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News 21 Aug 17

Romania Order Probe Into State Airline's Losses

Romanian Prime Minister Mihai Tudose has ordered an investigation into the affairs of the state-owned airline Tarom, after the company reported further major losses in the first part of 2017.

Ana Maria Touma
BIRN
Bucharest
Romania's airline reported 23 million euro losses in the first semester of 2017 and a 330 million loss over the past 8 years. Photo: Transport Pixels/Flikr

Romania’s national airline Tarom faces a government investigation after it reported more significant losses in the first half of 2017. The company has not made a profit since 2007.

The general manager of the company resigned on Monday after a row with Prime Minister Mihai Tudose over the poor results of the company.

The head of the government has ordered an investigation into the way the state-owned company has been managed during the past eights years after the airline reported losses of 330 million euros over this period - 22.7 million in the first half of this year.

The worsening situation in the company led to clashes between the Prime Minister and Minister of Transport, Razvan Cuc, as well as with the general manager of the airline, Eugen Davidoiu.

The Prime Minister said on television on Saturday that he believed the company was now in a worse shape than last year.

“They’ve 'achieved' a historical loss. We need to do something about it because it’s a national company, it’s a national symbol and it won’t be closed down or sold … It needs to become profitable and it needs to develop,” Tudose said. The PM also said noted that the company employs almost 2.000 employees, adding that an investigation would take time.

“If those employees were 1,000 pilots, it would be fine. But we have more employees in the support departments, such as marketing … And, you know, the pilots and flight personnel are the ones who produce the money for the ground personnel,” the Prime Minister explained.

Company manager Davidoiu on Sunday said that he doubted an audit will reveal any irregularities during his tenure. He was only named general manager on February 2. His tenure was extended recently for another four months.

“The irregularities are not to be found during my tenure, but in the past,” he explained. “Did you know Tarom doesn’t even have legal personnel? The former management gave up those positions,” he said.

He also pointed out that he believes the company is starting to do better, compared to other airlines in the region.  “Look around Romania: how many state-owned airlines are still standing?" he asked.

After reporting important losses over the past eight years Tarom has lost its place on the market regionally compared to budget airlines such as Wizz Air or Romanian Blue Air.

The company in June leased two new Boeing 737 aircraft. According to Tarom’s business plans, the airline plans to begin operating new routes to China and the United States. 

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