Thursday, December 30, 2010

Adria could be grounded in 2011

Adria to follow in MAT’s footsteps?
A dramatic month at the Slovenian national carrier continues this week. After revealing that the company is tackling financial problems and facing potential bankruptcy, the Slovenian Government has said it will review the airline’s financial performance which could see the carrier’s operating license revoked, effectively grounding the airline. The news came after the Minister for Transport, Patrick Valičič, held talks with Adria’s management.

A financial body is set to review the airline’s performance, after which it will be decided whether Adria’s operating license will be revoked, extended by 12 months or left as it is. Adria’s demise would have great impact on the Slovenian economy and it is unlikely that the government would let the carrier go. However, with the Slovenian Government owning most of the airline and with strict European Union laws forbidding any sort of aid, the airline will quickly have to be privatised.

On Monday, the Adria’s management cut employee wages by 20%. The airline has accumulated losses of up to 86 million Euros in the past 10 years with banks no longer willing to extend the loan repayment period. 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. More alarming was a statement made by an Adria Airways spokesperson yeasterday, who gave out advice on the actions passengers should take if Adria goes bankrupt and they happen to have booked a seat on one of their flights, published by a local newspaper.

12 comments:

  1. Cheap aircraft for Jat if Adria folds, hurry up and get in their.

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  2. Why have they announced new routes when they are in such a state?

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  3. Uf imam dve karte sa njima iz Beograda u junu 2011. Platio sam kreditnom karticom. Da li ce Viza da vrati novac ako Adrija propadne?

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  4. National airline is economically, meaning at the same time politically, very expensive but also very needed toy! I am one of those who strongly believe that national carrier in countries in our region is very economically and politically vital issue, hardly influencing both positions if one is lacking it.
    I think that Slovenia is only now paying off its closed model of privatization, preventing foreigners to enter in, almost up to EU accession date. One of the proofs for that can be found also in fact that only 8 airlines (correect me, if I am wrong) are serving LJU, facing at the very same time very rude EU rules on everything, including issues on non-aiding national airlines by the government (paradox is that the government is the owner who can`t help its company).
    I would make here comparison SLO-SRB, risking JAT haters to attack me. Due to eventual circumstances, and not due to some strategic planning, SRB is in conditionally better postion. BEG is served by some 32 carriers who are invited by free room Jat made for them by its shrinking business. Eventually, government faced with huge problem its national carrier. The good news is that SRB government realize importance of national carrier in this kind of economy, becoming involved. Even better news is that because of public money spending, broad public became involved thanks to media. That is now creating a pie which will need to be more carefully prepared before it is serve. Another paradox, prooved in many areas, is that SRB unlike SLO, is having political freedom to save its national carrier, because EU rules are not binding for SRB. This warning on national carrier possible bancrupt coming from SLO is obviously finally treated in SRB. How well, the time will show.
    And one more thing. I think that almost 15 years of closed privatiyation model in SLO managed to create new management mentality. JP persistant refusal on closer ties with other ex-yu airlines, now can ground them. I believe that JP-JU merger may benefit both contries and region, too. Many reasons are for that, not to elaborate them now.
    Maybe it is still not to late for that.

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  5. It will be sad to see Adria go but they are in a special position in the Ex Yu since they are part of the EU and they can't receive any government help. Not that it has stopped other governments in the past. Alitalia and Olympic were both huge receivers of public money in recent years and I thing the EU has just launched an investigation into Budapest helping Malev out with loans.

    If the worse was to happen for Adria than it will be interesting to see how smart OU is on this. I would have 5 plus daily Zagreb - Ljubljana flights using the Dash 8 ready to be implemented. They could probably just use one aircraft for this so rescheduling other flights should not be too difficult especially at this time of year. And I guess since they are both Start members than maybe OU could base some aircraft in Ljubljana and take advantage of the situation?

    Again, this is hypothetical if worse case happens for Adria which I hope it doesn't.

    Also, this should be a warning and wake up call for OU since Zagreb will have her hands tired like Ljubljana's an a few years time. Clocks ticking for OU to sought out her own mess!

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  6. Just a thought, but couldn't OU base a few planes at LJU already as they are part of EU open skies. Just like Wizz having a base at BEG.

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  7. Adria, the same as JAT has a long history and it would be hard to imagine EX YU Aviation without it. I fly Adria quiet frequently. They have a very good and courteous service, nice and well-maintained airplanes, the best looking flight attendants and that special charm that makes you feel like at home as soon you board their airplane.
    I hope that all those financial troubles force EX YU airlines to rethink their strategy and make them cooperate with each other. As segmented as they are at the moment, this can only prolong current financial issues they are dealing with. The best of luck to all and may the 2011 bring much brighter skies for all of the EX YU airlines.

    Sam

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  8. http://www.vecernji.hr/komentar/233862/

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  9. I don't know what JP did wrong? Too many aircraft and too low load factors? Salaries above industry avarage...wrong pricing? I have no clue, does anybody know the reasons for this desaster? For me JP always seemed quite well managed.

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  10. Zagreb-Ljubljana by Q400? I don't thing so. 143 km by highway all the way, that is just 1:15 hours by car. With Q400 that would be at least 30 minutes to airport + 45 minutes before flight for check-in + 30 minutes for flight + 30 minutes for passport control, luggage, custom and wolk to car parking + 15 minutes to city = 2:30 h, one hour more than by car.

    For Croatia airlines it would be important to double conentions to PRN, SKP, TGD + 21 flights to SJJ instead 14 now. On that way they will take most of Adria potential passangers + some of Jat and Malev passangers because of much better conections and shorter conection time. I was part of team for analising Croatia Airlines strategy with CTN management, and ond of basic strategy movements for company would be to come to at least 2 flights per day to SKP, PRN and other destinations where they fly. So, now is best time. They have fleet for that, and now potential passangers are here. Just if they will react on time, not to wait for Austrian, Lufthansa, Turkish, MALEV, Jat and others to take best share of the Adrias cake.

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  11. @ Anonymous above.

    Point taken re’ capitalising on Adria’s network to the Balkans.

    What I was thinking of Zagreb - Ljubljana was to give Slovenians an easy option to get to Europe in case Adria go bust. Many airlines around the world use the Q400 on short hops very successfully. Prices should be as cheap as possible just to get passengers to Zagreb then they can continue there journey again hopefully with OU.

    Also, OU would have to inform the Slovenians of this option so the PR department would also have to do some work in Ljubljana.

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  12. I know just 3 routes that fly on route of 140 km, and they all are inside one cuntry. There is no way that passangers would use plane on this short route, and even to make conections to West and North via South (ZAG) is lost of money and time. In case of Adria closure most of passangers would use VIE, ZRH, MUC and FRA, so via North to Weast and further North.

    Purger

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