BELGRADE: Etihad Airways, which has stakes in Virgin Australia and Air Berlin, will acquire a 49 percent stake in Serbia’s loss-making JAT Airways.
Serbia is looking to offload loss-making state enterprises, including JAT, pharmaceuticals firm Galenika and the Zelezara Smederevo steel mill, to help contain its budget deficit. The carriers said in a joint news conference that Abu Dhabi-based Etihad would provide a $40m loan facility to JAT, which would be converted into equity on January 1, 2014.
The amount would be matched by an equal Serbian government capital injection. JAT would also be renamed Air Serbia. Etihad, which launched in 2003, is on a buying spree to compete with regional rivals Emirates and Qatar Airways.
The airline and the Serbian government also would each provide further funding of $60m through shareholder loans and other funding mechanisms to meet working capital requirements and expand the Air Serbia route network.
“The partnership will provide passengers with an extensive route network and smooth flight connections. It will also consolidate and enhance both airlines’ market competitiveness as the relationship deepens over the coming months,” Aleksandar Vucic, Serbian Deputy Prime Minister, said. Reuters
