MIAMI – Serbian finance minister Siniša Mali said the government would assist Air Serbia (JU) with the repayment of two loans, estimated at US$52.9m and US$63m, noting the airline was of national importance.
Air Serbia could not reduce the repayment of the loans by 82% each. It will see the first of the two mature in September 2020.
In June this year, JU told the funding entities that it would not be able to fulfill its commitments and payments due to the financial burden caused by COVID-19. The carrier then suggested revising the sums and timelines for repaying the loans.
Negotiations with Etihad Creditors
Mr. Mali, Chairman of the JU Supervisory Board at the time the loans were issued in 2015 and 2016, said the government was negotiating with the creditors, stating, “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.”
Local and foreign investment funds Etihad Airways (EY) Partners I BV and EY Partners II BV provided the aforementioned loans. As such, the financing companies distributed US$700m between the Emirates (EK) and its equity partners for a mix of capital spending, fleet investment, and refinancing.
Apart from the aforementioned loans, JU was the beneficiary of €19.7m in state aid in 2019.
Further Comments from the Serbian Finance Minister
Commenting on Serbia’s plans to financially assist JU in the coming period, Mr. Mali noted that all carriers across the world were in an extremely difficult position and that “Our Air Serbia is no exception.”
According to exyuaviation.com, the finance minister said, “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.”
Mr. Mali was kee to note that the rules had been significantly relaxed, enabling the state to help improve the liquidity of companies that have been particularly affected by the COVID-19 crisis.
Mr. Mali added, “The Ministry for Finance has adopted two protocols, through which we have harmonized our regulations with the above-mentioned European directives. Therefore, JU is a company of national interest and the state will help it.”
Air Serbia is still doing what it can to survive this crisis. At the start of the month, it announced a codesharing agreement with Turkish Airlines (TK) for a total of 190 combined destinations.
Featured image: Air Serbia.