B&H Airlines (Sarajevo) has been granted a last-minute reprieve after its sole shareholder, the Bosnian government, was last week able to renegotiate bridging agreements with Austrian banking conglomerate Hypo Group Alpe Adria (HGAA) and Sarajevo Airport concerning outstanding leasing and ground-handling debts owed by the carrier.

Quoting local news sources, EX-YU Aviation News says the government was able to convince the bank to unfreeze the airline's accounts thereby allowing it to resume partial operations. The carrier is said to owe HGAA EUR7.5 million (USD8.2 million) in outstanding leasing dues for the two ATR72-200s B&H operates. The bank had threatened to repossess both props should the Bosnians have failed to repay at least EUR500,000 (USD550,000) by the end of last week. Government, however, was able to extend the deadline to the end of this month.

In a further boost to the cash-strapped airline, Sarajevo Airport d.o.o, the operator of B&H Air's home base, has also agreed to unfreezze the airline's accounts despite still owing EUR3.5 million (USD3.8 million) in unpaid ground handling and landing fees.

Despite the good news, all is still not well with the airline after the Bosnian government, though willing to help cover the airline's debts, said it did not have the fiduciary resources to do so at this point in time.

As such, one of the ATR72s, E7-AAD (cn 464), is still grounded in Mönchengladbach as outstanding MRO fees amounting to EUR200,000 (USD220,000) have yet to be settled. The loss of half the airline's fleet has had a knock on effect on its network with flights to Belgrade as well as an associated codesharing agreement with Air Serbia (JU, Belgrade), having since been suspended. Additional worries loom on the horizon as the airline's other ATR72, E7-AAE (cn 465), is also nearing the deadline for its next maintenance inspection. Should that aircraft be grounded, that would leave B&H Airlines with no means of operating flights.

The lease for both turboprops is due to expire in May this year with neither HETA nor Hypo Alpe Adria Leasing likely to extend the arrangement under the current circumstances.