Air Serbia repays $57.6 million Etihad Partners loan
Air Serbia has settled all of its remaining obligations towards the Etihad Airways Partners I BV funding vehicle to the amount of 57.62 million US dollars on the basis of a long-term loan taken out in 2015, which matured yesterday. In a statement, the carrier said, “The Serbian national airline expresses great satisfaction with the fact that it managed to provide the funds for the payment of liabilities independently, thanks to responsibly running its business before the coronavirus pandemic, as well as extensive austerity measures at all levels during the greatest crisis in the history of civil aviation, resulting from the pandemic”. It added, “Despite these circumstances and the fact that it could not operate commercial passenger flights from mid-March to the second half of May, the company has continued to regularly settle all of its obligations towards creditors and suppliers at home and abroad. On the other hand, the fact is that the situation is still very complex and that air traffic in Europe and the world is recovering much more slowly than expected. This is why Air Serbia will continue engaging in active talks with its strategic partners, including creditors and strategic suppliers, in good faith that a solution acceptable to all can be reached through negotiations”.
This June, Air Serbia informed the funding vehicle that due to the financial strain caused by the Covid-19 pandemic it may not be able to meet its obligations and payments. It proposed revised amounts and loan repayment deadlines, which were ultimately rejected by the creditor. "The payment of this loan is proof of sound and responsible management of Air Serbia before and during the crisis, and during the recovery from the consequences of the pandemic. The Serbian national airline will remain committed to the interests of its shareholders, employees and passengers and will take all measures necessary to protect the company and ensure its successful development. During the suspension of commercial traffic, Air Serbia started a series of programs aimed at working with business partners, implementing austerity measures and maintaining liquidity, as well as improving business processes and services for our passengers. All these programs will continue to be delivered”, the company’s CEO, Duncan Naysmith, said. He added, "I thank all partners, competent institutions and employees for their cooperation in the remedial actions from the consequences of the coronavirus pandemic, and that community cooperation is crucial, as we are stronger together".
Air Serbia has said that by taking out the loan in 2015, it was able to restructure its business, which has resulted in record results over the past few years. “After the restructuring, which was possible thanks to the funds from this loan as well, the company recorded its biggest expansion last year, in 2019, carrying a record 2.81 million passengers and flying to as many as 23 new destinations in just one year and launching operations from two new airports in Serbia - Niš and Kraljevo. During the first months of 2020, Air Serbia continued to grow, so in January and February, the number of passengers carried increased more than 20%, year over year. After resuming flights on May 21 this year, the company remained focused on gradually increasing frequencies where possible, while safeguarding the health of passengers and employees”.
Air Serbia took out a second loan, amounting to 63 million dollars, with Etihad Airways Partners II BV on May 20, 2016, which matures in June of next year. Five years ago, Air Serbia’s part-owner Etihad embarked on an international roadshow, supported by lead advisor Goldman Sachs and UAE-based ADS Securities and Anoa Capital, by creating the funding vehicles. The group successfully raised 700 million dollars which were split across the seven Etihad Partners entities at the time, including Air Serbia, for a mixture of capital expenditure and investment in fleet, as well as for refinancing. The funding vehicles comprise largely of international investment funds.
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