Eastern Europe's Airlines Hit Turbulence

For Prague-based public-relations consultant Joe Cook, the toughest part of a business trip to Bulgaria later this month will be finding a flight. Since Czech Airlines cut services to Sofia earlier this year, Cook must travel via Vienna or Munich at twice the time and cost. It’s the same story for journeys across much of Eastern Europe as cuts in state spending and a dearth of investors have forced government-owned operators to downsize networks. “Flight-related costs have increased, and one’s choices are reduced,” says Cook. “You start thinking, ‘Do I really need to go there?’”

Europe’s economic crisis is weighing on airlines from the Balkans to the Baltic as austerity programs coincide with high fuel prices and a European Union clampdown on government aid. Poland’s Polskie Linie Lotnicze Lot is seeking to sell stakes in its domestic airline, as well as its catering, casino, and fuel operations, to bolster its finances after five years of red ink. Latvia’s profitless AirBaltic is looking for a partner to buy a 50 percent stake. Serbia, which has been trying to sell JAT Airways for years, says it may inject as much as €180 million ($233 million) on top of recurring government-backed loans to make it more attractive to a potential buyer. And Estonia’s Economy Minister Juhan Parts last month said the closure of money-losing Estonian Air is “an option.”