Thursday, March 17, 2016

Adria's new owner plans profit in first year

4K Invest focuses on Adria's future following majority share takeover

Adria Airways' new owner, the turnaround fund 4K Invest, plans to swing the Slovenian carrier back into profit in 2016 by expanding its fleet and growing its operations in Estonia through Nordica, the Baltic country's new national airline, which utilises Adria's Air Operator's Certificate. 4K acquired a 96% stake in Adria through its subsidiary AA International Aviation Holding GmbH on Tuesday. It intends to acquire the remaining shares, for a 100% stake, and will make a takeover offer to the shareholders in the coming days. After naming four new members to Adria's Supervisory Board, 4K Invest has also appointed Dr. Arno Schuster to the Management Board, who is expected to replace CEO Mark Anžur soon. 4K Invest is a leading European restructuring fund registered in Luxembourg and managed out of Munich.

4K Invest anticipates for Adria to be profitable by the end of the year. "Actually, we look quite positively into this year, expecting good results. Adria's strategy seems like a good fit for a regional carrier", Mr Schuster says, adding there are no plans to make any drastic changes in terms of the carrier's network. Adria is believed to have registered a net loss of five million euros in 2015 following a small profit in 2014, although no financial results have been published so far. 4K Invest notes that several Bombardier jets will be added to the fleet during the course of this year, mainly to serve new destinations in and out of Estonia. "Adria Airways will make good connections available for business customers and offer attractive ticket prices for tourists. It will continue to serve the markets of Slovenia, Albania, Kosovo and Macedonia, connecting these countries with the world through the Star Alliance network. It intends also to grow in Estonia, a new market it entered in November 2015", Mr Schuster adds, noting, "We want to grow with our own existing network and to make it more efficient". Adria's CEO-in-waiting admits that he has no experience in the aviation sector, but says 4K Invest has experts on corporate restructuring and that human resources within the company will provide know-how.

Adria Airways' pilots, who initially scheduled a day-long strike for tomorrow, have called off the industrial action following the airline's acquisition. The union and the new owner struck a long-awaited collective bargaining agreement on Tuesday. However, Slovenian media speculate that in the coming months, Adria's new owners will lay off a number of employees. Mr Schuster says 4K Invest will "definitely look at the cost base" but did not directly respond to questions concerning possible staff cuts. The current CEO, Mark Anžur, previously noted, "The fund had said that it would stick to the current strategy. This means reducing costs per passenger, as well as an analysis of the processes and optimisation". Of the 415 staff currently employed by the flag carrier, 150 are in the back office. "This is still a little too high compared to other carriers. But we face a challenge with economy of scale because of our size. Retaining a certain standard of service requires having a certain number of staff. Therefore, it is crucial for Adria to continue growing while reducing the share of its fixed costs", he said.

99 comments:

  1. But wasn't the current strategy what led the company to post losses? Why wouldn't you change that?

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    1. Also why put so much emphasis on Estonia if it's a temporary commercial agreement with the Estonian government?

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  2. I'm sure Adria will have a very good relationship with LJU now since both are owned by Germans.

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  3. wow buying out the entire company. Same as what Fraport did.

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    1. As Adria Airways move right direction in privatisation, let hope Air Serbia follow same way. To be 100% privatising. Airport Nikola Tesla all so to be privatising. In normal circumstances, managing with government's birocracy is hopeless. Even monopoly das not help. Congratulation to Adria Airways. With big players future insured. Rodney & Sydneysiders✈

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    2. Please do not include us in your nonsensical comments Rodney.
      All the other Sydnesiders..

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    3. Ajde pusti gospodina Radovana na miru, pa to je vjerojatno najsvjetlija, najoptimističnija i najiskrenija osoba na forumu. Pozdrav svima iz Zagreba.

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    4. +1 anon 11:51

      he also makes a lot of sense...transparent privatisation is the way forward

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    5. Yeah but he only comments when topic is about Serbia. Or if not, he turns his comment to be about Serbia. He is not aviation fan, only Serbian aviation fan.

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    6. I agree with Radovan, the best path forward would be 100% private ownership. The problem is that in order to maintain EU Open Skies, the government owned 51% would have to be sold to either Serbian or an EU partner.

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    7. Anon 3:22 PM.
      Vasa primedba jeste priblizno korektna. Naime ja se radujem svakom napredku ljudi u svakom dobru. U komercijalnoj aviaciji bezkrajno. Jedino izuzev iskrenih zelja uspehe ili neuspehe ne komentarisem. Ne placam porez u drzavama raspale Yugoslavije, pa osim korektnih osecaja, za ostalo No koment. Er Srbija je kompanija moje Otadzbine rodjenja. Zaro 95% moji tekstovi pripadaju lokalnonom avio saobracaju. Moje ucesce na blogovima na drugim kontinentima podrazumeva dublje ucesce. Vi mi ako mozete oprostiti. Ako zahtevate, vise vazduhoplovstvo nemoram spominjati. Ali Vam zelim napredak i miran let. Bilo gde leteli. Toliko od mene ukoliko razumete ovaj jezik. ✈R✈ KVO✈SYD.

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    8. Radovane, jel Vam izašla knjiga? Kako se ono beše zove? I gde se može kupiti?
      Pozdrav iz daljine.

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    9. Postovani Anon 7:36 PM.

      Da, moja prva monografia sa 338 stranica I 309 fotografija je izasla prosle godine. Naziv knjige je: Od Polarisa do Juznog Krsta. Sadrzaj se odnosi na moj odnos prema ljudima u putnickoj avijaciji, sluzbi u mojem Qantas-u. Odnosi se I na mojih oko 4500 sati letenja po svim kontinentima u zadnjih 47 godina. U iducem mesecu letim za Sydney, pa ako ste u tom delu sveta, mozda se moze napraviti aranzman Trenutno sam ovde u Kraljevu gde redovno provodim zimu. Iskrene pozdrave ✈R✈ KVO✈SYD.

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    10. Поздрав г.Радовану,он се искрено залаже за развој авио саобраћаја у целој Србији а и у региону.

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    11. Vi koji pripremate avione,koji ste na na letovima, miran let I mirno sletanje. Rodney. KVO✈SYD

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  4. I have heard that they are already considering to base one of their airrcrafts at MBX. But since there is already Express Airways, there is also a lot of room for cooperation.

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  5. But what can Adria do? They have pretty much done everything they could. 10-15 years ago they relied on the entire Balkans to shuttle them to western Europe. Now that all those countries have more airlines flying there than Ljubljana, they can only focus on Albania, Kosovo and secondary cities in Poland (which I'm sure are well subsidised). I think they missed a huge opportunity in Macedonia where they should have set up a base. Now it's way too late with Wizz Air there. I think Adria probably has one of the best fleets out of all ex-Yu airlines, especially for low-yielding routes and let's face it the entire region is low yielding. But they also have a massive issue of having one of the smallest markets. I don't see what more they can do and I think very soon they will have issues in Pristina too when some LCC bases aircraft there. Though Adria has good brand awareness there.

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    1. you are spot on, they can stil fly from SKP to MUC, DUS and FRA though if they want to "connecting these countries with the world through the Star Alliance network"

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    2. Not sure for "one of the best fleets". CRJ2+CRJ7 are quite thristy, particularly compared to props such as DH8D or AT7. EMB-E2 series and Bombardier C-series are much more economical for small jets. But actually the DH8D could be of great use for them due to being faster and has longer range than the ATR - perfect for most of their routes.

      Adria basing one of their CRJs in SKP sure would be a great move to connect MUC, FRA, maybe also DUS. They can take advantage of subsidies and use synergies with other SA members (LH). Really don't know what keeps them from doing so.

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  6. Good luck Adria

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  7. Good luck Adria. And finaly this is the end of nepotistic, political and frnds-like HR approach. Adria will be the first in ex-yu that will see what tought capitalism means in real. Being owned by a found is the biggest challange so far. They do take care only and nothing else but the profit. This could push Adria on higher level or even to its end. I belive that the best will come out of this as 4K as a buyer would not buy it and risk another 3,5 mio if Adria would bancrot. So many who work for Adria at the momemt should be at least bit nervous.

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    1. "being owned"

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    2. Investing in Adria-like airline in the 21st century is akin to investing in a horse stable at the beginning of the 20th century. A 12-year old can deduce that only low cost airlines (some, not all) and big airlines (which are directly and indirectly subsidised) will survive in the long run. The trend regarding medium/small size airlines is clear.

      They do not risk 3,5 million, they risk 1 million, 3,5 million was given by the taxpayers. My 2 cents: Adria will go bust by the end of the year, 4K will make some profit by screwing the naive investors in their fund, and that will be that.

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  8. will the new owners offer free water again at least? Stvarno je sramota!

    poz

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    1. It will indeed be interesting to see if they want to make a LCC, hybrid or full service carrier out of Adria.

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    2. You can't have LCC with CRJ aircraft.

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  9. OT: Any coverage of Air Berlin's new routes to Croatia soon?

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    1. Reported over a month ago

      http://www.exyuaviation.com/p/air-berlin-in-major-croatia-expansion.html

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  10. Не бих желео да мрачим, али претварање компаније која прави губитак у профитабилну и то већ у овој години од које је прошао први квартал ми пре личи на утопијска обећања која даје српски премијер, него на озбиљну намеру новог власника Адрије.

    У сваком случају биће занимљиво видети исход за 9 месеци у држави која је свој главни аеродром и авиокомпанију предала у стопроцентно власништво немачким компанијама

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  11. For sure they will:
    - lay off 50-100 workers
    - put experts in important positions
    - there will be no more "mumble-jumble"
    purchase of equipment
    - for sure they will have utilization of fleet and better route system

    I hope they will (when Estonian contract expires) open base in SJJ and SKP where they can serve Star Alliance partners (FRA, MUC, DUS, BRU, ZRH, CPH) but also undeserved big destinations with low risk AMS, LHR, CDG, SVO.

    I think real task of 4K is to make Adria to work on western standards with less employees and than to sell it to Lufthansa and incorporate it in LH Cityline.

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    1. And what about OU? Is the privatization process still on?

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    2. Both JP and OU will disappear or will be incorporated in Lufthansa regional or Eurowings in next 2 years. Bad thing is reduction of planes in LJU and ZAG.

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    3. Purger hi! My assumptiom is that there was a hidden agenda all the time to get slovenina aviation industry under their (read LH) influence.

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    4. @ anon 10h32: They both won't. It is also clear LH is not interested in owning airlines in ex-yu.

      OU has a lot more idle potential but they must become smarter for winter time fleet utilization. They already can be profitable nowadays, even more after acquisition of 100-seaters.

      JP will be trimmed to become profitable also in long term. They have a gd approach being flexible and using the equipment where they can make profit including leasing out planes. Sure they will be sold again, but I doubt they will let them being sold to someone who will not keep the brand.

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    5. Generally, the interest of any investmant fund is profit. Thair long term investments are generally associated with the low risk, dividend paying stocks. Imho aviation is too risky and volotile for any turnarround fund to be invested long term. In this case i expect them to trim the costs as much as possible, maybe invest a little more in ti, keep it for 2-3 years max and sell it to one of the competitors. That's usually how it works. LH scenario Purger mentioned above seems very plausible to me.

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  12. OT - Air Serbia's route to LED to be announced soon, most likely operated by Adria at night time.

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    1. Wow! Air Serbia is on a roll! It's going to be an amazing summer season!

      Wish they could put politicking aside and link Pristina with Belgrade, as a cherry on the top!

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    2. See you around Croatia

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    3. One aircraft can do wonders.

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    4. To me it very much seems they are overscheduling their available aircrafts that can backfire massively. Unless they already know they will lease at least one more a/c for summer.
      Everybody remember last summer and the large number of huge delays and cancellations due to fleet shortage and all the time broken down aircrafts (Atrs and Aviolet Boeings).

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    5. +1 anon 1:50, regardless of freeing up this and that based on all the announced increases plus new routes it is crucial to have 1 more a/c.
      "One aircraft can do wonders."
      If that CRJ does 4 routes and then goes tech, JU is fu..ed.

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    6. There's always some free 737 to jump in, don't worry.

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    7. The Adria's aircraft is brand-new, it's only 2 years old.

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    8. So now only MUC and PRN to be added later this year and expansion plans complete, for now.

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    9. MUC has competition from LH and W6.

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    10. Ja ne znam kako i dalje mogu da predlazu MUC i SZG kad je to glupost .
      INN-NS

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    11. @AnonymousMarch 17, 2016 at 2:39 PM:

      Even 2 years old "brand new" aircraft can go tech. Adria doesn't even have an engine for CRJ9 on stock, last time they had a failure (bird strike, FOD, internal damage, a lot of stuff can cause it), aircraft was AOG for 2 weeks. Finding spare parts for CRJ in Europe is much more difficult than for A320 or B737.

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    12. Well, then they'll send in the 737 instead of sending it to Zagreb, oups.

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    13. "There's always some free 737 to jump in, don't worry."
      Would they not be heavily utilized for charters from June-September?


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    14. What's the plan once the Adria's jet is returned?

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    15. Good question. They will probably need another aircraft.

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    16. Once JP takes back its aircraft JU will be fine because WAW will become a seasonal route.

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    17. So A319 will be flying the routes?

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    18. Yes, they have no other choice. JU failed in WAW in winter and it would be a disaster if they keep on competing with LO.

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  13. Just noticed while trying to book a flight from ZRH<->LJU... Has there been a schedule change for Adria flights? There is no direct evening (21:00) flight from ZRH->LJU next week.

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    1. Meant the 20:45 flight, not 21:00 :)

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    2. JP operating

      21mar cr9
      22mar cr2
      23mar cr9
      24mar 319
      25mar cr9
      26mar no flt
      27mar cr7

      Listed only JP 307 etd 2045
      As of 27mar 2100

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    3. Rechecked again, no direct flights (20:45, ZRH->LJU) for: 22.3, 23.3, 24.3

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    4. Call Adnan in ZRH at 044 212 63 93
      I fly 26mar on 365 that flgt is KK

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  14. TK in SUTT daily with A321 ZAGIST as TK 1054 ETF 0930

    BEG also some A321 with TK 1084

    AY in LJU scheduled day 6 A321

    TOM with 787 767 DBV MAN LGW

    And surprise: OS 732 DAY 5 JUN UNTIL SEP a 767 300W DBV VIE

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    1. Wow, great! :-)

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    2. Wow! Regularly scheduled wide-body VIE-DBV-VIE - I will deffo book soon (now on Day5)! Thx for the heads-up!

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    3. Very surprised that ZAG got the upper hand over BEG. BEG was a better performing route for TK than ZAG. Hell, BEG was once 17 or 18 weekly, while ZAG got double daily flights like 2-3 years ago. There is no nationalism crap and the rest of hate bullsh*t, I was just stating facts how it was in the last 10 years. I guess their bookings must be going crazy since if you all remember ZAG was started with an A319 and was like that for a long time with eventually B737-800 later and finally double daily with A319. Now it is two flights with A320 and A321 which is impressive. BEG is mostly A320 and B737-800 which is not much diffence in capacity, but still massive increase from last summer for ZAG.

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    4. The difference being that in Zagreb they have no competition. In Belgrade they compete against Pegasus and Air Serbia.

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    5. I was still focusing on TK specifically, I dont give a crap about competition.

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    6. Competition influences TK operations... so you should.

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    7. TK je sve jaci i jaci zak je jaci i od pojedinaca iz EU3 .
      INN-NS

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    8. Po meni TK je jaci i od QR i EY ali ne i od EK-a.

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    9. Značajna je razlika da TK ima puno jači P2P promet dok recimo za Aziju ima osjetno manji kapacitet u odnosu na QR ili EK. Samo su donekle istog profila i ne mogu baš biti doslvno uspoređivane budući da puno veći dio prometa TK bude vezan uz samu Tursku, ne transferni promet.

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    10. Ali isto tako imamo toliko primera aviokompanija koje su bazirane u 'plodnim' trzistima a to ne znaju da iskoriste, dobar primer je AB.

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    11. Moguće, ali imaj na umu da AB ima u susjedstvu masu LLC, LH kao i kopnene opcije prijevoza, a glavna orijentacija je Njemačka i Europa, skroman longhaul a visoki troškovi. TK ipak malo lakše diše po tim pitanjima na svom domicilnom tržištu. U svakom slučaju to ne umanjuje vrlo vjerojatnu nesposobnost AB managementa da se već dulji niz godina prilagodi situacijama na tržištu.

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  15. OT: Admine kada cete da objavite red letenja za leto ex yu prevoznika? Navikli smo na to.

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  16. I'll tell you what will happen with Adria. This investment co will gut the airlines staff, lower cost base by stretching whoever is left until on paper, the airline looks super profitable. They will the float it and dim fund managers managing peoples pensions, investments etc.. will jump at the chance to invest. They will find out that what looked great on paper is now a POS and eventually go bust.

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    1. You are probably right. I have never been a fan of investment funds getting into airlines.

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    2. Uskoro ce da zavrse sa letenjem u Sloveniji, ostace po neki pilot od sinova danasnjih pilota.

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    3. Pa vljda ce jih AS i CA zaposlit

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    4. Samo ce onda bogati piloti imati novca da skoluju decu. Uzeti kredit za skolovanje nije bas cesto u Evropi.

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    5. Ili ce ici u koju drugu branzu...pronaci neki drugi posao. Ko kaze da ako "once pilot forever pilot". Trziste rada otvoreno je za sve. Za sve od nas. Tako su me barem ucili na fakultu.

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    6. Catchment area of LJU is far more better than ZAG's one. In 2 hrs drive live about 6 mio people. The problem of both JP and LJU is not to take advantage of it.

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    7. ...this reply goes to ano @3:34

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    8. Na koji si glupi fakultet isao?Pogledaj sastav ucenika na Pilotskoj akademiji u Vrscu.

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  17. 2 od 4 Ex yu Aviokompanije su nasli gazdu 1 je na pregovorima a 1 je jos uvek bez potencijalnog kupca .
    Tako da ce biti zanimljivo gledati napredak ove godine .
    ASL opet ima odlicnu ekspanziju sa 4 nove Evropske destinacije mozda ih bude i 5 ako sve prodje kako treba.
    INN-NS

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  18. Adria proved that is a flexible company and I think that this was an advantage for 4K's aqusisiton. Most probably they will seek for more oportunities all arround Europe and soon or later it will become a paneuropean airline. Has a good reputation, well known brand so who would kill this. Go Adria at least for next 50 years

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  19. Adria's problem is its catchment area. The country is small without any domestic traffic, and LJU is 1 hr driving distance to ZAG, where both no. of flights and passengers are doubled, hence better alternatives offered. TRS and VCE catchment areas are overlapping with LJU too, making life difficult for the base carrier. It would be wise not to try to compete in that squeezed region, but to base aircrafts to other destinations such as Tirana, Skopje, Sarajevo etc. despite the increased cost.

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    1. Not sure about that. http://www.therouteshop.com/wp-content/uploads/2013/09/ljubljana-catchment-large.png

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    2. If you need 2 hours to Zagreb, you should buy a new car.

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  20. Nadam se da nece otpustiti previse zaposlenih i da ce naci neki model za oporavak i stabilizaciju kompanije.

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  21. EX-YU - any info about Adria getting A321 this summer? There was rumor on skyscrapercity forum and one 321 is stored in LJU since 7th March https://m.planespotters.net/airframe/Airbus/A321/519/F-GYAZ-Air-Mediterranee

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    1. Official word from Adria is that it won't be utilised by them

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  22. Off topic.. jel neko zna zasto ASL ne koristi svoja dva A320 vec par dana? Izgleda samo A319 lete trenutno. Jel to zbog tehnickih razloga ili nije potreban taj kapacitet?

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    1. Kao i prosle zime, A320 slabo leti jer jednostavno nema potrebe. Oni su genijalni tokom sezone, to jest tokom leta i oko praznika.

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    2. U jedan se ugradjuje wifi

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  23. I wonder how many pax aboard this A300 from Teheran

    Qeshm Air QB2251 Belgrade On time Check in now 12:30:00 AM 12:30:00 AM 3/18/2016

    Source: http://ikia.airport.ir/

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    1. When is it flying back?

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    2. EP-FQO A300 performed this flight as per Flight radar: https://www.flightradar24.com/reg/ep-fqo

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  24. Wizz responded to Ryan and annonced SOF-CPH route - 3x weekly starting from June 13th. In the same time they cut LBC from 15 April - which is less than a month from the start of the route.

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