Etihad Airways has unveiled plans to acquire 49 per cent of JatAirways.

The Abu Dhabi-based carrier has also been awarded a five year management contract for the Serbian national airline.

These are two of the key components of a wide-ranging strategic partnership agreement, signed by Etihad Airways and the Government of Serbia, which includes a fleet of new aircraft, and a new integrated network of international destinations to enable greater access for business and leisure travellers to Serbia.

The agreement follows the launch of Etihad Airways flights between Abu Dhabi and Belgrade in June and will significantly enhance trade and investment relations between the United Arab Emirates and Serbia as well as boosting the tourism sector in both countries.

Economic ties between the two countries, valued at EUR23.3 million in 2012, three times greater than in 2011, continue to expand with a number of key government agreements signed in recent months which will see investments in agriculture, defence, technology, and tourism.

The strategic partnership agreement was announced today in Belgrade by James Hogan, President and chief executive of Etihad Airways and Aleksandar Vučić, deputy prime minister of the Serbian Government.

Within the agreement Etihad Airways will make available a USD40 million loan facility which will be converted into equity on January 1st 2014, subject to regulatory approval.

This will be matched by an equal funding injection by the government of Serbia.

Etihad Airways and the government of Serbia will also each provide further funding through shareholder loans and other funding mechanisms of up to USD60 million to meet working capital requirements and support network development for the newly created Air Serbia.

James Hogan, Etihad Airways chief executive, said: “We are delighted to welcome Air Serbia to our equity alliance and look forward to work constructively with them and their stakeholders to build a sustainable, competitive and profitable airline.

“In addition to creating scale, our renowned business model provides a unique common platform to drive synergies and cost savings which will be of considerable benefit to Air Serbia as the new airline evolves.

“We will have tough decisions to make but the financial investment by Etihad Airways and the government of Serbia, together with the positive impact of our joint management expertise and experience, will help ensure this airline, with its proud history, now has an even brighter future.”

The rebranding and renaming of JatAirways to Air Serbia is a significant moment in the history of the Serbian carrier which is more than 80 years old.

Tail fins on Air Serbia aircraft will feature the Serbian coat of arms and the country’s state colours on both sides.

The new livery was designed by a team in Serbia and the UAE and provides a new look and feel for the national airline.

The aim was to make a break with past practice, but not with Serbian heritage and also offer an unmistakeable national identity.

Among other planned developments will be an enhanced flight network, code sharing with Etihad Airways and airberlin, adding to Air Serbia’s current network of 33 cities another 12 destinations in Africa, Europe and the Middle East.

Etihad Airways is considered the World’s Leading Airline by the prestigious World Travel Awards.