FBIH ENTITY GOVERNMENT TO SELL 49 PER CENT SHARE IN BOSNIAN NATIONAL AIRLINE

SARAJEVO, Bosnia (17 July,2008) - At the end of June, the FBIH entity government issued a formal privatisation tender for the state-owned Bosnian national carrier, BH Airlines. The deadline for submission of bids is July 30th.

The tender documents require that the prospective investor acquire a 49% share in the company, while the government would retain 51%. Croatian Airlines and Turkish Airlines, as well as airlines from Malaysia and Italy, have expressed interest in this partial acquisition. Media reports suggest Turkish Airlines has not yet submitted a formal letter of interest, however.

"An increase in the fleet, a strategic partnership and investments in modernisation are keys to continued development of" BH Airlines, Nudzeim Recica, the airline's CEO said. He pointed out that even much-larger carriers like Croatian Airlines currently operate at a loss.

Company officials say that during 2007, the company handled about 70,000 travelers, in comparison to 60,000 the year before, a 14.1% increase. It grossed 7.4m Euros, which is 9.5% more than in 2006. Still, it reportedly posted a 2007 loss of about 51,000 Euros.

The FBIH Entity Privatisation Agency considers the partial privatisation an exceptional bargain for investors, because BH Airlines is the only Bosnian air carrier that has the potential to open new routes and markets and increase its rider load significantly.

However, the airline's market share in Bosnia is only 15%.

On the other hand, skeptics consider the arrangement a "catastrophic" move for the FBIH entity government, which will have to keep patching airline losses with taxpayer money. They argue that selling off the company completely would be a better option.

As for post-privatisation plans, once the fleet increases, the carrier has announced its intention to introduce flights to London, Amsterdam and Scandinavian cities. It is also negotiating with Montenegro to introduce a Sarajevo-Podgorica flight.
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