STRATEGIC PARTNERSHIP EY - JU

[YS11]

Etihad Airways (EY), the national airline of the United Arab Emirates (UAE), have unveiled plans to acquire 49% of Jat Airways (JU). The Abu Dhabi-based carrier has also been awarded a 5 year management contract for the serbian national airline.

• EY to acquire 49% of JU
• JU to be renamed and rebranded Air Serbia
• EY awarded 5 year management contract for new airline
• EY and Government of Serbia both to inject USD 40 million
• EY and Government of Serbia to each provide up to USD 60 million further funding
• Air Serbia to launch fights to Abu Dhabi from October 2013

These are 2 of the key components of a wide-ranging strategic partnership agreement, signed by EY and the Government of Serbia, which includes a fleet of new aircraft, and a new integrated network of international destinations enabling greater access for business and leisure travellers to Serbia. The historic agreement follows the launch of EY flights between Abu Dhabi and Belgrade in June and will significantly enhance trade and investment relations between the UAE and Serbia as well as boosting the tourism sector in both countries. Economic ties between the 2 countries, valued at EUR 23.3 million in 2012, 3 times greater than in 2011, continue to expand with a number of key Government agreements signed in recent months which will see investments in agriculture, defence, technology, and tourism. The strategic partnership agreement was announced by President and Chief Executive Officer of EY and Deputy Prime Minister of the serbian Government, at a media conference in Belgrade on August01st 2013. Within the agreement EY will make available a USD 40million loan facility which will be converted into equity on January01st 2014, subject to regulatory approval. This will be matched by an equal funding injection by the Government of Serbia. EY and the Government of Serbia will also each provide further funding through shareholder loans and other funding mechanisms of up to USD 60 million to meet working capital requirements and support network development for the newly created Air Serbia. The rebranding and renaming of JU to Air Serbia is a significant moment in the history of the serbian carrier which is 86 years old. Tail fins on Air Serbia aircraft will feature the serbian coat of arms and the country's State colours on both sides. Among other planned developments will be an enhanced flight network, codesharing with EY and Air Berlin (AB), adding to Air Serbia’s current network of 33 cities another 12 destinations in Africa, Europe and the Middle East. The new destinations are : Abu Dhabi (complementing EY's daily service), as well as Banja Luka, Beirut, Bucharest, Budapest, Cairo, Kiev, Ljubljana, Prague, Sofia, Varna, and Warsaw. Among the first new destinations to be launched by Air Serbia will be a 4 flights a week service between Belgrade and Abu Dhabi. Complementing EY's current daily flights, the new Air Serbia service will start in October 2013 and will move to daily when the new fleet grows to facilitate an increased service. The new A319 will be in Air Serbia livery, with a stylish cabin trim and product of a standard never seen before operating out of Belgrade. The current JU fleet of 10 B737-300 will be retired from scheduled operations, and in the short term will be replaced by leased narrow body aircraft. In the longer term, an Air Serbia order will be made for 10 new narrow body aircraft. Air Serbia will become EY's 6th equity partner following investments in AB (29.21%), Air Seychelles (HM) (40%), Virgin Australia (DJ) (10.5%), Aer Lingus (EI) (2.99%) and most recently Jet Airways (9W) (24%, subject to regulatory approval). (EY Newsletter & AirTransportNews & AviTrader & AIN & AirCargoWorld, August01st 2013).