Monday, November 30, 2015

Adria scales back network growth for 2016

Adria to consolidate operations in 2016, add aircraft

Adria Airways' CEO, Mark Anžur, says the airline plans to consolidate its operations next year and scale back plans to expand its route network. The statement is in stark contrast to the airline's earlier strategy to add a number of new routes from Ljubljana and secondary bases next year. Speaking to "ATW", Mr Anžur said, "We are developing our own strategic plan, which can be supported or not by the new owner. 2016 will be a year of consolidation. We will work to maximize the efficiency of existing routes, rather than opening new ones. We have had flight operation problems because of a lack of crew, so we have to fix that and work on our load factor. In 2017, we are planning on growing again significantly".

In contrast to his latest statements, earlier this year, Mr Anžur said, “Next year we plan to base an aircraft in Tirana and have three daily flights to a number of destinations. We are considering at least two new routes. Italy is a very real possibility. We are already planning new flights for the 2016 summer season from Ljubljana as well. For us, these are interesting destinations as they are important business hubs and offer the possibility of connecting flights. The Iberian Peninsula will certainly be among them. Even Italy would be of interest". Over the last two years, Adria has grown significantly, adding routes outside of its home base in Ljubljana. This year, the carrier is expected to post a 16% jump in passenger numbers and 10% revenue growth. Only 5% of that growth so far came from the Slovenian capital.

Despite plans to scale back its network expansion, Adria is still looking to add two aircraft to its fleet next year. According to Mr Anžur, these will likely be an Airbus and Bombardier jet. A Bombardier CRJ700 is expected to enter the fleet during the first quarter of 2016, while a CRJ200 will be retired. Furthermore, the airline's CEO says the Airbus aircraft could be either an A319 with 156 seats, rather than Adria’s existing 144-seat configuration, or an A320. The A319 has cheaper upfront costs, but Adria also needs to strike a balance between demand for more seats in the summer and weak winter demand. Commenting on the airline's ongoing privatisation process, Mr Anžur says, "They [potential investors] have already submitted their bids and very soon the government will shortlist one and enter final negotiations”, noting there are both financial and strategic partners in the running. Shareholders are selling a 91.58% stake in the airline. The remaining 9% will “most probably” be sold as well, the carrier's CEO notes.

Sunday, November 29, 2015

Serbia to become Europe's fastest growing market

IATA tips Serbia to become Europe's fastest growing air market

The International Air Transport Association (IATA) released its updated passenger growth forecast this week, projecting that passenger numbers are expected to reach seven billion by 2034 with a 3.8% average annual growth in demand. That is more than double the 3.3 billion who flew in 2014 and exactly twice as many as the 3.5 billion expected in 2015. The Association forecasts that Serbia will become Europe's fastest growing market in percentage terms over the next twenty years, with an average annual growth rate of 7 - 8%, doubling in size each decade. On a global scale, Serbia is expected to become the fifth fastest growing market in percentage terms in a list dominated by African nations. Besides Serbia, the top ten will be made up of Malawi, Rwanda, Sierra Leone, the Central African Republic, Tanzania, Uganda, Papua New Guinea, Ethiopia and Vietnam.

Belgrade Nikola Tesla Airport has seen its passenger numbers increase over 105% when compared to ten years ago. The airport has recorded an average annual growth rate of 9% over the past decade. Furthermore, in 2014, it added an extra 1.1 million passengers (up 31%) compared to the year before. In 2015, the airport is expected to record more modest growth figures of up to 5%. During the past ten months, Serbia's two international airports handled a combined total of 4.196.051 passengers. Overall, Europe will have the slowest growth rate over the next twenty years, amounting to 2.7%, but will still cater for an additional 591 million passengers a year. The total market will be 1.4 billion passengers. The five fastest-increasing markets in terms of additional passengers per year over the forecast period will be China (758 million new passengers for a total of 1.196 billion), the United States (523 million new passengers for a total of 1.156 billion), India (275 million new passengers for a total of 378 million), Indonesia (132 million new passengers for a total of 219 million) and Brazil (104 million new passengers for a total of 202 million).

IATA’s Director General and CEO, Tony Tyler, says, “Economic and political events over the last year have impacted some of the fundamentals for growth. As a result, we expect some 400 million fewer people to be travelling in 2034 than we did at this time last year. Air transport is a critical part of the global economy and policy-makers should take note of its sensitivity. The economic impact of 400 million fewer travellers is significant. It is important that we don’t create additional headwinds with excessive taxation, onerous regulation or infrastructure deficiencies”. IATA has also pointed towards exciting prospects for the Iranian and Cuban markets following years of isolation. China is expected to overtake the United States as the world’s largest passenger market (defined by traffic to, from and within) by 2029. Japan, Spain, Germany and France will fall relative to their competitors, while Italy will exit the top ten largest passenger markets list.

Saturday, November 28, 2015

Adria pilots call off Monday strike

Pilots and management set two-month deadline for new deal

Adria Airways' pilots have called off a planned strike scheduled to take place next Monday after reaching an initial deal with the airline's management to further negotiate the terms of a new collective agreement. The two sides have set a deadline for January 31, 2016 to settle the terms of a new comprehensive bargaining contract and engage in regular dialogue. In case the two sides fail to find common ground, the Union of Slovenian Pilots will revive plans for industrial action. The company says it is satisfied with the temporary arrangement as it will avoid a "crippling" and "unnecessary" strike. Pilots are unhappy with violations to their collective agreement which was cancelled by the management on October 2014 but continues to be enforced until a new one is inked.

Earlier this month, the Union of Slovenian Pilots announced a work stoppage on November 30, which would have lasted from 05.00 until midnight. In addition to fairer working conditions, pilots are also demanding an increase in wages. Adria offered its pilots a 7.3% salary hike and more flexible workplace conditions in order to boost productivity but said the union's terms were "unacceptable". This summer, the airline's management narrowly avoided a cabin crew walk out over similar issues. Local media report that Adria is likely to end the year with a five million euro net loss, following on from a small profit in 2014 and several years of restructuring.

The strike would have come at a critical time for the carrier, which is in the final stages of its privatisation process, with stakeholders seeking to sell a 91.6% share in the company. This Monday, shareholders were to decide on an eight million euro capital injection in an attempt to boost the airline's liquidity, however, the Slovenian Sovereign Holding (SSH), which is overseeing Adria's privatisation, called for the meeting to be postponed. It has now been rescheduled for December. The SSH hopes for the capital to be provided by a potential buyer, but is first seeking for Adria's owners and creditors to write off a share of the airline's debt in order to make it more appealing to investors. Three German companies are said to be vying for a majority stake. Earlier this week, the independent state-owned maintenance company Adria Airways Tehnika was sold to Poland's Linetech Holding.

Friday, November 27, 2015

Split Airport terminal project delayed

Split Airport terminal construction moved to spring 2016

The construction of Split Airport's new multi million euro terminal has been delayed, with work on the project now expected to begin next spring instead of this autumn. The state has to issue construction permits after which a tender process for the selection of contractors will be launched. "If everything is completed at a quick pace, I expect construction to begin in the spring of 2016", the Croatian Minister for Sea, Transport and Infrastructure, Siniša Hajdaš Dončić, said recently. The new terminal will stretch over 34.500 square metres and increase the airport’s capacity to 3.5 million passengers per year. Furthermore, the car park and bus area will be expanded by 35.500 square metres.

The project is valued at 59.3 million euros and is estimated to take just over two years to complete. The state will exempt Split Airport from paying tax on profit, which will fund part of the investment (17.1 million euros) through its accumulated profits. The rest will be paid through a loan from the Croatian Bank for Reconstruction and Development, which will not require state guarantees. "There is no reason why this project should not be completed in two and a half years, resulting in a revamped airport that will have the capacity to handle over two million passengers annually, a figure expected to be achieved in 2017/2018", Mr Hajdaš Dončić said.

Check-in at Split Airport during summer month rush

Split Airport is the former Yugoslavia’s third busiest airport and the second busiest in Croatia after Zagreb. It has already handled a record 1.8 million passengers this year, surpassing 2014's end of year result in just ten months. The airport is facing capacity issues during the peak summer months when the bulk of its passengers pass through its doors. Managing Director Lukša Novak expects for Split to hit the two million passenger mark next year. However, with Aegean Airlines, Air Berlin, Volotea, Niki and Thomson Airways already announcing new routes to the coastal city for next year, the figure could be achieved sooner rather than later. Split Airport's expansion is the third major project of its kind in Croatia following similar ongoing investments at Zagreb and Dubrovnik airports