State launches talks with UAE over Air Serbia future
The Serbian government will today hold talks with Etihad Airways and its partners in the United Arab Emirates over Air Serbia’s future and the state’s potential plan to renationalise the carrier which has been hit hard by the coronavirus Covid-19 pandemic. The Serbian President, Aleksandar Vučić, said, “We will strengthen Air Serbia. On Monday we are holding talks with the shareholders from the United Arab Emirates and by Tuesday we will know what action needs to be taken. We will request for them to provide part of the finances for the losses that have been incurred over the past four months. These are massive losses. We are ready to provide part of the funds too. If they [Etihad] don’t want to, we are ready to recapitalise the company and take a greater stake in the airline as a result. We won’t give up on building up the company”.
The President hinted that if Etihad were to fully or partially exit the airline, another strategic partner could be brought in. “We might introduce some other strategic partners, but we will continue to hold a majority stake. Air Serbia will be our flag carrier and it will be stronger than it is today”, Mr Vučić noted. The Serbian Ministry for Construction, Transport and Infrastructure estimates the airline will loose up to eighty million euros this year as a result of Covid-19. It previously said, “There is no question whether or not we should help Air Serbia. We just have to make an effective and sound program. That doesn’t mean simply giving out money, but also creating the necessary conditions for Air Serbia to effectively function”.
The strategic partnership agreement between Etihad Airways and the Serbian government, unveiled in August 2013, saw the Emirati airline make available a forty million US dollar loan facility to Air Serbia which was converted into equity on January 1, 2014 for a period of five years. This was matched by an equal funding injection by the Serbian government. The two sides each provided further funding through shareholder loans and other funding mechanisms to meet working capital requirements and support network development. The five-year deal was later extended until further notice, however, Etihad’s involvement in Air Serbia has been significantly reduced, with the state providing subsidies and funds for the airline over the past few years. Etihad registered an 870 million US dollar loss in 2019 and its equity investments in carriers around the world have unravelled in recent years.
Air Serbia is continuing to rebuild its network after resuming a limited number of commercial flights on May 21. Today, the airline will reinstate operations from Belgrade to Dusseldorf, Prague, Bucharest, Istanbul, Sofia, Tirana, Athens, Copenhagen, Podgorica, Tivat and Stuttgart. This will be followed tomorrow by the resumption of flights to Brussels and Berlin, and on Wednesday to Stockholm. The carrier will also bring back services from Niš to Hahn and Nuremberg as of tomorrow. Since reintroducing flights, the airline has increased frequencies on its operations to Zurich, Paris, Amsterdam, Vienna, Ljubljana, London and New York.
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