Thursday, July 10, 2014

Adria avoids Malév scenario

European Commission approves €79.6 million in state aid for Adria

Following a two-year in-depth investigation, the European Commission has found that state aid provided to Adria Airways between 2007 and 2011 to the tune of 79.6 million euros is in line with European Union regulations. As a result of the ruling, the Slovenian national carrier does not have to repay the finances it received, which could have seen the airline go bankrupt. Furthermore, the Commission established that Adria did not break state aid rules when it sold its maintenance division, Adria Airways Tehnika, to holding PDP and Ljubljana Airport, both of which are state owned. “Adria Airways benefitted from three public capital injections in 2007, 2009 and 2010, amounting to around 15.2 million euros in total, carried out through the state owned holding PDP and its predecessor KAD, respectively. The in-depth investigation has shown that these capital injections were based on reliable valuations and that Adria Airways paid the market price for the capital. The measures therefore provided no undue advantage to Adria Airways and do not constitute state aid”, the Commission ruled.

On the other hand, the executive body found that the additional fifty million euro cash injection carried out in 2011 by Slovenia and PDP does constitute state aid as it provided the company with an advantage. However, the carrier’s subsequent actions have limited unfair benefits produced by the cash injection. These measures include Adria's restructuring plan which is based on realistic assumptions and should enable the company to return to long term viability within a reasonable timeframe. Furthermore, the cancellation of scheduled routes, the surrender of slots and reduction of its fleet over the past few years has led to a capacity reduction that will limit the distortions of competition brought about by the aid and Adria will sell several assets in order to bear part of the restructuring costs.

Adria Airways will now continue implementing its strategy of becoming a hybrid full fare-low cost airline, while at the same time cutting frequencies but adding capacity. In addition, it will continue with its fleet renewal, commenced earlier this year. The Commission’s ruling clears Adria of any access baggage, making it more appealing to potential investors once the Slovenian government decides to resume the airline’s privatisation process. Furthermore, the ruling gives a boost to Ljubljana Airport’s privatisation prospects. The airport’s future operator no longer has to fear whether its busiest customer will cease operations. As a result, Adria has avoided a similar fate to that of Hungary’s former national carrier Malév. In 2012, both Malév and the Barcelona based Spanair declared bankruptcy and ceased operations after the Commission ordered the airlines to pay back state aid received by the Hungarian and regional Catalan governments respectively.


The European Commission concluded its investigation into the alleged state aid provided to Adria Airways by stating, “The granting of the aid therefore complies with the conditions set out in the guidelines: the aid is accompanied by a restructuring plan that should enable the company to become viable again, appropriate measures are foreseen to compensate for the distortions of competition created by the aid, and the company contributes to the costs of restructuring at the required level. The debt-to-equity conversion carried out by the banks in 2011 is a sign that the markets believe that Adria Airways may become viable”.

57 comments:

  1. Great news. Good luck, Adria. Love you.

    ReplyDelete
  2. So happy for Adria, good luck!

    ReplyDelete
  3. Glad about Adria, wish all ex-yu airlines prosperous summer ahead!
    Regards from Belgrade

    ReplyDelete
  4. BREAKING NEWS:

    Kucko leaves Croatia Airlines because of personal reasons.

    Candidates for CEO are Mišetić again, Kelava and Jerkovic. R.I.P. Croatia Airlines.

    ReplyDelete
    Replies
    1. Why don't you take the job, Purger?
      :D

      Delete
    2. Why R.I.P. Croatia Airlines, isn't that great news?

      Delete
    3. Breaking news - I don't think so... Everyone saw this coming. Now we can just wait for chapter 11

      Delete
    4. Aleksandar
      Of course I cannot! That would be same dilettantism and unprofessionalism as those "party-CEO's". I am not expert!!! They should hire expert from Croatia (Matkovic, ex Zagreb airport CEO is the only expert in Croatia) or out of Croatia doesn't matter of costs. Even if you pay him 1.000.000,00 EUR per year that is less than those "party-CEO" can make losses.

      Anonymous
      I cannot say anything about Jerkovic exempt that he put Croatia Airlines on court while was one of directors for several million kunas. Kelava is that lady about whom Unions have most complains because as manager for purchase she made lot of doubtful decisions and orders (in same time she had some 7 cars including Aston Martin, Grand Cherokee etc.). And what results Mišetić had? Most of CEO's and experts thing that most of debts was made by him especially extra expensive A319/320 buying.

      2nd anonymous
      No one saw this coming. He has huge political support. He is leaving because of private reasons. Real private reasons.

      Delete
    5. Eh Purger, don't be so hard on yourself. You might not be an "expert", but I bet you would be better than any CEO that any Ex-Yu airline has ever had. At least you are genuinely interested in aviation, unlike these other people.

      Is it possible that the Croatian government finally woke up to the unprofessionalism of Kucko, so they decided to get rid of him, but decided to allow him to quit instead, to make it look like he was not fired?

      Delete
    6. Whoever ends up being Croatia Airlines' next CEO, he/she should immediately come up with a new strategy for the airline.
      They wanted to be a regional player without a regional network. They wanted to cater for the needs of the O&D market but they mostly fed Star Alliance hubs. They concentrated on the tourist industry, which is seasonal, and all they ended up doing was losing all the summer income during the slow winter months.

      They should just build up their fleet around the Dash-8 and E-195 birds. I doubt they desperately need the A320 for their current network. Even if they can fill it to Frankfurt, the real question is if they are really making that much money off of those routes in order to justify this business move. After all, it was mentioned on here so many times that their feeding business isn't that lucrative. Even if they end up launching some destinations in the east, they can send the E-195 as far as Moscow without a problem. I mean, of course they can, Adria sends its CRJ-200 there. lol

      Delete
    7. Ako će CTN ostati na istom ili neznatno povečanom kapacitetu onda nema smisla nabavljati još jedan avion

      6x Q400
      4x A319
      2x A320
      3x 190

      Daleko bi bolje bilo u tom slučaju bilo
      8x Q400
      12 x 190

      No, ako iole kane povečavati flotu i kapacitete onda ima mjesta i za 190 i za A319

      6x Q400
      6x 190
      6x A319

      ili bar
      6x Q400
      8x 190
      4x A319

      A319 ima posla (na LHR, TLV i charterima ne možeš letjeti sa Embraerom, FRA, SPU, DBV su svakako isplativiji sa A319), već postoji posada za njih, rezervni dijelovi.

      Ja bi recimo postepeno povečavao flotu Embraera i smanjivao onu Airbusa. Novi Airbusevi (koji dolaze za 4 do 6 godina) bi prvo zamjenili A320, a potom i najstarije A319. To bi značilo 4 nova A319 i dva najbolja od onih starih, te nabava isključivo Embraera u budućnosti.

      2015.
      6x Q400
      2x 100
      4x 319
      1x 320

      2016.
      6x Q400
      3x 100
      4x 319
      1x 320

      2016
      6x Q400
      4x 100
      4x 319
      1x 320

      2017.
      6x Q400
      5x 100
      4x 319
      1x 320

      2018.
      6x Q400
      6x 100
      6x 319

      2019-2020.
      zamjena starijih A319 sa novima

      nakon toga razvoj flote na način da se povečavaju količine Embraera

      Što se tiće novih ili starih ma vrlo je vjerovatno da je tu deal sa onim Embraerima koje je Luftica povukla od Augsburga kad ga je natjerala na bankrot. Ako ih se već nije rješila oni su naši 100%.

      Delete
    8. Što se tiće ova tri kandidata za direktora, mislim da se radi o ogromnom spinu. Prvo, radnici bi dobili slom živaca da dođe Mišetić i Kelava, a ni Jerković nije baš superpopularan. Uz to Kelava je HDZ-ov ekponirani kadar (mislim da je u nekakvom Karamarkovom gospodarstvenom timu), pa teško da bi Milanović na tako što pristao. Istina Jerković je dobio sudski spor protiv CTN-a (uzgled tome je kumovao Mišetić jer mu je "nelegalno" skinuo plaču, što znači da su dva kandidata u ratu), pa je moguće da je ovo jeftiniji način da Vlada rješi potraživanje (evo ti mjesto CEO, a ti nečeš tražiti novac). Mislim da su se ova tri imena izbacila zato da radnici o tome pričaju, pop*zde i onda prihvate bilo kakvu alternativu. Jer bilo koje ime koje dođe nakon ova tri izgledati će kao potpuno blaženstvo. Ako je Jerković stvaran odabir onda me nikako ne čude ostala dva "kandidata". Sa pozicije sindikata on igleda odličan kandidat spram "konkurencije". To je ko kad engleskoj kraljici predlože tri kandidata za biskupa, od čega su dva krajnje nemoralna, nesposobna i loša, a treći nije baš dobar izbor, no izbor je prmijera, pa spram ostala dva igleda kao savršenstvo.

      Delete
    9. Aleksandar, no, it is a private reason (family one). I know what reason is, but it is so private that is no fair to go with it in public.

      Delete
    10. What about Kondic - Air Serbia CEO ? He's half Croatian and seems to be doing a good job. Why doesn't the government try to poach him ?

      Delete
    11. funny man :-) :-) :-)

      trust me Kondić has a contract by which he cannot even dream about it, and if he thing about that they can exemplary shot him in Knez Mihajlova street.

      Delete
    12. Kondic is not half Croatian, he is an Australian of Serbian (Bosnian Serb, to be precise) origin.

      Delete
    13. And there is 4th candidate. Dan Simonić, who was IT manager in CTN and now is deputy minister for air traffic. He is IT expert. Period!

      Delete
    14. Purger, what do you mean in your post about Kondic ?

      Delete
    15. just to add - are you saying that he wouldn't do a good job ?

      Delete
    16. Kondic has a huge salary and I don't think he would be interested to go to Croatia Airlines. He relocated half way across the globe to lead Serbia's national airline and has a 5 year mandate with Etihad.

      Delete
    17. About Kondić - much too early to say anything.

      But for sure, Kondić is not material for Croatia:
      1. He have contract with Air Serbia, so he is not free.
      2. Why to open fight with Etihad, there are so many free experts one can choose
      3. Croatia needs expert from European air origin (not from Australia).
      My personal option would be Barbara Cassani (she is free in this moment). If you remember she made miracle from British LCC go! (and sell it for huge amount of money to easyJet), and than one more miracle with candidature of London for Olympics 2012. But that is just my wet dream.
      But that all is irrelevant, concerning the fact that new CEO will be political elected and for sure not expert.

      Delete
    18. Purger - whether someone is from Australia or Mars - it doesn't really matter .. what matters is that they excel in and understand how to run an airline - irrespective of its location ...

      Delete
    19. Purger, do you think that new CEO will have to do something new with Croatia Airlines or he'll just keep on doing what Kucko already began?
      P.S. Very happy for Adria, good luck!

      Delete
    20. I don't wish anybody a disease. No mather who it is.
      But it's hard to believe because we know the history of K. and all he did was lying into the extreme.
      There is so much going on at OU.....I think it's an escape.....
      It's hard what I am saying but I have experience with that man!

      Delete
    21. Purger, why not CRJ1000 instead of E-Jet family?

      -CRJ is bombardier, which better fits with Q400.

      -CRJ700 family has better CASM than equivalent Embraer jets.

      -CRJ has lower backlog, so could be delivered sooner.

      -Bombardier heavy maintenence center is close by (in Slovenia).

      -The only thing that CRJ1000 is lacking in, range, is not a big deal since OU probably won't need more than 1600nm range.

      Delete
    22. If you ask me I would in a second move from Airbus to Bombardier. For me the best combination
      Q400
      CRJ-900
      CSeries 300

      But of course they cannot hook of Airbus order. Pilots hate Q400 so they are against CRJ and CSerias apriori. And, to be fair, Embraer 190 is much better plane than CRJ-900. That is why you have 713 190/195 orders and just 343 CRJ-900.

      Delete
    23. You basically described the fleet of airBaltic. I would be very impressed if OU could become the next airBaltic. AirBaltic got a competent CEO (Martin Gauss), and a new efficent fleet, and all of their problems were solved.

      Pilots should not be allowed to decide what airplanes the airline buys.

      The E-jet family has better performance, comfort, range, cargo capacity, and style than the CRJ, but the CRJ is more economical. The Embraer is too much plane for the needs of OU.

      Bombardier makes the planes that best fit Croatia Airlines.

      Delete
    24. Croatian Airlines Fleet say summer 2017 is going to look like this.

      8xA319
      2xA320
      6x Q400

      with 2-3 E195 being leased over summer season only, with order pending for four CS100 from Bombardier.

      Older A320s and 2 A319 might be sold by 2020 and replaced by additional four CS100.

      OU fleet circa 2020 might look like this.

      6-8x A319
      6x Q400
      8x CS100


      by 2025 fleet might look like this.

      4x A319
      6x Q400 with replacement for aircraft now being considered
      12x CS100
      4x CS300 (on order)

      Eventually by 2035 the last of airbus aircraft will be retired taken out of the fleet and Q400s will also be replaced by either more CS100 or perhaps Q400 NG or w/e comes after Q400 on production line.

      Fleet by 2035 might look like this.

      12x CS100
      8x C300
      8x Q400 NG/Q500 perhaps












      Delete
  5. Finally some really positive energy. Let's keep it at least through the summer :) Good luck, Adria, and nice summer to all of you.

    ReplyDelete
  6. All of a sudden it looks not so bad in exYU: JP is safe, OU got rid of its incompetent CEO, JU will keep its timetable together over summer. Cheers :)

    ReplyDelete
  7. Cool , but please lower the prices a bit : )

    ReplyDelete
  8. Cool , now lower the prices please Adria!

    ReplyDelete
  9. It's time for new 2014 public capital injection into Adria!
    Now that you know the trick -what to write (and never deliver plans only) in papers and documents blabla so the EC is happy- do it again.
    Don't forget to put in your pockets 30% Mr. 30. No need to remind you.

    ReplyDelete
    Replies
    1. Not true. Restructuration investment can be made „once and never again“. That is strict EU policy!

      Delete
    2. Actually it isn't. That kind of state aid can be given once every ten years. ;)

      Delete
    3. No it is not. This one (restructuration) is once and never again. I was in presentation where they show us 5 possible models of "state investment" in Croatia airlines.

      Delete
    4. EU regulation on state aid clearly states that the government can intervene and fund a restructuring programme once every decade.
      This can be found within publicly accessible documents regarding state aid.

      This was especially interesting in the case of Cyprus Airways and its own state aid. I do not know what they were presenting the Croats with but this what applies for the rest of the EU members.

      Delete
  10. Ja kad sam pricao da JP nece biti ugasen vi ste me ismejavali sa Radio Mileva vezom :-) INN

    ReplyDelete
    Replies
    1. Gde ode ono mamlaz?

      Delete
    2. Hehehehe...

      Možda viže paše "mulac" (u Dalmaciji to je balavac koji je blentav zato što je mlad, pa je mulac) ili "klipan".

      Ajde dite moji lipo spat. Knjige se primit i igrat se sa vlakićima ili autičam.

      Delete
    3. Koju vas dvojica imate bolest kad vredjate druge.preporucujem vam da posetite Doktra. :-) A na vasu zalost zovek nista nije slagao INN

      Delete
  11. And there is 4th candidate. Dan Simonić, who was IT manager in CTN and now is deputy minister for air traffic. He is IT expert. Period!

    ReplyDelete
    Replies
    1. As long as they present a person who has proven that he or she is corrupt it will not work for OU. Then you can indeed say R.I.P. Croatia Airlines

      Delete
  12. Can we please stick to the topic?!?!?!?!?

    ReplyDelete
  13. Last night's flight to Beirut departed with 89 connecting passengers from Berlin.

    ReplyDelete
    Replies
    1. what are most popular connecting routes other then Paris and Berlin? How are the loads overall?

      Delete
    2. All routes are popular, especially Paris, Stockholm and Copenhagen. Yesterday it was Berlin as you can see. Flights are packed, A320 operating there now by default.

      Delete
    3. ^are there any pax going to ex yu region?

      Delete
    4. No, i heard there were some for Budapest and Warsaw. At times the flight is 100% transit pax.

      Delete
    5. Which doesn't mean there aren't any, they're just few. Also BEY is quite pricey from Belgrade, you would rather fly on PC.

      Delete
    6. So much for those telling that Air Serbia will be Etihad's feeder and that no one from Western Europe will fly over Belgrade lol.

      Interesting however that Beirut is more popular even than Tel Aviv.

      Delete
    7. ^ How is tel aviv route doing lately? I feel like it will suffer due to unrest in the area

      Delete
    8. I have no idea.

      Delete
    9. Lufty cancelled their night flight. Wonder what happened.

      Delete
  14. Wonder, how much was the commission influenced due to the government's postponement of Adria's privatization?

    ReplyDelete
  15. Does anyone know when Kucko is leaving?

    ReplyDelete

Before posting a comment be mindful of other participants and readers. EX-YU Aviation News does not tolerate insults, excessive swearing, racist, homophobic or any other chauvinist remarks or provocative posts with the intention of creating further arguments. Such comments will be deleted as soon as possible. The opinions expressed by those providing comments are theirs alone, and do not reflect the opinions of EX-YU Aviation News. Thank you for your cooperation.