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Etihad Airways to invest $100m in JAT Airways

Staff writer |
Etihad Airways will acquire a 49 per cent stake in Serbia's loss-making JAT Airways. Etihad will provide a $40 million loan to JAT, which would be converted into equity on January 1, 2014.

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The Serbian government will give the same amount to the troubled company and it will change the name JAT to Air Serbia. That will be the end of one the biggest airliners in the Europe. Between 1987 and 1989 JAT has more than five million passenger a year, it has 36 planes, connected former Yugoslavia with 61 destination in the world, and it was 10th biggest company in Europe and 31st globally.

Etihad and the Serbian government will also provide further $60 million each through various funding mechanisms to meet working capital requirements and expand the Air Serbia route network.

"The partnership will provide passengers with an extensive route network and smooth flight connections. It will also consolidate and enhance both airlines' market competitiveness as the relationship deepens over the coming months," said Aleksandar Vucic, Serbian Deputy Prime Minister, in a joint press release with Etihad Airways.

Etihad will also get a five-year management contract with the airline and it has appointed Dane Kondic as the new chief executive for Air Serbia. The current JAT Airways fleet of 10 Boeing 737-300 aircraft will be retired and replaced with leased narrow body aircraft. Air Serbia plans to order another 10 narrow body aircraft in the long term.

Etihad Airways is spreading in several regions, having stakes in Virgin Australia, Air Berlin, Aer Lingus, and Air Seychelles. The company is awaiting regulator approval for a stake in India's Jet Airways.

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