Jat Airways, Serbia's largest airline, will offer Abu Dhabi's Etihad Airways a minority stake at negotiations scheduled to take this place, according to a report in the Balkan nation's media.
Balkans Business News said that the Serbian government offered the UAE airline a shareholding in Jat in return for experienced pilots and land for the construction of a cargo centre at Belgrade's Nikola Tesla Airport.
The report did not provide details on any other financial arrangement for a potential deal.
The newspaper reported that Jat and Etihad had already exchanged information on a potential bilaterial tie-up, but would enter into more detailed negotiations later this week.
Jat is set to become the first debt-free airline in the former Yugoslav countries, as the Serbian government announced that it would take over the carrier's entire €170m (US$221m) worth of debt. Jat has previously been through two failed privatisation attempts.
Founded in 1927, Jat is one of Europe's oldest airlines and currently serves 25 destinations via a fleet of 13 aircraft.
Etihad has spent the past few years forming what it describes as an 'equity alliance', which has seen the airline build up stakes in carriers including airberlin, Air Seychelles and Virgin Australia.
UAE government-owned Etihad in January this year reported that full-year net profits for 2012 increased 200 percent to US$42m, as it carried more passengers and pushed ahead with strategic alliances with other international carriers.
The UAE flag carrier said revenue increased 17 percent to US$4.8bn, while passengers rose 23 percent to 10.3m.
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