Air Serbia repays $63 million Etihad loan

Air Serbia has repaid its second and final loan to Etihad Airways Partners BV, a special purpose vehicle set up by Etihad Airways in September 2015 to raise funds for itself and its equity partners. Last year, the Serbian carrier repaid the first of the two loans, amounting 52.9 million US dollars, despite initially seeking to renegotiate the debt and defer the payments due to the financial strain caused by the coronavirus pandemic. After its request was denied and it faced a default on its debt, the airline made the payment independently in full. The second of the two loans matured this summer, with the Serbian carrier also making the full payment on time. The only other two parties to have successfully repaid their loan to the funding vehicle are Etihad Airways and Etihad Airport Services, while Air Seychelles, Alitalia and Air Belin have not done so.

Six years ago, Air Serbia’s shareholder Etihad embarked on an international roadshow, supported by lead advisor Goldman Sachs and UAE-based ADS Securities and Anoa Capital, by creating the funding vehicles. The group successfully raised 700 million dollars which were split across the six Etihad Partners entities at the time, including Air Serbia, for a mixture of capital expenditure and investment in fleet, as well as for refinancing. The funding vehicles comprise largely of international investment funds. The two Air Serbia loans, amounting to a total of 115.9 million dollars, were the two biggest financial obligations the airline had taken on from lenders.

Air Serbia previously noted it was able to restructure its business thanks to the loans, which led to record results over the past few years. “After the restructuring, which was possible thanks to the funds from this loan as well, the company recorded its biggest expansion in 2019, carrying a record 2.81 million passengers and flying to as many as 23 new destinations in just one year and launching operations from two new airports in Serbia - Niš and Kraljevo. During the first months of 2020, Air Serbia continued to grow, so in January and February, the number of passengers carried increased more than 20%, year over year. After resuming flights on May 21, 2020, the company remained focused on gradually increasing frequencies where possible, while safeguarding the health of passengers and employees”, the airline said. It previously noted the repayment of the first loan was proof of the company’s sound and responsible management before and during the crisis, and during the recovery from the consequences of the pandemic.