The Serbian-Montenegrin government is expected to separate Utva Aircraft Industry, the country's sole aircraft manufacturer, from its state-owned parent ahead of Utva's privatisation in the third quarter.

Utva Aircraft Industry is to be hived off this month from the Lola Group of engineering companies, formed in 1995, says Utva general manager Tomislav Bjelogrlic. This will clear the way for the company's assets to be valued before the government invites bids for the facility in August. "We are looking for a strategic partner either to invest in equipment for a particular contract, or to buy our assets," he says.

Once Utva is independent, the government is expected to launch a formal privatisation programme, under which bidders will probably have to commit to keeping the Pancevo facility as an aerospace concern. Consultants are expected to issue a valuation by mid-June, with invitations to tender issued by August, says Bjelogrlic.

The company's 86,000m2 (926,000ft2) factory in Pancevo, 30km (19 miles) north of the capital Belgrade, sustained $68.5 million worth of damage during the NATO bombardment of then-Yugoslavia in 1999. Bjelogrlic says around 40% of the factory was destroyed, including the assembly hall, metal treatment plant and paint shop. Before the NATO strikes, Utva produced military trainer aircraft and general aviation aircraft. Utva won US Federal Aviation Administration certification to produce components and parts for Israel Aircraft Industries' Galaxy business jets and Boeing 747 cargo conversion programmes.

Bjelogrlic says some of the machinery and tooling has been replaced since the war, and the company has undertaken some small-scale parts production contracts for Belgium's Sabca and Sonaca structure suppliers as well as providing tools for Serbian-Montenegrin flag carrier Jat Airways' engine overhaul facility.

The company was valued before the NATO action at DM150 million ($89.5 million), although Bjelogrlic admits a new valuation will be "much, much lower". Utva says it has letters of intent from a European subcontractor and a US firm, but expects to receive further offers once the official process is launched.

Bjelogrlic plans to hold talks this month in Mostar, Bosnia-Herzegovina, with Soko Aeronautics, the former Yugoslavian national aerospace company.


Source: Flight International