The Prime Minister of the Federation of Bosnia and Herzegovina, Fadil Novalic, says his government is considering establishing a new airline to succeed the ailing B&H Airlines (JA, Sarajevo) should it be forced into liquidation. The national carrier has been grounded for the past three weeks as a result of mounting debts and a lack of available aircraft.

In a bid to stave off B&H Air's impending bankruptcy, Novalic told airline union representatives that his government had offered to pay the carrier's largest creditor, HETA, a lump sum of BAM5.3 million (EUR2.71 million) to settle B&H Air's ATR72 leasing arrears.

With B&H Air's leasing dues now said to amount to nearly BAM23 million (EUR11.75 million), inclusive of interest, settlement would require HETA to write off BAM17 million (EUR8.69 million) in bad debt. According to Bosnia's Klix news site, while the Austrian firm initially rejected the proposal, it has indicated it would be willing to settle the matter out of court albeit for an undisclosed amount.

However, in the event the parties fail to reach a compromise and B&H Air is forced to declare bankruptcy, Novalic says the BAM5.3 million would then be put towards establishing a new national airline which would lease one undisclosed aircraft. In addition, the new carrier would source staff from B&H Air, albeit on a drastically reduced scale.

Sarajevo has long blamed B&H Air's woes on the unfavourable terms of a ten-year lease signed with HETA's predecessor, Austrian bank Hypo Alpe-Adria-Bank International AG, in 2005. The contract, as such, ended on May 30 of this year effectively leaving B&H Air with no active aircraft.