A new management led by Sorin Buse is tasked with giving Romania’s national carrier a clear heading again. In recent years the company was led by Belgian Christian Heinzmann and under his lead the company reduced its loss by 95%. Under his lead load factors improved to 70% and the number of carried passengers increased slightly. Part of the improvement in losses also comes from lower oil prices, meaning that as oil prices head higher again the losses might increase. More structural cuts in costs are needed.
The TAROM fleet consists of 23 aircraft. While the airline only has a small fleet it operates 6 types of aircraft and 3 families. A significant cost saving can be realized by reducing the number of types operated and phasing out the older fleet members. The Airbus A310 will be replaced by the Boeing 787-800, which should help the carrier in reducing maintenance costs as well as achieving higher load factors.
Competition From Low Cost Carriers
Although TAROM has seen major improvements, the airline should return to profitability more rapidly and look into fleet expansion. Currently the growing Eastern European market is dominated by WizzAir and Ryanair. For TAROM to be able to compete with these LCCs (low-cost carriers) it needs a clear strategy and execution.