Government ups stake in Air Serbia as it pumps in extra funds

Investment takes its stake in national airline to 82%, with Etihad now holding 18%

Air Serbia flight attendants stand in front of the jet engine of an Airbus A319-100 at Belgrade’s Nikola Tesla Airport. AFP

Serbia's government has increased its stake in the country's national airline through a recapitalisation exercise that will see it provide more funding for the airline.

In a statement on its website, Air Serbia said the government's stake increased to 82 per cent from 51 per cent, meaning that Abu Dhabi's Etihad Airways' stake was reduced to 18 per cent from 49 per cent. The increase was carried out "to eliminate the disturbances" caused to the airline by the economic fallout from the Covid-19 pandemic.

"We are grateful to the Government of the Republic of Serbia for providing support to the national airline to overcome business obstacles caused by the coronavirus pandemic in the most difficult year in the history of passenger air traffic," said Duncan Naysmith, chief executive of Air Serbia.

"In this way, the foundations have been created for further uninterrupted business and that, with fundamental measures to rationalise the company's operations, which are already well under way, Air Serbia will be able to overcome difficulties, strengthen its position as a leader in the region and continue to provide direct and an indirect contribution to the Serbian economy."

Airlines have been devastated by the Covid-19 pandemic, with some operators being placed into insolvency and governments around the world disbursing $173 billion in support for the industry, according to the International Air Transport Association.

The trade body is forecasting that the industry will lose an estimated $157bn in revenue across 2020 and 2021 as a result of the pandemic.

"Following the Serbian government's recapitalisation of Air Serbia, Etihad's shareholding has diluted from 49 per cent to 18 per cent," an Etihad spokesperson told The National.

"We are pleased the Serbian government has reinvested in the future of the airline. Etihad continues to work closely with Air Serbia, while we respond to the ongoing impact of the Covid-19 crisis on our own business."