Etihad Airways acquires 49% stake in Jat Airways

Haseeb Haider / 2 August 2013

Etihad Airways has acquired 49 per cent shares in Serbia’s Jat Airways, which will be rebranded as Air Serbia in coming months.

Serbia’s Deputy Prime Minister Aleksandar Vucic (centre), Etihad airways CEO James Hogan and Air Serbia CEO Dane Kondic after the signing ceremony in Belgrade on Thursday. — Reuters

The UAE’s national 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.
The historic agreement follows the launch of Etihad Airways flights between Abu Dhabi and Belgrade in June and will significantly enhance trade and investment relations between the two nations.
Trade grew three times year-on-year to €23.3 million in 2012 and a number of agreements signed recently will see investments in agriculture, defence, technology, and tourism.
The deal was announced by James Hogan, President and Chief Executive Officer of Etihad Airways and Aleksandar Vuèiæ, Deputy Prime Minister of the Serbian Government, on Thursday, under which Etihad Airways will provide a $40 million loan which will be converted into equity on  January 1, 2014. 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 said: “Our renowned business model provides a unique common platform to drive synergies and cost savings which will be of considerable benefit to Air Serbia as the new airline evolves.”
The rebranding and renaming of Jat Airways 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.
The deal will see 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.
Complementing Etihad Airways’ current daily flights, 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 Jat Airways fleet of 10 Boeing 737-300 aircraft will be retired and replaced by leased narrow body aircraft in short term. In the longer term, an Air Serbia order will be made for 10 new narrow body aircraft.