Sunday, December 19, 2010

Adria considering bankruptcy!

Uncertain times for Adria
The Slovenian national carrier Adria Airways may go into receivership or even file for bankruptcy, Maks Tanjikar, the chairman of the company’s Management board told Radio Television Slovenia. According to Tanjikar, Adria has accumulated losses of up to a whopping 86 million Euros in the past 10 years with banks no longer willing to extend the loan repayment period. Adria’s CEO, Tadej Tufek, was more moderate with his words telling Reuters on Friday that the company is expected to end 2010 with a loss of between 8 and 9 million Euros, after a 14 million Euro loss in 2009, but hopes to return to profit in 2011 by cutting costs, including a 20% cut in employee wages. "Talks with possible strategic partners are ongoing but are still at the initial stage", he said. Slovenian media are reporting that Lufthansa is interested in taking over the carrier which would give it unprecedented access to the Balkan market. However, the German giant might once again come under scrutiny from the European Commission’s competition watchdog. "In 2011 we need to decide whether to become a part of a larger air carrier or change our business model to become competitive with low cost airlines”, Tufek concludes.

Tanjikar, on the other hand, said that if the company failed to find a strategic partner within the next 6 months it could declare bankruptcy. On top of the 86 million Euros debt, the airline owes a further 29 million Euros to suppliers.

Adria Airways is owned mostly by the Slovenian Government although a certain number of shares are held by minority stock holders. These stock holders wrote a letter to the Slovenian Government last week, urging them to sack the current management team stating that they have brought the company in a dire financial state.


  1. OUCH!! Now that is a huge loss!!
    I do not think that Slovenia would allow Adria to go bust, maybe they could restart it the same way Olympic did. However one major difference is that Olympic has a considerable Greek market to serve where as Adria has the small Slovenian one.
    I do not think that Lufthansa would use Adria because of its Balkan coverage but rather to feed its flights in Munich and Frankfurt.
    Does anyone know what losses are Jat and Croatia going to have at the end of the year?
    At least Jat has been reporting some positive results over the past few months which is good.

  2. Well 80M€ is credit for aicraft like CRJ2,9, A320, new house while 30M€ are really owed to suppliers and this number matches to previous losses kinda (4+14+9).

    The majoriti of loss is from A319 leases which are more on the ground than in the air and they cost 600k€ per month = 4,8M€ since May till December.

    Remember that even A320 which cant fly has credit on it, irronicly it is without engines. And beeing grounded, Adria is still leasing engines for it =D

    While Adria sold A320 engines and lease them back in 2005 I think, becuase engines needed big checked for which Adria could not pay (around 8M€), but since than Adria payed beyond 25M€ just for leasing them. Good deal do not you think?

    Adria somehow needs to remove CRJ2 fleet and become more elecotrinic company like easyjet where you do not need dozens of paper pusshers in each department.
    with fleet of CRJ9 and A319 they could be something like LCC, not LCC as Adria is part of Star Alliance but still it could offer LCC class on board or something.

    Flying to every city 3-4 times per day must stop, you have like 200 pax per day to drive to MUC, if you do it 4 times you will have 4x50 if you do it twice you will have 2x100. I next months fuel will go up and this are not the 90' anymore where regionals were great.

  3. I don't think that JP is so interesting for LH. LH is easily covering the Balkans from their hub in MUC and OS in VIE. They have much bigger work with integration of OS and SN.
    Slovenia itself is a miniature niche-market and the bulk of transit pax are ethnic Albanias who for some reason love JP. Once this airline drastically cutting connecting flights they will use OS or LH fro transfer to their destinations.

    JP could be downsized to 4 CRJ and 2 A319 and stop this loss-making 4 coupon business that doens't make any money. Concentrate on major Airports like FRA/BRU/AMS/ZRH and fly 2xdaily and during the night some charter flights. That's it.

  4. JP has been a regional partner of Lufthansa for ages now and im sure LH will not let JP down that easy.

    LH is already using JP to feed its hubs in FRA and MUC (same goes for OU )

  5. Don't forget guys, Slovenia is in the EU which mean the Slovenian government can not by EU law help Adria in any way. I know that both Olympic and Alitalia received government help when they almost went bust but this was frowned upon big time by the EU and I guess the question is where or not Ljubljana will get away with helping Adria out.

    So, all Adria can do is either restructure or hope someone will be interested enough to take over.

  6. Good news for LJU airport. It will have to search for new carriers to survive. And this should happen very soon, as Adria generates 70%+ traffic.

  7. only you know why is that supposed to be good news for LJU airport.

  8. The airline won't go bankrupt.

    As mentioned earlier by Anonymous, the country is very much a niche market.

    Perhaps (like many other airlines worldwide) the 50-seat planes are not economically viable for the airline, and should be removed from the fleet replaced with 70-seaters.

    @ Anonymous (#2)

    Yes, but then becomes the issue of capacity vs frequency. If as an airline you attract more business passengers (who ultimately keep an airline running) through staggered departure times, consistent service and a loyalty program you will do better in terms of profits.

    But yes, to upsize aircraft may work best going to 3x70-seats rather than 2X100-seats - only a 5% increase in RSKs which doesn't bring down cabin load factors too much. OUs cabin factor fell through the floor when they replaced 3 42-seaters with 4 76-seaters...

  9. I agree with you, it was just an example, nowdays Adria flys with 20-30 pax to FRA on CRJ2 so generally speaking what I wanted to tell is that you need to downsize freq. a bit to fly with bigger planes as bigger planes are cheaper per pax and so you can afford cheaper tickets and with cheaper tickets you get new pax and overall I believe more revenue.

    Cheers, Anon#2

  10. To add, for example there is a lot CRJ7 on the market (Horizon Air is leasing them out), it would be a nice to try that.

    2 CRJ7
    4 CRJ9
    2 A319

    Maybe instead Adria, BH Airlines could connect Ljubljana, and Adria would have some seats on that flights.

    Banja Luka is a bad deal anyway, well bad for Sky Srpska as they are paying to Adria for the route.
    One time per week, max 2, route could maybe even succeed.

  11. I think, the Region needs one Carrier and not 5 or 6 carrier. If you look how is the market from the singel Country in ex-yu and how is the market for one carrier....then you will see that the carrier on teh region have one single choise....Get the airline one the ex-yu together with 4 Basestation.And get this Airline a neutral "Ex-Yu Air" :-)

  12. Adria is offering 100 euro (all included) round tickets ex- Ljubljana (all except Moscow and Brussels). Buy this year fly next year. Do they need money so badly?

  13. As a frequent flyer with Adria it would be a shame to see this airline go under,I have flown other Balkan airlines or start ups some of those airplane were so out of date missing panels on inside of interior very frightening experiences, it seems Adria to me is the best airline to emerge from the demise of YU , very modern airline fleet profesional crews always courteous ,it would be sad to see this company go out, so they have amassed very high debt hopefully they will make right decisions and restructure and come out of this economic problem they find themselves in.


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