Sunday, August 30, 2015

Strong interest in Adria stake

Financial investors eye majority stake in Adria

The second privatisation attempt of Slovenia's national airline is said to have generated significant interest from potential investors, as the government seeks to sell its majority stake in the carrier. A public call for the expression of interest for a 91.58% share in the airline was published in July. Sources close to the privatisation process say the sale could be completed "in a matter of weeks" with investment funds showing the strongest interest in the carrier, which turned its first profit in seven years in 2014. The state is looking for a swift sale in order for Adria to avoid liquidity issues, which arise at the airline each winter as business slows. During the 2014/15 winter season, the carrier took out a bridging loan in order to stay afloat and concluded a sale and leaseback arrangement for two of its Bombardier CRJ900 aircraft in order to boost liquidity.

Binding offers for the majority stake are expected to be submitted no later than mid-September. However, the Slovenian Sovereign Holding, which oversees the privatisation of state-owned companies, says, “As part of the sales procedure, the financial advisor has contacted the widest possible range of potential investors from around the world. The sale of each company varies and we will not comment on a timeframe when it might be completed”. The CEO of Adria Airways, Mark Anžur, previously said it would be best to offer the carrier to small airlines or financial investors, as big European players have "problems of their own".

Adria handled 1.112.857 passengers in 2014, an increase of 8% compared to the year before, and recorded a profit of 921.123 euros. The airline carried over its distributable profit from 2014, which amounted to 895.000 euros, into accumulated earnings, in a decision taken at a shareholders' meeting this Tuesday. Adria is said to be in need of six to ten million euros in additional funds in order to expand its business, which is why the government is eager to sell its stake in the carrier as soon as possible.

18 comments:

  1. It seems they will be bought by a European financial fund. Not ideal in my opinion when I remember what happened to Balkan Airlines under similar circumstances (although the financial investors were not from Europe).

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  2. It's never a good sign if you are having liquidity issues in winter year after year.

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    1. They have a lot of issues, not just liquidity. Adria is shiny on the outside and rotten in the inside. The profit from last year was made because of the sale of aircraft otherwise it would have been a loss. The reason Adria published in financial report for 2014 only this week is because the auditor KPMG wasn't sure how to list the sale and leasebacks and whether it should list them in profits. Anyway Adria has dumped KPMG already chosen Deloitte as it auditor for 2015 because it is easier to play with the numbers that way,

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  3. Overall I think investment funds might be the best solution for Adria.

    Investment funds are interested in one thing only, making a profit and expanding the business. If an airline buys Adria, such as Lufthansa, they will continue making Adria a feeder rather than making good business decisions.

    Having an investment fund bring in fresh capitol and an experienced management team could further Adria's hybrid model into more markets. I think Nis would be a great candidate for one CRJ to Vienna, Paris, and Frankfurt.

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    1. What are you talking about ? How on earth could Adria fly from Nis to anywhere other than Slovenia, when they do not have a Serbian AOC and therefore no traffic rights ?

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    2. Wizz Air doesn't have a Serbian AOC and has a base in Belgrade and Serbian employees.

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    3. There is a difference between Adria and Wizz. For instance, Solinair did not get cargo traffic rights between BEG and SJJ even though it had no competition from any Serbian or Bosnian operator..

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    4. Both SJJ and BEG are outside of the EU. That's the difference.

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  4. Wonder if it will be JP or OU that's sold first.

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    1. I think JP, since nobody is speaking about OU any more, and Croatia will have general elections by the end of the year or beginning next year.

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    2. +1

      I'm still waiting on those announced good news about OU some weeks ago. Guess something went wrong way and deal is off.

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    3. I also have heard that some foreign company is in talks with Ministry, regarding OU. Moreover, rumours are that they are finalising the contract. As far as I know, that will be a company which hasn't been discussed as an option in our aviation sphere. Hope to see the results soon.

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    4. Sorry for the OT, but selling a big company isn't something that is normally done three months before elections. I can see a problem here. Even if, I think the former slovene PM Bratusek sold Ljubljana airport just before the elections. Maybe I am wrong...Anyway I hope they will manage to sell both carriers.

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    5. Doesn't matter who will be sold first, but I think OU still has better chances. No one talks about OU in Croatia because there are more important things to be solved at the moment, and the elections are coming, of course. As far as I remember, IFC will find (hopefully) possible investors by mid October.

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  5. it's really strange why Qatar Airways (with A319CJ A7-HHJ) come to LJU on friday and will again came tomorow.

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    1. e.g. for golfing at Bled? it's nice weather in Slovenia this weekend.

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  6. Does anyone knows Adrias desicion about MBX-SEN flights? This site wrote much about it but now its so quiet...

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    1. http://www.exyuaviation.com/p/adria-delays-maribor-flight-decision.html

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