Transport Airlines

Serbian airline JAT joins Etihad’s family of strategic alliances to stay alive

Mar 27, 2013 10:04 am

Skift Take

Etihad invests in struggling airlines and often turns around their operations and increases profits in a strategy that’s benefitted all involved and paid off handsomely thus far.

— Samantha Shankman

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Anthony Joh  / Flickr

A flyer snaps a picture of his JAT Airways tickets. Anthony Joh / Flickr


Etihad Airways PJSC, the third-biggest Gulf airline, will sign an initial partnership agreement with unprofitable Belgrade-based JAT Airways in April as Serbia works to save its national carrier from bankruptcy.

The memorandum of understanding, the first step in forming a strategic partnership, will be be signed in mid-April in Belgrade, the Finance Ministry said in an e-mailed statement today.

“We want JAT to become a profitable company and the pride of Serbia,” Mladjan Dinkic said, according to the statement. The final accord may be completed two months after that.

Serbia plans to take over about 170 million euros ($216 million) of JAT’s liabilities, reduce its workforce of 1,300 and add six new aircraft to its fleet as part of the company’s overhaul, Transportation Minister Milutin Mrkonjic said March 22. The government also started talks with the European Aeronautic Defence & Space Co., the parent of Airbus SAS, on leasing four planes.

The partnership would include a “complete upgrade” of JAT’s fleet and the purchase of new planes, allowing Etihad to take over 49 percent of Serbian carrier and turn JAT into a member of the Etihad-led alliance, along with Air Berlin Plc, Aer Lingus Group Plc, Virgin Australia Airlines Pty Ltd. and Air Seychelles Ltd., he said. Etihad would also help JAT lease four new planes before the start of the tourist season in June.

New Routes

Etihad and JAT would also start daily flights between Belgrade and Abu Dhabi and introduce flights from Belgrade to Chicago and three other U.S. destinations with Air Berlin, he said.

Dinkic is in the United Arab Emirates, where the Abu Dhabi Development Fund approved a $400 million financing for Serbian agriculture, half for irrigation systems and the rest for cheap lending to Serbian farmers to purchase machinery.

Dinkic, who is also the country’s economy minister, will meet with representatives of Mubadala Aerospace and Mubadala ATIC, parts of Mubadala Development Co., which is interested in investing in a 4 billion-euro semiconductor plant in Serbia, according to a Jan. 14 report.

Prime Minister Ivica Dacic’s eight-month-old Cabinet is trying to pull the economy out of its second recession in three years, lure investments and reduce the unemployment rate of around 25 percent. Mubadala’s investment alone would exceed a third of total investments in Serbia between 2005 and 2001.

Editors: James M. Gomez and Alan Crosby.

To contact the reporter on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net. To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net.

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