Tarom privatisation has to wait

The privatisation process of national air carrier Tarom will be launched in 2005-2006, after enforcing the restructuring plan aimed at eliminating losses, Andrei ?ancu, the aviation counselor of the Transports minister, told Ziarul Financiar.

The company’s restructuring plan schedules a 25 million-dollar cut in losses, down to 36 million dollars, the Transports Ministry representative maintained. Over the past three years, Tarom has posted losses totaling about 160 million dollars, while the level of losses amounted to 60 million dollars last year.

“The restructuring programme devised for Tarom complies with the agreement concluded with the International Monetary Fund (IMF), while the company is estimated to derive profit in 2005-2006. We will be able to talk about privatisation only when the company regains its strength,” ?ancu stated.

Lufthansa Consulting re-devised the restructuring plan for Tarom, which is to be debated in a government meeting.

“I think it’s wiser not to rush into it (i.e. privatisation). All companies are thinking about survival now; we were already heading towards recession, but this trend was accelerated by the events in September,” says Bernd Wietfeld, British Airways communication manager for East European and Mediterranean countries.

Both European and American air carriers have been cutting down operational capacities lately and operated layoffs.

The cost cut at Tarom was achieved by restructuring, flight cancellation on certain routes and a cut in the number of flights, but also by renegotiating contracts with the product and service providers.

Six Tarom agencies abroad were closed down – Chicago, Tripoli, Montreal, Barcelona, Abu Dhabi and Dubai. Flights to Barcelona, Tripoli, Stockholm, Dubai and Riad were cancelled during winter, thus leading to a 30% cut in the operational capacity.

Tarom fleet is comprised of six Boeing 737, two Airbus, seven ATR 42 and six rented Boeing 737. One Boeing 737 costs about 90 million dollars. At the beginning of the year, Eximbank granted Tarom a loan worth 300 billion ROL, guaranteed by the state.