European Airlines advise Romanian Tarom to cut costs before privatization

The Association of European Airlines has asked the Romanian state – owned airline Tarom to reduce its costs before being privatized, as it will be difficult to find an investor during the current European aviation crisis. “If Tarom is privatized or not is not that important. What is really important is for the company's management to take strategic measures. In respect to the Tarom privatization, I believe the steps to the privatization are what matters. The first step is to reduce the company's costs, then to restructure it and make sure the costs stay low, and then, the last step, to take strategic measures for privatization,” said Ulrich Schulte-Strathaus, the secretary general of the Association of European Airlines. The fact that the European aviation industry is still in crisis makes it difficult for Tarom to find a buyer. Tarom posted losses of nearly EUR 80 million last year, when most airlines in Europe were affected by the Icelandic volcano eruption, as well as by the increase in fuel and airport tax prices. The Romanian Government has pledged to sell up to 20 percent of Tarom, either by listing it on the Bucharest Stock Exchange, or by selling it to a strategic investor. It also plans to hire private management for Tarom by November this year. The Association of European Airlines brings together 36 major airlines and also includes Tarom among its members. Its member companies have a cumulative yearly turnover of EUR 82 billion. editor@romania-insider.com (photo source: Tarom)