He also said all contracts for the mandate of the members of the board of directors will be published on Tarom’s website.
The company’s new chief executive, Christian Edouard Heinzmann, will earn EUR10,000 net per month, Pascariu said.
In the last four years, Tarom piled on losses of EUR180 million and lost the number 1 position on the airline market to low-cost operator Wizz Air, which carried more passengers last year.
Pascariu said Tarom would start making a profit within the next three years.
“I would like Tarom to set corporate governance precedents, which also means transparency. (…) Of course unless measures are taken, in less than two years Tarom could go insolvent. We will renegotiate all contracts,” Pascariu said at ZF Live.
He added that Tarom’s situation was currently much better than a few days before because the company now had a general manager and a deputy general manager and financial officer, people with experience in the aviation industry. He specified that the first general manager to be appointed, Austrian Heinrich Vystoupil, relinquished the CEO position because he did not accept the terms of the contract for the mandate, so the board of directors had to appoint a new general manager.
“I can honestly say I am not sorry about this change, my argument is the CV difference. With Heinzmann we have signed a commitment letter, the contract will be signed on November 19. Deputy general manager Moriarty will start on November 12,” he said.
Pascariu said about Tarom’s financial situation that the company would have palpable results only next year.
“The general manager will draw up a management plan which will have to be approved by the board of directors. This plan will include qualitative and quantitative financial targets,” Pascariu said.
The chairman of Tarom’s board of directors, who is also chairman of the board at real estate fund NEPI, also said the state-run airline will perform if it applies the same corporate governance standards as in private companies.
On the other hand, consultant Ionel Blanculescu, also a guest at ZF Live, said he believed it was not the management of private companies that was the problem, but the political influence.
“I think Tarom would need to be part of a major aviation group, it is not enough to change non-professional management for a professional one. I don’t think it is right to bring a foreign manager to run the company, and pay them thousands of euros, instead of bringing Romanian managers.”
However, Pascariu said when the board of directors chose Tarom’s manager, it did not start from “what could be found around, but from the job profile, we looked for someone with expertise in a state-run company, who had previously run an aviation company, perhaps even a state-held aviation company.” He says in Romania there are good technical and operational managers, but not financial ones. That is why we brought a deputy general manager with expertise in finance alongside Tarom’s general manager,” he said.
As for Valentin Macec, advisor to transport minister Ovidiu Silaghi, who was appointed member of Tarom’s board of directors, Pascariu says this is institutional continuity, making him one of the most useful members of the board of directors.
“I am not saying he is an exception, I look at what everyone is doing. One of the basic rules is diversity of the board.”
“Tarom is in a competitive industry, so it cannot start making a profit if it raises prices, passengers are looking at the quality and price of service,” Pascariu said.
Pascariu says although he has not finished the company’s diagnosis, he has formed quite a clear idea from what he has learned so far. “Tarom has a diverse fleet, each plane is different, this means additional maintenance costs. There are companies in the world that want to achieve a uniform fleet, so we will find the best solution. Tarom airplanes are in the air for 8 hours and a half a day, which compares with a European average of 10 hours,” Pascariu said. He also said Tarom had a huge maintenance capacity, which it is not using.
“At the same time, most of the company’s routes are not profitable, only two are, so Tarom should look for profitable routes, such as those to Italy operated by low-cost carrier Wizz Air.
Pascariu says Tarom delivers “full services” but is “low cost” in terms of revenues, adding that its business model has to be rethought.
The chairman of the Board of Directors of Tarom said because of Tarom mentality and because of the lack of clear performance standards within the company, his impression when he came to Tarom was he had gone back 20 years in time.
(English version by Daniela Stoican)