The past comes back to haunt Adria
The European Commission has opened an in depth investigation to verify whether a number of public support measures in favour of the Slovenian national carrier, Adria Airways, are in line with European Union state aid rules. These measures include four capital injections between 2007 and 2011 amounting to around 85.5 million euros. The Commission has doubts that they were granted on market terms. Adria has been facing financial difficulties for several years and has recorded annual losses since 2008. The most recent aid injection came last year when Adria was granted fifty million euros. In addition, the Commission found that state owned holding company PDP and the majority state owned Ljubljana Airport acquired 52.3% and 47.7% of Adria Airways’ maintenance subsidiary Adria Airways Tehnika between October 2010 and March 2011.
The Commission will now investigate whether one or more of the capital injections within the past four years have procured an economic advantage to Adria Airways over its competitors in the EU Single Market. Latvian flag carrier airBaltic is also under investigation by the European Commission for acquiring state aid. Following last year’s multi million euro aid package, Adria launched a restructuring program to cut down on costs which has so far been successful.
Following its investigation, the European Commission can order Adria to pay back the state aid it received if it considers the payments from the government to the national carrier was illegal. Earlier this year, both the Hungarian national carrier Malév and the Barcelona based Spanair went bankrupt after the Commission ordered the airlines to pay back state aid received by the Hungarian and regional Catalan governments respectively. Meanwhile, there hasn’t been a single word regarding Adria’s privatisation process, over two months since an open tender call for potential partners was closed.