Serbia, Turkey to speed up aviation deal talks

BELGRADE, July 12 (Reuters) - Serbia and Turkey moved closer to an aviation deal on Monday after the countries' leaders pledged to speed up talks that could see indebted Serbian flag carrier JAT Airways merge with Turkish Airlines THYAO.IS.

In March, Serbia announced it would split JAT into two separate companies with one assuming debts and the other profitable assets, in order to attract a strategic partner that was likely to be Turkish Airlines. [ID:nLDE62F10L]

Turkish Prime Minister Tayyip Erdogan said he and his Serbian counterpart Mirko Cvetkovic discussed cooperation between JAT and Turkish Airlines and the conversion of a military air base in Serbia’s Southwest into a civilian airport.

“We are ready for steps that will make that cooperation possible. I am promising to do my best that the people of Serbia have links to every corner of the world through our two companies,” Erdogan told a news conference in Belgrade, speaking through an interpreter.

Cvetkovic only said he and Erdogan “tackled aviation industry issues”.

In March, JAT Airways announced a 16.5 million euro ($21.97 million) loss for 2009 and said it planned to borrow 51.5 million euros to renew its ageing fleet and prepare for a potential partnership with Turkish Airlines.

JAT Airways operates a fleet of 15 aircraft comprised of ageing Boeing 737-300, Boeing 737-400 and ATR 72-200s.

In 2008 Turkish Airlines took over a 49 percent stake in BH Airlines in neighbouring Bosnia and pledged to invest 5 million euros to lease a Boeing 737 aircraft and secure another aircraft at a later date.

In April JAT announced the sale of its headquarters building in Belgrade to state landline operator Telekom Srbije for 10.3 million euros, to pay back government’s loan from 2009.

During Erdogan’s visit, Serbia and Turkey also signed a series of agreements that will pave the way for construction of a highway linking Belgrade and the southwestern region of Sandzak which has sizable ethnic Muslim minority and is bordering Bosnia, Kosovo and Montenegro.

The fellow EU aspirants also abolished visa requirements between the two countries.

Reporting by Aleksandar Vasovic; Editing by Simon Jessop