State to assist Air Serbia with Etihad Partners debt
The Serbian Minister for Finance, Siniša Mali, has said the government will assist Air Serbia with the repayment of two loans, valued 52.9 million US dollars and 63 million dollars, noting that the carrier is of national interest. The airline, which unsuccessfully attempted to reduce the repayment of the loans by 82% each, will see the first of the two mature next month. Mr Mali, who was the Chairman of the Air Serbia Supervisory Board at the time the loans were issued in 2015 and 2016, said, “We are negotiating with the creditors. While I can’t reveal the contents of those talks, I can say that we will certainly help Air Serbia. We are working towards resolving this problem together with our partners at Etihad Airways”.
The two loans were issued by two international funding vehicles comprised of local and international investment funds named Etihad Airways Partners I BV and Etihad Airways Partners II BV. They distributed 700 million US dollars in loans between the national carrier of the United Arab Emirates and its equity partners for a mixture of capital expenditure and investment in fleet, as well as for refinancing. This June, Air Serbia informed the funding vehicle that due to the financial strain caused by the coronavirus Covid-19 pandemic it may not be able to meet its obligations and payments. It proposed revised amounts and loan repayment deadlines.
Commenting on the government’s plans to financially assist Air Serbia in the coming period, Mr Mali noted over the weekend, “All carriers across the world are in an extremely difficult position. Our Air Serbia is no exception. This is likely the biggest crisis ever faced by the aviation industry, and, as a result, states must help their airlines. Due to the pandemic, and the corresponding economic crisis, the European Union has adopted new state aid rules. The rules have been significantly relaxed and enable the state to help improve the liquidity of companies which have been particularly affected by the coronavirus crisis”. Mr Mali added, “The Ministry for Finance has adopted two protocols, through which we have harmonised our regulations with the abovementioned European directives. Therefore, Air Serbia is a company of national interest and the state will help it”. Air Serbia was the beneficiary of 19.7 million euros in state aid last year.
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