The Serbian government endorsed the privatisation of state-owned airline JAT on July 21 2008, having announced it was reducing the minimum selling price because of high global fuel prices.

On July 17, Serbian deputy prime minister Mladjan Dinkic said that the selling price would be cut to achieve “greater competitiveness”. The initial price for the flag carrier was 150 million euro for a 51 per cent stake.

Dinkic told Tanjug: “In other words, we will not convert a JAT debt to the National Bank of Serbia into capital but leave it up to the future buyer to renegotiate and reschedule”.

Dinkic said that the Serbian government was aware that the airline industry worldwide was being hit by high fuel prices.

“JAT needs investment and we will try to find a strategic partner in a tender and of course there is a reserve plan if we are not satisfied with the outcome of the tender,” he said said.

JAT was founded in June 1927 as Aeroput, after 1947 becoming the national carrier of Yugoslavia. It was hard hit by UN economic sanctions imposed in the 1990s because of the wars in Yugoslavia.

Reuters news agency said that JAT had 209 million euro of debt. Its assets, a two-decade-old fleet of 16 mainly Boeing 737 planes plus real estate, had been officially estimated to be worth $150 million, the news agency said.

At the same cabinet meeting on July 21, the Serbian government adopted a decree defining the conditions for attracting foreign direct investment, envisaging the return of 25 per cent of the capital to any investor that would invest more than 200 million euro and employ more than 1000 people.