.4 million in the first year of operation. The airline eventually aims to resume services to Australia and Canada.

Serbia's assistant minister for traffic and telecommunications, Dragoljub Trgovcevic, says JAT and the government have agreed with Airbus to delay the airline's A319 deliveries for a further two to three years, but says the deal is still "inadequate for JAT" and negotiations are continuing to revise the aircraft mix. The previous Serbian government ordered eight A319sin 1997 when US aircraft were unavailable due to trade sanctions.

Source: Flight International