MUMBAI: Flagship carrier Air India is exploring a strategic alliance or an equity stake in Serbia’s national carrier Jugoslavenski Aerotransport (JAT), a senior official said on 4 June.
“Discussions are on for a joint venture. We are also exploring the possibility of buying a stake in JAT,” said Air India executive director (public relations) S. Venkat.
State-run Air India was exchanging data including traffic and looking at valuations and profitability, he added.
Due diligence was likely to be completed by the end of June following several months of talks before a final decision on a bid to be taken in consultation with civil aviation ministry officials, airline officials said.
“We are seeing congestion across most of the key European airports we operate at. A Belgrade presence will offer strategic growth opportunities at this stage,” Venkat said.
If Air India decides to bid for JAT it can expect fierce competition from Russia’s Aeroflot, according to media reports.
Air India has been working to rebuild the image of the airline amid growing competition from slick private full-service and low-budget carriers.
Air India and domestic carrier Indian Airlines are set to merge operations next month.
Air travel in the nation of 1.1 billion people is booming and the number of airlines has risen to 10 from three in just four years. Average fares have fallen by two-thirds squeezing profitability.
India’s airlines posting a collective loss estimated at $500 million in the year ended March.
Air India, which has a total fleet size of 47 aircraft, last year ordered 68 passenger jets from US aerospace Boeing for nearly $11 billion.
JAT currently operates 10 Boeing 737-200s, which are 25 years old and four propellor-driver ATRs.
Air India’s net profit slid in 2006 by 82%, hit by high fuel costs and competition and the situation remains tough this year.
The net profit for the year to March 2006 totalled $3.54 million dollars on revenues that rose 25% to Rs96.77 billion.