Air Serbia saw its net profit for 2016 drop sharply to €0.9 million ($1.1 million) compared to €3.9 million in 2015.

It achieved the result on revenue up 5% at €320 million, compared to €305 million the previous year.

The central European carrier said it made considerable investments in its product over the year. The airline pointed to the delivery of its first widebody aircraft—a leased Airbus A330—and the reintroduction of US services, which were halted more than 20 years ago following the airline’s financial misfortunes in its previous guise of JAT Airways, the former Yugoslav national carrier.

Passenger numbers grew 3% to 2.6 million in 2016, while cargo carried rose 31% to 4,900 tonnes.

The Serbian government sold a 49% stake in the national airline to Etihad Airways in 2013 and the airline is now one of several Etihad partner carriers. Codeshare partnerships with Etihad and airberlin contributed €26.7 million to its revenues last year. New codeshare agreements were signed with Air Seychelles (another Etihad partner airline) and Montenegro Airlines, with codeshare income rising 24% to €26.7 million.

“We are pleased to have recorded a net profit of close to €1 million in 2016 despite the considerable investment in our operations, Air Serbia CEO Dane Kondić said.

“This year our focus is on strengthening our commercial results, improving the efficiency of our operations and maintaining our focus on cost control and balance sheet discipline,” Kondić said. “On the fleet side, we have recently refitted our narrowbody Airbus A319 and A320 fleet with 1,500 new Recaro seats, increasing capacity across our short-haul network and making Air Serbia more competitive as a result.”

He said the competitive landscape is “changing rapidly, not only as a result of the greater number of airlines flying to our hub in Belgrade, but also from the growth of alternative secondary airports in the region. In order to ensure that we continue to deliver positive results into the future, we must maintain the ability to respond and to continue to make the necessary adjustments to our business. This includes leveraging our investment in technology to drive revenue and offer the customer more choice whilst ensuring we work more efficiently and effectively to reduce our cost base,” Kondić said.

Chairman Siniša Mali added, “Posting an annual net profit for 2016 is a great achievement for Air Serbia considering the substantial investment made in its fleet and network. Launching a long-haul route on a widebody aircraft—as Air Serbia did by connecting Belgrade to New York last year—is always a costly undertaking. The service has now been operational for one year and is already delivering strong benefits to Serbia in terms of increasing inbound tourism numbers from the US and strengthening our business ties.”

Alan Dron