Monday, February 10, 2014

Adria aid ruling this summer

Government preparing for Adria state aid ruling during the summer

The Slovenian government has confirmed the European Commission will hand down its judgment this summer on whether Adria Airways received illegal state aid between 2007 and 2011 to the tune of 85.5 million euros. The process is taking significantly longer than originally expected with the Commission recently requesting additional documentation from both the Slovenian carrier and the government. The Slovenian Ministry for Finance says it is standard procedure for the Commission to ask additional questions, particularly on the subject of Adria’s restructuring plans and whether the company will be viable after the process is completed. According to the ministry, the Commission focused most on the last capital injection in 2011 when the government pumped fifty million euros into the Slovenian carrier without notifying the European Union.

Adria could be ordered to pay back all of the alleged state aid it has received if the Commission finds it was contrary to European competition laws. However, the airline could also be forced to pay back only part of the state aid. Adria’s CEO, Mark Anžur, has previously said he is optimistic that the ruling will be in the airline’s favour but declined to give further comment on the issue. The European Commission has also declined to comment on the procedure saying only that the investigation is ongoing and that a decision will be made in due course.

The European Commission is also investigating Adria for the sale of its maintenance division, Adria Airways Tehnika, to sate owned holding company PDP and the majority state owned Ljubljana Airport who acquired 52.3% and 47.7% of the maintenance company between October 2010 and March 2011. The two have since decided to sell their shares in Tehnika, launching the company’s privatisation process earlier this January.

The European Commission’s decision is highly anticipated at Adria as it could seal the company’s fate. The airline’s cost cutting measures have proved relatively successful in the past two years with losses significantly reduced and passenger numbers starting to improve. The carrier has also drafted a business strategy for the next six years which will see the airline become a hybrid full fare - low cost airline. This summer, Adria is launching new routes and focusing on secondary bases outside of Slovenia. It has also recently inked codeshare agreements with both Royal Jordanian Airlines and Air Serbia and plans replace the unprofitable Bombardier CRJ200 jets with additional CRJ900 aircraft.

18 comments:

  1. They are waiting to see whether Slovenia will deliver on reforms and austerity measures. If they fall out of line they will shut down Adria to teach them a lesson. Same as they did with Malev when Orban fell out of line. EU!

    ReplyDelete
    Replies
    1. Are you dreaming that Slovenia will deliver on reforms and austerity measure e.g. reduced monthly salary of public servants in Slovenia (even Ireland did it)nothing serious done in this field yet?
      No way will do it.
      No way.

      Delete
  2. Looks like they will be hiring new pilots (could not find it in English):
    https://www.adria.si/sl/o-druzbi/zaposlitve/odprti-razpisi/

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  3. Looks like interesting article in today's Finance newspaper. Does anyone have full access?
    http://goo.gl/UEhsLr

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    Replies
    1. Here you go: http://pastebin.com/raw.php?i=NCgCX3XD

      Delete
  4. As it was discussed in comments of previous Adria article and never finished. According to info on LJU airport webpage Adria has sent A320, A319 and CR9 to Sochi so far.

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  5. OT

    Air Serbia hired 100 new check-in agents yesterday.

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    Replies
    1. Why do they need so many?

      Delete
  6. OFF TOPIC

    China Southern buying a 29% stake in Adria Airways. Follow the news tomorrow.

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    Replies
    1. Hmm weren't they tipped to buy a stake in Croatia Airlines?

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    2. Yeah sure, they're going to buy an airline with a possible 80m € fine.

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    3. I highly doubt it, but who knows... Just don't wanna see Adria go bust, they're a good company and I really like Slovenia!

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    4. And?
      Where are the news about China Southern?
      Was just a joke?

      Delete
  7. If that's true, it's one more reason more for EU to slap JP and Slovenia on the wrist with the decision...

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    1. Unless the EC sees this as a good move to prevent yet another airline from failing as a result of the ongoing economic crisis.

      I can just imagine how annoyed Lufthansa will be if China Southern actually buys a part of Adria.

      First the Arabs buy Air Berlin which competes with them, then they go on and buy Darwin which competes directly with their most profitable branch, Swiss, and finally now the Chinese might be taking over one of their regional puppets which might compromise the future of their feed from not only Slovenia but from UNMIK Kosovo and Albania too.

      Fun times ahead.

      Delete
    2. Fun times indeed but not for JP's employees. Sitting around waiting for this decision that could break the company and leave them without work is not fun.

      i agree with you, even more interesting would be LH's reaction to this. We kind of know their sentiment already as they raised voice about Etihad’s possible investment in Alitalia. Adria is smaller player but it’s about their eroding influence that eventually always translates into revenues

      Delete
  8. This comment has been removed by the author.

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  9. "Neuradno: Adrio Airways lahko prizemljijo že stevardese" in today's edition of the newspaper Finance: http://pastebin.com/raw.php?i=NCgCX3XD

    ReplyDelete

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