Etihad takeover offer revealed

Etihad to double Jat’s fleet and halve its workforce

Etihad Airways has sent in its offer for a 49% stake in Jat Airways to the Serbian government, the country’s national daily “Politika” reports. The offer outlines Etihad’s plans for Jat over the next three years which includes doubling the airline’s fleet, halving the number of employees and operating with a profit. Etihad has given the government a June 15 deadline to respond to the offer. Since the Serbian government will take over all of Jat’s debt, Etihad plans to run the airline with a profit in 2014, which would amount to 25 million euros by the end of 2015.

The document, which outlines the strategic partnership between Etihad and Jat, also places great emphasis on the 1998 order for eight Airbus A319s, which have never been delivered. Last year Airbus revised the agreement, offering instead four Airbus A320s, crew training and simulators at a price of 190 million euros. However, the Serbian government never responded to the offer. After the planned takeover, a new proposal from Airbus will be sent directly to Etihad. The national carrier of the United Arab Emirates also plans to halve Jat’s workforce. From the current 1.243 employees, numbers will be cut to 800 in the initial phase and will eventually be brought down to 600. Cuts will mostly be made in administration rather than among pilots and cabin crew personnel.

Fleet wise, Etihad plans for the Serbian carrier to have between 14 and 16 mid size aircraft of up to 150 seats by 2015 and a further 8 ATRs for regional flights. In order to ease its current fleet problems, which are causing daily delays across its network, Jat held talks with Adria Airways for the lease of two Airbus A319s last week. The deal will materialise only if the Serbian government gives guarantees to Aer Cap (which owns the two aircraft) that Jat will pay its leasing fees on time.


  1. Anonymous09:32

    But this is no supposed to happen, so many experts on here were saying that this was all Jatovanje. :(

    On a more serious and less retarded note, I am really happy that we are finally seeing some progress. I really hope we will see a new livery too. Also, the fact Jat will have 8 Atrs indicates that they will work on turning Belgrade into a regional hub. I am sure they will open Bucharest, Sofia, Tirana and a few other cities.

    1. Anonymous09:40

      Are you really that gullible?

    2. Anonymous09:49

      God, don't you ever get bored of your pessimism and bitterness.

    3. Anonymous10:09

      I cannot find this anywhere on “Politika”, could you please provide a link to the original story? Thanks.

    4. Anonymous11:40

    5. Anonymous11:56

      No wonder I couldn't find it, this story is 3 days old, I did not look back far enough. Thanks.

    6. Anonymous23:03

      Where does the source say that Etihad plans to double Jat's fleet???

  2. Anonymous09:46

    I can see huge problems if half the workforce are laid off. Mass strikes etc...

  3. Anonymous10:03

    I don't see pilots and crew siding with bloated administration. People will get redundancy/early retirement packages, paid by the government naturally. Furthermore, I can't see anyone in Serbia who will be sympathetic to the strike by administration who have been on the JAT 'gravy train' for so long. Writing has been on the wall for a long time.

  4. Anonymous10:25

    4 A320's cost around 355 Million euro, airbus simulator is around 15 Million. Does anybody really believe that Airbus is going to give a 180 million discount to a nation that has already reneged on its previous arrangement?

    We are talking about the most popular passenger plane in the world, with a 4 year waiting list and thousands of standing orders. If they give close to a 50% discount to Jat, then they have to give it to everyone, and that simply isn't going to happen.

    Add to this the 132 million needed to buy 8 Atr's and the total comes to 502 million. So you would have us believe that Etihad will spend over half a billion dollars purchasing planes. At the 25 million a year that is claimed they would make in profit, it would take over 20 years to recover this money. This doesn't include the money they will actually pay for 49% of Jat.

    Am I the only one that finds this a bit far fetched?

    1. Anonymous10:36

      Apparently you have not read the article properly. Airbus will send the proposal, not to Belgrade, but to Etihad directly. They will negotiate for the deal, not the incompetent Serbian government.
      Etihad has its own order with Airbus so they can manoeuvre as they please.

    2. Anonymous10:47

      the article says:

      "Last year Airbus revised the agreement, offering instead four Airbus A320s, crew training and simulators at a price of 190 million euros. However, the Serbian government never responded to the offer."

      Etihad wasn't in the picture last year, so the question remains. Why would Airbus offer Jat 50% off their most popular plane? It is simply not believable.

    3. Anonymous10:52

      But Etihad will leave the incompetent Serbian government with 51% controlling interest?

      5 star Jatovanje..

    4. Anonymous10:56

      Because by giving a large discount to Jat for a few planes, it will force them to switch from Boeing to Airbus. Thus securing a new customer for the future. A small discount now for a long-term business. Seems quite logic to me.

      To the anonymous moron above. It has nothing to do with Jatovanje. Serbia can't give them more than 50% since Etihad is not an EU carrier. However, the agreement states that Etihad will be making all the decisions.

    5. Anonymous11:08

      Why can't Serbia give Etihad more then 50 percent of jat? Serbia isn't in the EU!

    6. Anonymous11:13

      And you expect all of the other airlines that have paid full price to accept this? They are Jat's competition, you think they would happily sit by and see one of their competitors get the same aircraft as them for half the price? Grow up.

      Jat have no choice but to replace their aircraft, with over a thousand orders for 320s on their books do you expect anyone to believe that they would cut their own throat to sell 4 planes to Jat? They already have all the major airlines buying from them, they wouldn't care if Jat fly 320s or Superjets. They can keep happily selling hundreds of planes to Emirates, Qantas, British Airways, Singapore, Lufthansa, Aeroflot and many, many others.

      You make it sound as if they are desperate to get Jat's business.

      Have you read the agreement? You must have to no so much of the details contained therein.

      And the EU doesn't allow more than 30% ownership by non EU carriers, moron.

    7. when zagy11:15

      50% SMALL discount?!?!

    8. Aэrologic13:51

      First of all, i would give two slaps to the idiot who started this sub-thread about Airbus prices. The cost of 4 Airbus A320 aicraft is maximum 240 Million Euros. Given that JU already paid a deposit which is being held for many years, i would consider 190 Million Euros a small but still significant discount, of around 5% maybe, with interests taken into account. So that should close the story.

    9. Airbus R Us..14:13

      And where did you get that price? Cost of a single Airbus 320 is 88mil (2011 price on wikipedia). Current average price is 91.5mil

      Get your mum to show you how to use a calculator and the rest should be simple.

      (hint it's 366mil)

      The deposit JU paid was taken as compensation for failure to meet their end of the deal, so it is not "being held".

      So give yourself those couple of slaps and check facts before you post garbage.

    10. Aэrologic14:25

      You moron, have you learned today (or are you only gonna learn now) that Airbus A320 and A320neo is not exactly the same aircraft?

      Secondly, have you forgotten that EUR and USD isn't actually the same currency?

      God, you should kill yourself for making yourself that stupid. So to recapitulate (from the document my doggy went to obtain for me to further confirm his stupidity and my original words) :

      - A320 average list price in 2013: ~70 million EUR.
      - A320neo (that was never considered for Jat): ~77 million Eur.

      So shut the fuck up now at the risk of being totally levelled-off.

    11. Aэrologic14:31

      PS: My guess was 80 million Eur. per aircraft. So thanks again for proving my point.

    12. Airbus R Us..14:34

      I stand corrected.

      Didn't think the us dollar had gone so far south against the euro.

      Still talking more than a 25% discount, this doesn't include 15mil for one simulator, still doesn't sound believable.

  5. Anonymous10:32

    "Haters gonna hate" is the motto of the day.

    1. Anonymous11:00

      please delete this irrelevant comment.

    2. Anonymous11:50

      hehe, "Haters gonna hate"

      reminds me of

    3. Anonymous11:57

      no insult intended, thought I would share a laugh..

  6. Anonymous10:49

    So does that mean that Adria will give back the $450,000?

  7. Anonymous11:44

    Serbian government will reject this deal end of story. All that in the article serbia will have to pay for and give 49% of Jat to Etihad. Etihad isnt a charity its a business but with that said i think this article is a straight out lie or speculation. I remember on Ex-Yu aviation news saying the deal will not be made public till 15 june so we dont know what the deal is. So all we have now is media speculation PEOPLE wait till Etihad anounces it then argue about it!

    1. Anonymous11:48

      Yes, the Serbian goverment is going to reject the deal it brokered! Makes so much sense, right?

    2. Anonymous11:57

      Where will Serbia find 200 million EUR for Jat debt + another 100 million for sucking 600 workers and leasing planes in meantime?

      The same government that could not finalize simple and easy leasing for 6 planes and because of that have catastrophic in Jat air operations every day.

    3. Anonymous11:59

      They have form in this, they were offered planes at 50% off, and didn't respond to the offer. Makes sense too, right?

    4. Anonymous12:12

      Are you serious? The € 200m debt will be payed from the state budget in the defined yearly installments. The equity the Serbian goverment will gain from this deal will be so much greater than € 200m anyway. It's like free money. 51% of the proposed carrier is worth much, much more than 100% of what JAT is today.

    5. Anonymous13:04

      The government is freezing wages and pensions and redrafting the national budget, because as a nation Serbia is on the edge of bankruptcy.

      The vast majority of the 170m debt is to companies within serbia, and if it was to be "payed from the state budget in the defined yearly installments" then it should attract interest, so over time it will be significantly higher than 170m. But we all know that no serbian company that is owed money by Jat will see a single cent of it.

      You really expect that Etihad will drop half a billion into Jat just so the government can get a 250m asset for free?

    6. Anonymous16:16

      These 170 mil. EUR are already owed by the state. Every single Jat's loan has Serbia's guarantee behind it, otherwise, no one would actually borrow any money to Jat.

      So, the choice is:

      1) Have the company go under in a few years, after spending further tens of millions into subsidies, and then pay the 170 mil. debt, or

      2) Pay the 170 mil. debt and get a 51% share in a (possibly) successful airline and attract more air traffic and transit pax into BEG.

      Morons in the government, though, have this habit of choosing option number 1.

    7. Anonymous16:57

      The government has lost much more money recently. Getting half of the projected 25 million in 2015 profits alone sounds like a good deal given that without Etihad (or similar investor) there is no way to decrease that debt...

  8. Purger12:21

    No dobro daleko je to od realizacije. Tu treba uzeti u obzir nekoliko faktora:

    1. Etihad će preuzeti Jat samo ako Srbija prije riješi vruče krumpire i očisti kompaniju te napravi preduvjeta za "clean start". To znači otpisivanje dugova i otpuštanje nekih 600-700 radnika, kao i bolno i brzo restrukturiranje kompanije. Ta priče košta Srbiju 200 milijuna EUR, 170 za dugove i 30 za smirivanje radnika otpremninama, prekvalifikacijom, zbrinjavanjem, saniranjem potencijalnih štrajkova, propagandu, restrukturaciju, novu efikasniju sistematizaciju radnih mjesta, type rating... tj. svi prljavi poslovi koji se moraju obaviti prije dolaska Etihada.
    - IMA LI SRBIJA 200 MILIJUNA EUR? Nemojte zaboraviti da je Rusija državu spasila od bankrota interventnom pozajmicom koja je samo duplo veća od te svote.

    2. Image Jata je u totalnoj banani posebno uz posljednje događaje oko otkazivanja letova i 24-satnih kašnjenja rezultiranih prastarom, nepouzdanom i premalom flotom, te fijaskom oko leasinga. Naravno, ovo je vjerojatno dio scenarija koji se treba uvjerit radnika da će sve otići u tri p.... m.... ako se ne prihvati zadnja slamka spasa od Etihada, stoga ljudi bez štrajka, pognite glavu i prihvatite ovo ili...

    3. I dalje su u Jatu razno-razni priučeni businessmeni kojima curi mast odojka sa brade i koji će funkcionirati po načelu "ma što će meni onaj tamo zamotani Arap solit pamet kako se vodi srpska kompanija". Takav pristup je stvar 50-godišnjeg drilanja koji će se teško preko noći izmijeniti i koji je B&H Airlines koštao fijaska sa Turkishem.

    4. Nemojmo zaboraviti da Srbija nije dio EU i da nema baš dobar rejting u Europi, a razni moćnici iz LH, AF, BA, TK neće blagonaklono gledati na ekspanziju Etihada u Europi. Pogledajte koliko problema ima Emirates, Etihad i Qatar oko ekspanzije (posljednji primjeri Beča i Berlina su vrlo indikativni). Stoga je za očekivati da će i Jat imati problema sa ekspanzijom na Zapad (ovdje mislim i na Hrvatsku i Sloveniju kao potencijalno tržište).

    U svemu ovome podsjetio bih na svoj post od 25.4.

    Etihad se pojavljuje kao spasilac i na ruševinama kompanije, zapravo na onome što su sami postavili kao uvjet, kreće graditi brzim koracima novu i uspješnu kompaniju. Odjednom dolaze novi avioni, povećava se broj linija, jaka frekvencija prema Abu Dhabiu (zasigurno i dva dnevna leta), a u ovom slučaju i prema TXL i DUS.

    Povećanje je nekih 50% u usporedbi sa samo dva-tri mjeseca prije preuzimanja, i nitko ne primjećuje da to nije 50% u usporedbi sa 2-3 godine prije.
    - OBISTINJUJE SE (naravno zanemarite pompozne izjave, to će na kraju biti nekih 16-18 aviona ukupno sa turbopropima)

    Jat postaje feeder, linije se šire, ali ne brzo kao što se nadalo. Ipak, u konačnici sve je daleko logičnije, isplativije, efikasnije, novije, pametnije, i PROFITABILNO. Istovremeno tehnika, cargo i školovanje za Etihad, donose tonu novaca i benifita. No ne Srbiji, ne Jatu, nego Etihadu.

    Svi se pitaju zašto Srpska pamet to nije uspjela sama.

    1. Anonymous12:40

      Very simple answer - if they had either the know-how, ability, vision or will to do so, they would have done it by now .... They may have well avoided this situation, had they have done so 3 or 4 years earlier ... Your point shouldn't be around whether this question will be asked in 3 or 4 yrs time - it should be around why it wasn't asked 3 or 4 yrs ago !! It wasn't and so they are where they are ... And, if this deal with Etihad does indeed go forward, then the question that should be asked in 3 or 4 yrs time is this - why the fuck did we wait all these years to do this deal !!

    2. Anonymous13:14

      You have never been west of the Drina have you?

    3. Hey Purger,

      Have you heard of any gossip regarding Etihad looking into 49% purchase of OU? This was mentioned yesterday on and if true could be a very interesting twist to this story.

      Sorry If I annoy some of the more sensitive types on this blog with this question but I just want some clarification on this.

    4. Purger13:23

      You are absolutely right!

    5. Purger13:30

      Sorry 2 comments after I attach mine. My comment “you are absolutely right” goes to anonymous 12:40.

      About Etihad 49% into Croatia Airlines possible announcement was first by Minister of transportation some 2 weeks ago. But I don't find this real and I thing those are just wet dreams or tool of Government. At the end if that is real than maybe Etihad will make new "Yugoslavian airlines" what was some kind of plan for Lufthansa. In this light let us remind that Etihad had interest in Adria privatization also. Who knows...

    6. Thanks!

      I can sleep better now.

    7. and, a new 'yugo airline'....., would it work or should I ask would it be prevented from working?

    8. Aэrologic14:16

      That news is pure hoax.

    9. Anonymous16:21

      Hey, PURGER, what happened to your business flight to New York, which airline are you going with at the end?

    10. Purger18:01

      Turkish from ZAG.

    11. Anonymous18:19

      Wish you a nice trip!

    12. Purger19:38


    13. Anonymous22:07

      Will you make an trip report? Are you an member?

  9. Anonymous13:41

    Restructuring of the company will be painful but there is no any other way to survive because the local guys just wanted to gain lots of money overnight. As you know, it's all about a vicious circle of corruption.

  10. Anonymous14:30

    Does anybody know status of Jat planes YUANI, YUANV and YUAON? Also, what happened with Adria’s A319?

    1. Anonymous17:12

      YU-AON was returned to leasing company, the other two are undergoing routine maintenance, Adria's A319 are waiting for financial guarantees from the government.

    2. Anonymous18:41

      Wrong info. YU-AON will start operations in one week approximately. It will take maybe a month for YU-ANI to enter into service. There are no scheduled reparation plans for YU-ANV. YU-ANF and YU-ANH are not aircraft anymore.

    3. Anonymous19:01

      They were cannibalized or are simply tired beyond economical repair (or both) ?

    4. Anonymous20:19

      It is well known fact that YU-ANH was cannibalized, but YU-ANF? Are you sure? That aircraft was flying 9 monhs ago.

  11. Zrakoplovni Purger16:20

    Hey, how are you everybody?

  12. Anonymous20:12

    I think that the Serbian government is keen to see a solution for JAT Airways since a state bankruptcy is looming some time around October. MMF and other institutions are putting pressure on the state to get rid of big loss makers. They are now looking to sell stakes of companies that could find buyers, since others like Zeleznice Srbije or EPS are even more ill-fated and will stay state-owned due to lack of interest. The government simply can't afford to keep a company that employs 1200 people and looses around 30-50 million € per year! That's it.

  13. Anonymous21:29

    Regarding Serbia's public finances:

    1) Serbia's debt/GDP is over 60%. A far cry from bankruptcy territory.
    2) Serbia's deficit is cyclical (as in it's due to a crisis). Debt/GDP was below 30% before the crisis started. Again, no where near bankruptcy territory.
    3) Serbia has a lot of very valuable assets. Telekom is worth over 2.5b euros alone and utilites are worth a fortune (especialy EPS). These assets can be liquidated to pay
    the debts.
    4) The Russian loan was negotiated in a time where the projected budget shortfall was much greater.
    It's value was $1b in the beginning, reduced to $500m since Serbia didn't need the extra $500m. Of those $500m, $300m have been drawn and were used
    to refinance the older higher interest debt. The money wasn't used for spending.
    5) The IMF deal is all about perception and gaining a stronger credit rating.
    As such, Serbia is not anywhere near bankruptcy. Its public debt is lower than many EU's countries and its purely cyclical in nature.

    Since Serbia already guarantees JAT's debt, so as the poster above wrote, it has a pretty clear situation here. It will either
    let JAT go under and pay for those debts, or simply pay for those debts and get 51% of what will become a very valuable company.
    Considering the current goverment made this deal in the first place, it's pretty clear where we're headed.

    1. Anonymous22:06

      So what was problem about pensions and is it true that Russian money was used on that? And that you will have social problems without that loan?

    2. Anonymous22:21

      Pensions are a major drag on the budget, since our pension system was destroyed by the hyperinflation in the 90s. Serbia's budget is around 10b euros a year, so the Russian loan is negligible, it doesn't solve anything. As I said, that loan was negotiated when the deficit projection was higher, although it could increase beyond current projections (goverment is predicting 5-5,5%, again less than many EU countries hit by the Great Recession). And as I said, the money was used to refinance the old debt, concluding a major part of the refinancing ops done to decrease interest payments. Serbia can issue eurobonds with around 5% interest, less than many EU countries for that matter and the rate is steadily decreasing (2 year ago, we issued 1bn euros 10Y bond @ 7,25%).

      And no, it's not true there will be social problems without the loan. Serbia has the ability to finance its obligations for the foreseeable future and that's without any sort of economy growth, which is finally starting to happen after 5 years of a recession.

      The only people saying that there's going to be bankruptcy are the opposition parties , which are responsible for the current economic situation and the state of JAT for that matter, since they were in power from 2008 to 2012.

    3. Anonymous22:52

      60% is rather high for a 'frontier'market, with declining population, the worst dependancy ratio, lack of competitiveness, notorious for corruption and difficulty for doing business.

    4. Anonymous23:25

      And do you know any country in the world that bankrupted with 60% debt/GDP public debt, especially in a recession with even junk having low interest due to everyone chasing yield?

      And as I said, the deficit is cyclical. Serbia had very low debt before crisis and very strong GDP growth (over 10% in some years).

      On the other hand, the JAT debt is already guaranteed by the goverment, so the argument that Serbia is going bankrupt and won't be able to take over the debt is invalid. None of this won't influence the JAT sale.

    5. Anonymous23:29

      @10:21 - You mean in power from 2000 to 2012?

  14. Anonymous23:54

    Look no further than Spain, which started with debt-to-GDP of 36% in 2008 only to accept bailout money to sort out banks when debt-to-GDP reached 70%. Now, it looks more like 85%. Things turn ugly very quickly, and Serbia doesn't have much going for it. The questions remains: where is growth going to come from to reverse the trend of increasing debt-to-GDP ? Population growth, capital growth, productivity growth.

  15. This deal will be great for Serbia, Jat and the region if it goes through but what might cause the deal to collapse is not the unwillingness of the Serbian government to enter into an agreement with Etihad but it not being in the position to sell Jat in the condition Etihad will like to buy it in.

    According to this article, Etihad has sent its offer to the Serbian government and we do not know what the fine print is. It might just be too expensive for Serbia to agree to.

    When you think about it, can the Serbian government really afford to pay the hundreds of millions in Euro's just to keep 600 people employed? This part makes no sense.

  16. Anonymous04:52

    The A319 from Adria are equipped with V2500 Engines, very nice, much better engines than the CFM. Less oil consumption. Hope JAT gets them :)

  17. Anonymous05:10

    Why in gods sake should the Serbian government not accept that offer ?
    It is as if some milionaire would bow down to a beggar and beg him to take a staple of gold as price for his ugly and disabled daughter!
    Serbia has to pay the debt even when the deal fails.
    Its like the doctor says you will loose your leg -
    You can chose between loosing the leg and get a pile of gold or
    loosing the leg but getting nothing.

    1. Because there is a better option!

      Close Jat down, sell any assets it has to pay the debt. This way other Serbian companies who probably employ more people than Jat are not continually disadvantaged and the tax payers are freed from this burden. While Etihad is still interested, invite them to start a new airline from scratch with full government support. You could even slowly close down Jat while the other airline is being established to minimise the effect.

      There are many better options, you just have to think outside the box and see past the end of your own nose!

    2. Anonymous09:39

      lol of course, everyone advocates on here that Jat should be closed down but we have never heard you propose the same thing for OU.

    3. If OU found itself in a similar situation where an airline like Etihad wanted to buy a stake and run it but the airline had to be debt free than I would advocate selling off assets over using tax payer money to achieve this too.

      Back to Jat, have you ever thought that Etihad once it has control of jat might just sell anything they don't want or need with 49% of the revenue going to Etihad where now 100% can stay in Serbia?!

  18. Anonymous11:18

    Well I give a damn who brought the country on the brink of bancruptcy, but the present goverment acts like all other before. Not a single public entity has been sold or reorganized. The public sector is overstaffed by 20-30% and pensions must be freezed at least, better would be to cut them by 10% to free the money for investment and rebuilding infrasructure. But hardly to expect from a coalition who's voters are 65+ x years old. The best for Serbia would be to go bancrupt with a big bang including social unrest. Unfortunately that's the only way to wake politicians up on the Balkans!


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