Etihad Airways PJSC, the third-biggest Gulf airline, said it will take a 49 percent stake in Serbia’s unprofitable, state-owned Jat Airways as part of a rebranding push that includes a new name and management.
Etihad’s initial $40 million investment in the Serbian company will be converted into equity at the start of 2014, and followed by a $60 million loan to help renew Jat’s fleet, Etihad Chief Executive Officer James Hogan said today in Belgrade. Serbia will match the total, Deputy Premier Aleksandar Vucic said.
“The Balkans as a crossroads to the world is a huge opportunity,” Hogan said. “We believe we’re going to be very well-positioned to take advantage of that.”
The Serbian company is Etihad’s sixth equity alliance member following those with Aer Lingus Group Plc (AERL), Air Berlin Plc (AB1), Virgin Australia Holdings Ltd. (VAH), Air Seychelles Ltd. and Jet Airways (India) Ltd. (JETIN) Serbia repeatedly tried to sell Jat in the past, including to Hava Yollari AO, the carrier known as Turkish Airlines. The company will in future be called Air Serbia.
The Serbian government agreed to assume liabilities of its flag carrier, “so Air Serbia is a new company, a clean sheet of paper,” Hogan said.
Etihad’s Dane Kondic will manage the renamed and rebranded company, overseeing fleet renewal that will start with a lease of two Airbus A319s, under a five-year management contract, Hogan said.
“Over the next 24 months, we’ll negotiate with Airbus and Boeing,” about further aircraft for Air Serbia, he said.
Today’s accord follows an agreement for a code-sharing partnership in April, and Etihad said at the time that it would begin regular daily flights to Belgrade two months later.
With assistance from Gordana Filipovic in Belgrade.
To contact the reporter on this story: Misha Savic in Belgrade at email@example.com