Bulgaria’s National Assembly approved on March 23 the privatisation strategy for the country’s flag carrier Bulgaria Air. The idea of the new Government-proposed strategy was to help raise the company’s competitiveness ahead of Bulgaria’s European Union (EU) entry, scheduled for January 1 2007.

The strategy was approved by the 240-seat Parliament, 107 to 30 with two abstentions. According to the Government’s strategy, which was drafted last month, 99.99 per cent of Bulgaria Air will be put up for sale by the state. The shares will be offered to a strategic or a financial investor.

The state, however, will keep a “golden share” in the company in order to protect national interests. The golden share will permit the state to have the right to block key decisions of the new owner. The potential investors should be Bulgarian-registered companies, and must be at least 51 per cent owned by companies or individuals from Bulgaria, the EU or the European Economic Area.

The strategic investors will be required to have had at least 150 million euro in revenue from air services in each of the past two years and to have carried at least 750 000 passengers a year over the same period. The financial investors must have managed assets worth more than 250 million euro in the past two years or have equity in other companies of at least 150 million euro. The bidders’ investment plans for the first two years after privatisation will have a weight of 35 per cent in the winner-selection ranking, followed by price commitments (30 per cent), development of new destinations (20 per cent), and opening of new jobs, the remaining 15 per cent.

“The Government will try to complete the privatisation of the company by the end of June so that Bulgaria Air will be competitive when Bulgaria joins the EU next year,” Petar Mutafchiev, Transport and Communications Minister, told a Bulgarian-language newspaper on March 22. The Government expects that by the time Bulgaria joins the EU in 2007, or at the latest in 2008, the country would have signed the EU “open sky” agreement, which allows any flight operator from the EU to set up business wherever it wants, Mutafchiev said.

Bulgaria Air succeeded the country’s flag carrier Balkan Airlines, which was declared bankrupt in 2002 after a nearly two-year struggle to repay debts totalling about $100 million. Due to the restructuring of the company, a rise in fuel prices and the entry of low cost airlines in Bulgaria, Bulgaria Air’s pre-tax profit for 2005 has dropped 71 per cent to 500 000 leva. The company, at present, accounts for 30 per cent of the air travel tickets sold in Bulgaria - a country of 7.8 million people - and about 25 per cent of the revenue from ticket sales.

On March 20, Bulgaria Air started offering round-trip tickets at a promotional price of 169 euro. The offer is valid for flights to 16 European destinations, among which are Amsterdam, Barcelona, Berlin, Brussels, Copenhagen, Frankfurt, Lisbon, London, Madrid, Milan, Paris, Prague, Rome, Stockholm, Vienna and Zurich. At the moment, the Bulgaria Air tickets to these destinations cost 209 euro. To benefit from the offer, Bulgaria Air customers need to simultaneously reserve and purchase the ticket by April 15, Bulgarian National Radio reported.

Travel is to be effected between April 1 and May 31 2006. The duration of stay should include at least one weekend but should not exceed one month.

The offer is a part of the new pricing policy, giving customers with good planning the chance to benefit from the best conditions. Similar programmes will be developed to enable the company to increase its market share.

The sale of Bulgaria Air had been discussed in Parliament several times over the past four years. The procedure, however, was delayed because of the June 2005 parliamentary elections and the following three-months period when negotiations for the recently formed coalition Government were under way.

As a result, Bulgaria Air today has to undertake measures to face the ever-stronger competition and, at the same time, follow the restrictions imposed by the state due to its starting the sell-off.

The list of low-cost airlines flying to Bulgaria includes Hungary’s Wizz Air, Slovakia’s SkyEurope and Itay’s Myair, the latter performing its first flight to Bulgaria in April 2006. Four traditional airlines boosted flights to Bulgaria in the outgoing winter season and Norwegian Air Shuttle has been given the green light to service flights from Oslo to Varna and Bourgas, on the Bulgarian Black Sea coast.

So far, Bulgarian private airline Hemus Air and Austrian Airlines have officially announced interest in participating in the Bulgaria Air sell-off.