UPDATE Air Serbia to receive share from $700m transaction

Air Serbia to receive funds from platform financing transaction

Air Serbia will receive a share of the USD 500 million raised on international markets on Tuesday by Etihad Airways, its airport services business, the Serbian carrier itself and four other Etihad partner airlines (Air Berlin, Air Seychelles, Alitalia, and Jet Airways). Etihad Airways, Etihad Airport Services, Air Berlin and Alitalia will each receive almost 20% of the funds. A further 16% will be given to Jet Airways, with the remainder to be divided between Air Serbia and Air Seychelles. The funds raised by the transaction will be used largely for capital expenditure and fleet investment, as well as for refinancing, depending on each individual airline’s needs. The transaction marks the first time that Etihad Airways and its partners have raised funds together. To date, Etihad has already raised in excess of $11 billion from more than eighty financial institutions, to help fund its expansion strategy.

The success of the fundraising initiative was a “major endorsement” of the businesses’ shared strategies, said James Hogan, President and CEO of Etihad. “A key element of our equity partner strategy is creating a total which is greater than the sum of its parts, a grouping which can work together to improve revenues, reduce costs and uncover exciting new business synergies”, Mr Hogan said. He added, “We have already been able to identify significant opportunities together, whether that be in shared IT platforms, joint fleet procurement or shared training costs. Commercial fundraising is no different. Our proposed transaction is simply the next logical step in our growing partnership and underpins its strategic importance”.

The $500 million was raised at a series of roadshow meetings, held in Abu Dhabi, Dubai and London, where the shared vision and strategies of the airlines were laid out to financial institutions. "These highlighted the growing network coordination and revenue development initiatives, coupled with joint procurement and business synergy projects, across the airlines", Etihad said. The Serbian carrier reported a net profit of 2.7 million euros and 262 million euros worth of revenue in 2014. Its revenue rose 29% during the first half of this year, totalling 95.5 million euros. Earlier this year, Air Serbia's CEO, Dane Kondić, said, "We will improve our profit and are on target to improve our passenger numbers”.

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UPDATE

After unprecedented demand from financial institutions in a range of markets, the airlines reopened the transaction and have raised an additional $200 million today, bringing the total to $700 million. “The additional demand we have seen over the past 24 hours has been enough for us to re-open the transaction. These additional funds will allow this group of airlines to accelerate further the realisation of this vision and these strategies. Individually, each of these partners is building an increasingly strong business. But together, that strength is multiplied. This transaction recognises and endorses that strength", Mr Hogan said.