Sunday, July 24, 2016

Germans take full control of Adria


The German owner of Adria Airways, which held 99.14% in the carrier before Thursday's shareholders' meeting, has squeezed out small investors at fifteen cents per share and now owns a full 100% stake in the company. The remaining share cost AA International Aviation Holding, an affiliate of the German turnaround fund 4K Invest, roughly 9.900 euros. The company said the move would simplify management, make the business structure more flexible and reduce operating costs. The German fund had acquired 96.09% in the formerly state-owned airline through a recapitalise-and-sell procedure in March. A total of 3.1 million euros in fresh capital was provided by the Slovenian state and one million by AA International Aviation Holding, which also paid 100.000 euros to the state-owned shareholders.

4K Invest is a leading European restructuring fund registered in Luxembourg and managed out of Munich. All of it ́s subsidiaries, including AA International Holding as Adria's parent company, are completely owned by European investors, mostly German nationals. 4K Invest anticipates for Adria to be profitable by the end of the year, following a loss of 6.9 million euros in 2015. "Actually, we look quite positively into this year, expecting good results. Adria's strategy seems like a good fit for a regional carrier", the airline's 33-year-old CEO, Arno Schuster, recently said. "We want to grow with our own existing network and to make it more efficient", he added.

Slovenia becomes the only country in the former Yugoslavia to have fully privatised key players in its aviation sector. In 2014, Germany's Fraport acquired operator Aerodrom Ljubljana, which runs Ljubljana Jože Pučnik Airport, and now holds a 100% share in the company. In 2015, maintenance firm Adria Airways Tehnika was sold to Poland's Linetech Holding. The 100% stake was unofficially sold for around five million euros, some two million euros of which came in purchase money and the rest in the form of a loan repayment to the two former shareholders. Meanwhile, Delavska hranilnica, a union-owned savings bank which has a majority stake in Mairbor Airport's operator Aerodrom Maribor, is expected to sell its share to Chinese businessmen David Pu, the owner of Maribor winery Vinag, who is also associated with several Chinese ventures in the city. Mr Pu reportedly offered 6 - 7 million euros for an outright stake in Aerodrom Maribor pending due diligence and the resolution of outstanding issues such as the concession fee for airport infrastructure. The operator of Portorož Airport is also looking for a new owner with Aerodrom Ljubljana, holding company Istrabenz and the Port of Koper all moving to sell their stakes. The Serbian-based holding company MK Group is believed to be close to making an offer.

42 comments:

  1. It will be interesting to see whather this max privatization pays off. So far, at least with Adria, I would not say so.

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    1. I'm more interested in Adria's financial results at the end of the year. There is nothing more to sell (as in property, planes). If they pull off a profit then they have actually done something right. Let's wait and see.

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    2. @ 9:17 i wouldn't wait till end of the year. it short term to turn things around. give a full one year then start talking.

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    3. THey might sell it in a year.

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    4. And they may not see the year through ....

      The company is probably worth more if these liquidation experts sell off the assets if it goes under

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    5. What assets? Leased aircraft or corporate building still to be payed off?

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  2. Related to Slovenia, a few days ago (and I read this here), Ryanair was holding a recruitment event in Ljubljana for future air crew. Why here? Are they preparing for flights from Slovenia? Do they maybe think Adria will go bankrupt?

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    1. You might find a few answers here

      http://www.exyuaviation.com/2016/05/ryanair-warns-of-airport-monopoly-in.html

      - Ryanair's Chief Commercial Officer, David O'Brien, has warned countries not to sell airports to monopolists like in Slovenia
      - Ryanair currently operates services to every European Union-member state with exception to Slovenia.
      - In 2013, Ryanair requested for the European Commission to swiftly act and conclude its investigation into whether Adria Airways accepted state aid and benefits from the Slovenian government to the tune of up to 85.5 million euros from 2007 to 2011, contrary to European Union competition laws.

      They have obviusly had their eye on the Slovenian market for some time.

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    2. The only way Ryanair would come back to Slovenia would be if Adria went bankrupt. But relying solely on Ryanair is a death sentence. They soon start to blackmail the airport because they bring say 200,000 passengers per year. Also they can decide to leave at any point and do not rely on any suppliers except for fuel.

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  3. OT: I have to say that I LOVE the vintage pictures you guys upload every day!
    Many, many thanks.

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  4. Adria Tehnika doing fine again, for JP it still too early to judge, but Fraport Lju Airport take over is kind of disappointment. New terminal not before 2030, I still dont agree with that, especially seeing how tight and small everything is at the airport. U barely can spend any money there, how do they wanna earn some money?? Just parkings and airport taxes wont do it

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  5. Well I completely agree with the Slovenian government's decision to sell smaller airports. It gives them a much greater chance to expand and develop.

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    1. Yes but unfortunately look at Maribor. Nothing has really changed. There is still no traffic. It has even been surpassed by Portoroz in terms of passenger numbers!

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  6. Any chance of Adria purchasing some C series planes? That would be fantastic.

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    1. With their current finances I very much doubt it. Plus I still think they have a CRJ900 on order.

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    2. What advantage would this bring? Some routes are too thin even for CRJ900. Buying new airplanes with questionable reliability (hasn't been in service even a week) in the current financial situation would only bring the inevitable demise closer...

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  7. It seems the only lucrative business for Adria is its involvement in the Nordica and the new owners plan on capitalising on that.

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  8. I posted this a few months ago but think it's still relevant.

    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. A good point. Its not easy for them. And again my conclusion to these, we hve way too many carriers in the region. FRA ZRH MUC VIE flights are star alliance feeder flights where yr revenue share is just the small portion from LJU to FRA,ZRH etc
      BRU probably one of the better yield routes. SVO is not doing well. So whats left? Some Gastarbeiter and Transferpax flts to SKP PRN TGD and TIA

      I dont see a real future for carriers like JP. OS LX LH TK could connect the star alliance airports, the rest done by LCC and maybe AY and JU
      similar size cities in Europe hve more or less such a set-up

      My way out would be an ex YU LCC with the name Adria. Shut down OU and YM and start to connect our region with Europe and nearby's. Maybe if lucky, if not already too late,they could succeed. But it needs a lot of luck, considering how far Wizz Ryan and Easyjet are here already

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    2. Ryan and Easyjet could do this if they wanted to ... they have scale which Adria - nor any other ex-yu carrier can only dream of ... if you are advocating this, then Adria is already dead. They missed their chance 5-10 years ago

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  9. Good luck Adria

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  10. Hopefully new owner will introduce major changes to the company, otherwise...

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    1. You need DEEP pockets to introduce changes of the magnitude that you are suggesting. They should have got a strategic partner involved, which would have brought this with them - not an investment fund, who are not long term owners of any business, aviation or otherwise. They will strip out costs and then look to sell it off. If no takers, they will liquidate. They didn't bring anything into the mix so they lose nothing .... They are currently living on credit. The business is not cash positive and they are going into winter. Basically, they are in deep shit

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  11. I wish Adria all the best. It's a brand worth preserving.

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    1. Some said the same thing for JAT, but it wasn't true. Respected brands find a new life when companies go bankrupt, for example Kodak once known for films is now opening prescription glasses stores around the world. Adria brand will find a new use outside of airline world.

      On a lighter side, if Adria goes bankrupt Pepsi might come back and fill the void (this is not a Photoshop):

      http://www.airliners.net/photo/Air-France/Aerospatiale-British-Aerospace-Concorde-101/212303/L

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  12. I have to question whether a multi hub system is profitable for Adria considering its size. Can an airline with 12 aircraft be profitable with 4 different bases (which are not that close by) with crew from different countries that have different laws and regulations.

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  13. OT

    Have two Atrs broken down? YU-ANK operated OTP and is going to PRG. YU-ANI just returned from BNX.

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    1. Don't worry two A320s will magically appear soon and will make all well!

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  14. OT: Five hour delay today on Croatia Airlines flight from London. Their network has been a mess all week. Lots of delays. What the hell is going on?

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    1. Dont worry,OU is perfect,ASL is mess!!!

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    2. Good answer .... when you can't respond, then throw the ball to JU ....

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    3. Nonsense. Air Serbia is a phenomenal airline, they are something like a Balkan Lufthansa!

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  15. Bice zanimljivo videti hoce li biti opet novih linija iz LJU.
    INN-NS

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  16. Can someone please explain to me how does selling everything to foreigners help improve your economy. So far slovenia has sold its airport and now its airline. The country will now receive tax but profits will go to investing nations and slovenia no longer has control of its own air travel. Someone please explain this strategy, sorry if I sound rude.

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    1. Well, profits from state-controlled companies also go to government-friendly domestic or foreign private "partners" and to ruling party. These companies are often extra subsidized by "us", giving even more money to private foreign and domestic companies and individuals. The profits from domestic investors go to private pockets and to tax heavens. There is no big difference after all. The only system where nothing goes to foreigners and everything goes to "us" is Stalinism. It does not work and it is not nice to live in this system. Otherwise the USSR would be still live and kicking with happy soviet citizens enjoying the profits.

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    2. Compare Adria's profits to received government funds in the past 25 years and let us know how much profit is Slovenia "loosing"...

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  17. OT: Air Serbia's sole A330 has been flying to JFK for one month. Despite concerns about reliability of operating that route with a single airplane, no flights have been cancelled. Departure delays in excess of one hour were common due to long queues at JFK but in most cases YU-ARA has been able to arrive at BEG on or before scheduled time. One major NYC storm caused long delays to propagate to flights during following days. On days when no scheduled flighs to JFK were planned, A330 went once to DUS (Air Berlin maintenance base) and once to FCO (Alitalia maintenance base). Very smooth start of longhaul operations without major issues!

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    1. Actually, I think they over-exaggerated the flight time to New York. They are at least 45 to 60 minutes longer than they actually are, even with crazy delays in NYC.

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