Loading page...

Romanian Business News - ACTMedia :: Services|About us|Contact|RSS RSS


Tarom estimates losses five times higher than initially budgeted


Romanian state airline Tarom estimates losses of RON 206.7 million (EUR 44.9 million) for this year, according to its rectified budget.

The losses are five times higher than those provided in the initial budget approved by the Government in September. The losses were then estimated at RON 41.2 million (EUR 8.9 million).

The state airline recorded losses of RON 46.9 million (EUR 10.2 million) last year due to a drop in revenues and in the company’s asset value. The company’s budget shows that 2017 would be the 10th year of loss for Tarom as the company has not made a profit since 2007. The airline’s losses have deepened from one year to another, and specialists say the company will end up in a financial stalemate, especially because it has to pay monthly installments for the two Boeing aircraft purchased this year.

Tarom estimates total revenues of RON 1.14 billion (EUR 248 million) for this year, according to its latest budget.

On the other hand, the Court of Accounts showed in its latest report that the losses carried forward of Tarom by 2012 of RON 1.67 billion have deepened  by another RON 545 million by the end of last year.

Minister Stroe: TAROM must be supported

National airline TAROM should be "pruned" and turned efficient as regards expenditure, and for the next year its draft budget to be endorsed by the Parliament will include the purchase in emergency regime of 10 airliners, Transport minister Felix Stroe said on Friday in a telephone call with the private broadcaster Realitatea TV. 

"TAROM is a national brand and must be rescued. The economic situation of TAROM did not occur in the last quarter, it has a history of 10 years. We do have two measures already, we are initiating them. The first is an urgent reorganisation of TAROM, this including the staff's structure. Yesterday (Thursday, ed. n.) I had a several-hour talk with the TAROM technical trade union and the company's management, the day before yesterday I've also had talks with the leadership, for almost 6 hours. We agreed that with our support, the TAROM management and the trade union urgently send me a restructuring plan, of the staff's structure included. TAROM should be pruned and turned efficient as regards its expenditure regime," Stroe said. 

The minister added that "we cannot keep 200 employees at the financial department, for instance, whilst an air operator that is transporting thrice our number of passengers in one year, also a Romanian company, only counts 30 employees at that compartment." 

Felix Stroe however rejected the conclusion that layoffs could occur in the next period at TAROM. 

According to the Transport minister, the company must be supported, and to this effect the TAROM 2018 budget will include the necessary amounts for the acquisition of 10 airliners.