ETIHAD Airways has unveiled plans to acquire 49 per cent of JatAirways. The Abu Dhabi-based carrier has also been awarded a five year management contract for the Serbian national airline.
These are two of the key components of a wide-ranging strategic partnership agreement, signed by Etihad Airways and the Government of Serbia, which includes a fleet of new aircraft, and a new integrated network of international destinations enabling greater access for business and leisure travellers to Serbia.
Within the agreement Etihad Airways will make available a $40 million loan facility which will be converted into equity on January 1, 2014, subject to regulatory approval. This will be matched by an equal funding injection by the Government of Serbia.
Etihad Airways and the Government of Serbia will also each provide further funding through shareholder loans and other funding mechanisms of up to $60 million to meet working capital requirements and support network development for the newly created Air Serbia.
James Hogan, Etihad Airways’ president and chief executive officer, said: “We will have tough decisions to make but the financial investment by Etihad Airways and the Government of Serbia, together with the positive impact of our joint management expertise and experience, will help ensure this airline, with its proud history, now has an even brighter future.”
Aleksandar Vučić, Deputy Prime Minister of the Serbian Government, said: “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.”
The rebranding and renaming of JatAirways to Air Serbia is a significant moment in the history of the Serbian carrier which is more than 80 years old. Tail fins on Air Serbia aircraft will feature the Serbian coat of arms and the country’s state colours on both sides.
Among other planned developments will be an enhanced flight network, code sharing with Etihad Airways and airberlin, adding to Air Serbia’s current network of 33 cities another 12 destinations in Africa, Europe and the Middle East. The new destinations are Abu Dhabi as well as Banja Luka, Beirut, Bucharest, Budapest, Cairo, Kiev, Ljubljana, Prague, Sofia, Varna, and Warsaw.
Among the first new destinations to be launched by Air Serbia will be a four flights a week service between Belgrade and Abu Dhabi.
The new Air Serbia service will start in October 2013 and will move to daily when the new fleet grows to facilitate an increased service.
The current JatAirways fleet of 10 Boeing 737-300 aircraft will be retired from scheduled operations, and in the short term will be replaced by leased narrow body aircraft. In the longer term, an Air Serbia order will be made for 10 new narrow body aircraft.
Air Serbia will become Etihad Airways’ sixth equity partner following investments in airberlin (29.21 per cent), Air Seychelles (40 per cent), Virgin Australia (10.5 per cent), Aer Lingus (2.99 per cent) and most recently Jet Airways (24 per cent – subject to regulatory approval).