Sunday, June 5, 2011

Adria asks for 50 million Euros

Adria requests for government aid
Adria Airways has asked the Slovenian Government for 50 million Euros in order for the national carrier to continue its operations. Although the European Union Competition Commission outlines that financial support to established airlines is in breach of EU competition laws on state aid, emergency support is allowed under EU rules for the rescue and restructuring of firms in difficulty. Next week, the Slovenian Government will set out conditions the airline must fulfil in order to be eligible for state aid. It did not disclose the amount it is willing to give to the national carrier. On Friday the government met to discuss potential business restructuring models for Adria, although no decision was made.

Adria Airways has cumulated up to 100 million Euros in debt so far. It has already been issued a short term loan this year, while Ljubljana Airport wrote off debt owed by its main customer to the tune of 2.4 million Euros. In return, it received a stake in the airline’s technical division. Despite recent media reports that the government plans to sell Adria, the airline’s management recently announced that privatisation is not on the cards.

12 comments:

  1. This is really unbelievable for an airline of JP size. 100 m € debt and thirsty for another 50 m € !
    I really wonder how Slovenia will justify this....there is no chance that with such management LH or any other serious airline will be interested in investing there. Seems to be worse than Croatia or JAT...

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  2. I thought that Slovenians are better businessmen!

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  3. They'll get something, whether its 50mil or not. Slovene govt is well aware of the isolation faced if JP goes under, irrespective of EU rules...

    The article mentions internal restructuring: what could possibly be reduced or removed to bring the costs into line? Is the management structure excessive? Are 6 CR2s justified? As mentioned above, these are abnormally high debts.

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  4. Maybe they should continue to paint new retro liveries on there plans there 'ONLY' 100mill in debt could be worse :S!!!

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  5. S5-AAT was ALREADY in white colors and than it was only sticked with stickers, so cost of a 1000€ or so.

    When you lease an aircraft it is in white and you return it in white.

    Really, 100m debt is unbelievable???
    With what money do you think you buy aircraft?????????????
    Adria bought 7 planes since 1997 (5 CRJ2 and 2 CRJ9) not to mention 3(5-2) A320 in 1988 of which one still has not been paid of though it is grounded. This is the bad management of old CEOs.
    So 80M loans from banks for 5 CRJ2 and 2 CRJ9 which costed new about 172M$, is it really a lot? Not to mention 8M€ worthy headquarters and 1 new hangar in 2007.

    What is bad is 20M debt to suppliers which is in the respect of previous losses made.

    @ frequentflyer
    There will be a lot of changes in internal work, departments will reorganize, new people will came, old will have to leave or already did becusae of poor management.
    They want to lower salaries even more =S
    They leased 2 A320 so that tickets can be cheaper (which is logical!) this is the good move and improvement is already seen.
    CRJ2 are justified for flights out of LJU (VIE->ZRH), inventing a new type like DH84 would be too costy and it would be a third type in a fleet, even more costy to maintain.

    And again, debts are high becasue they were not paied under Tufek or previous CEOs.

    In 90' CRJ2 were profitable planes, they offered more connections with higher frequency.

    Nowadays this is not true. Big companies, specially feeders are supported by their mainline, while small regional airline, flying on their own, have to survive.
    + bigger airlines can affford grounding them any buying turboprosp, while Adria with 100M debt cant afford this, logical?

    The idea would be to keep 3-5 CRJ2 some for VIE,MUC,ZRH routes and one for charters which are rund the whole year by Adria and are quite well paid. Than 5 CRJ9 for flying our of LJU and A319, A320 for Balkan bases.

    The problem is, that I do not know if management is aware, with direct routes from Balkan bases, you offer cheaper tickets but you loose pax on LJU-west Europe routes so you need to send smaller planes over there.

    You need to look at fleet, which is not really a great example

    you have 48/50, 86, 135, 162 and 180 pax planes, on just 2 types of airplanes.

    Croatia for example

    76 132 162

    or Jat

    66 124?

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  6. You need to look at fleet, which is not really a great example

    should read

    You need to look at fleet, which is really a great example

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  7. Very strange logic...to build a hub in LJU to offer dump fares from SJJ, BEG, SKP, TGD, PRN and so on 4 coupon tickets via LJU ( these yields just kill ) and then open "Balkan" bases to offer direct flights to western Europe which will cannibalize own routes via LJU!
    To be honest with LX, OS, LH, OK, MA flights in place from "the Balkans" no one really needs a loss making hub in LJU. JP strategy should be to focus on high yield double or triple daily routes from LJU to some capitals with a handful of CRJs. That's it! That what JP is nowadays, is simply the rest of yugo-nostalgic megalomania logics...similar to JAT airways philosphy.

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  8. Ljubljana: Balkan hub? Can't see how will work out, daytime dreaming or trying to justify further investments (read via financial help) to boost additional debits :(

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  9. To June 5, 2011 9:13 PM
    it's just to justify further investments ... because we will build this make that etc.

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  10. RIP soon Adria :(

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  11. Peter from SydneyJune 6, 2011 at 6:54 AM

    How are you suppose to have a conversation here when everyone is 'Anonymous'? Can the owner of the site get rid of anonymous postings? I agree with Anonymous 4, JP and the other EX YU airlines need to focus on what actually works! Get those routes right and then MAYBE considering expanding into other markets, but again, ONLY if there's the business case for it. JP and the others cannot expect to be the next LH, they need to concentrate on their own little network, make sure it's running well and only then can think about expanding. You cannot get things back in order when you've got loss making routes left right and centre!

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  12. CRJ2 are simply not economical anymore. This is even more bothersome as it's a prevailing aircraft type in Adria's fleet. Switching to DHC8 shouldn't be that costly as DHC8s are made by the same manufacturer as CRJs. In addition, Adria used to operate DHC4s in the past, so it's not like their pilots have no clue what to expect.

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