Despite renewed efforts at privatisation, airline sell-offs in the eastern Europe continue to be dogged by a lack of political will and scant interest from Western foreign investors.
The Romanian Government is to begin searching for investors to buy a majority stake in its national carrier Tarom. Advertisements for advisors and consultants appeared in May and the full search for a new owner will begin in the autumn. A final deal is not expected until next year, however.
Romania's move comes just as Bulgaria shortlists three of the five original bidders for a majority stake in Balkan Bulgarian. But none has connections to a Western airline.
The favourite is a Russian-backed group which bid for a 75% stake but was blocked by the Bulgarian Government this year. The group includes aircraft manufacturer Tupolev. The two other finalists are a consortium including Arkia Israeli Airlines and a German entrepreneur Ulrich Behdeler Atakan.
Tarom, meanwhile, is likely to find it equally difficult to find a Western airline partner. One consultant bidding for the role of advisor to the government says the airline is not cost efficient enough for a Western carrier and the Romanian economy offers few lucrative business class passengers. He says the government should sell Tarom to local entrepreneurs who have formed a consortium with Western financiers.
"We would first need to set aside the airline side of operations, stripping away hotels, engineering and so forth - items that are easily saleable," he says.
The other problem with smaller east European airlines, the consultant says, is that they need to renew their fleets in the next two years to comply with new European Union rules on aircraft noise.
Governments appear reluctant to give up flag carriers to foreign owners so soon after gaining independence from the former Soviet Union. Balkan Bulgarian could have been sold last year, but a Lufthansa-backed consortium was blocked by the government. "These airlines are getting worse and without Western help soon, they risk becoming unsaleable," says the consultant.
Source: Airline Business
