Etihad acquires part of Serbian airline

Etihad Airways has plans to acquire 49% of JatAirways and has been awarded a five-year management contract for the Serbian airline. These are two of the key components of a strategic partnership agreement, signed by Etihad Airways and the government of Serbia, which included a fleet of new aircraft and a new integrated network of international destinations to Serbia. JatAirways will be rebranded and renamed to Air Serbia. Dane Kondic has been appointed CEO. The partnership agreement with Etihad Airways follows the launch of Etihad flights between Abu Dhabi and Belgrade, Serbia in June. The agreement will improve trade relations between the United Arab Emirates and Serbia. Within the agreement, Etihad Airways will make available a R400 million loan facility, which will be converted into equity January 1, 2014. This will be matched by an equal funding injection by the government of Serbia. The two will also each provide further funding through shareholder loans and other funding mechanisms of up to R600 to meet working capital requirements and support network development for Air Serbia. Among other planned developments will be an expanded flight network and code-sharing with Etihad Airways and airberlin. The new destinations to Air Serbia’s network are Abu Dhabi; Banja Luka, Bosnia; Beirut, Lebanon; Bucharest, Romania; Budapest; Cairo; Kiev, the Ukraine; Ljubljana, Slovenia; Prague; Sofia, Bulgaria; Varna, Bulgaria and Warsaw, Poland. One of the first new destinations to be launched by Air Serbia will be a four-flights-a-week service between Belgrade and Abu Dhabi. It will start in October and will move to daily when the new fleet grows to facilitate an increased service. The 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’s sixth equity partner following investments in airberlin, Air Seychelles, Virgin Australia, Aer Lingus and Jet Airways.