Friday, September 8, 2017

Adria sells brand name for €8 million


Adria Airways has confirmed it has sold its brand name for eight million euros. The transaction took place in December of last year and helped the Slovenian carrier post a record profit of 3.2 million euros in 2016, a significant swing from its 9.2 million euro loss in 2015. In its recently published financial report, Adria notes, "The purchase price for the brand is paid by the new trademark owner (i) with the royalty deducted from the purchase price, and (ii) after nine years, i.e. in 2025, the remainder of the purchase price of the brand in cash. The license fee for the calendar year in cash is 400.000 euros + 0.15% of the annual revenue".

It is unclear to whom Adria sold its 56-year old brand name, with conflicting reports it was purchased either by the company's owners, 4K Invest, or the Slovenian government. Zvone Petek, the Honorary Consul of Slovenia in Zurich, who previously served as Adria's Country Manager for Switzerland for over two decades, noted in a recent comment for the "Travel Inside" magazine that, "It is interesting that the brand name Adria Airways was sold for eight million euros during the course of the privatisation. It is unclear who is now the holder of the trademark rights. Insiders believe it is the state of Slovenia. This gave the airline a necessary financial injection". Although Slovenian press has not delved into the matter, some reports from last November suggest that 4K would purchase rights to the Adria name.

Adria Airways Switzerland

The Adria brand has since expanded into Switzerland, with Darwin-operated Etihad Regional recently renamed to Adria Airways Switzerland. The logo of the Slovenian carrier is now displayed on Darwin aircraft. In its financial report, Adria notes it managed to achieve profitability through restructuring and partly due to the role it played in establishing Estonia's national carrier Nordica, resulting in the subsequent partnership between two, which saw the Slovenian airline provide its counterpart with a booking system, operational services and staff training, at a fee. Furthermore, the carrier profited from aircraft leasing arrangements made with several airlines during the year and the sale of two Bombardier CRJ200 aircraft, as well as spare engines.

110 comments:

  1. So now we know how they turned a profit.

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    1. Some years ago Lufthansa sold BMI to BA and posted a record profit. That´s business- that´s how it works.

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    2. Ovde sam doziveo napad od agresivnog lika kome je sve BS iako sam mu naveo oba izvora za ovu vest. Kao sto vidite Adrija je u teskom sranju, pravi i dalje ozbiljne gubitke i prestanite vise da zamisljate da ce prodavati Darwinove avione.

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    3. 1. LH's record year wasn't when they sold BMI. In fact the sale value was 1/5th of their profit that year.

      2. Sell what from Darwin? 20+ year old Saab 2000 or 15+ year old ATR72? Those airframes have barely any resale value...

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    4. Anon 9:12, you didn't provide any proof and you claimed that RS bought the brand. I will now ask journalist to look into the matter.

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    5. The difference with publically traded companies like LH are obligated to post ALL results, both operating and overall so that an average investor can figure out if they are worth investing. Not like JU or Adria, which do it selectively to serve the story line.

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    6. Adria will not sell anything as of Darwin as it has no assets. ATR's and few SAABS are leased so nothing to sell, those few SB's directly owned by some previous owners will be kept in place till the right time.

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  2. The creative accounting at ex-Yu airlines is becoming ridiculous.

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    1. It's not "creative accounting". If you sell something it goes into your profit. The same is done at other airlines across the world.

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    2. Yes, but sale and leaseback of your own brand at the end of the year, when you see you can't make profit but still want to display it is very obvious. Unless you are covering your ears and eyes.

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    3. Exactly last anon +1

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    4. @Anonymous September 8, 2017 at 9:18 AM:
      Exactly! The thing is, Dr. Schuster said (when he was named the CEO), that Adria will end the year with a profit of around 1 million euros. Well, he outdid himself. His company made a profit of 4 million euros. He's the man! Worth every penny.

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  3. Smoke and mirrors. How can they publish the transaction in their financial report but not divulge the purchaser? A complete lack of transparency which only serves to highlight all is financially not what it seems. Surely now there isn't anything left for them to sell!

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    1. Why would they be required to display the purchaser?

      They also list revenue from tickets, yet there's no list of people who bought tickets (even the largest buyers, such as government, companies, tour operators, etc.)

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    2. Not requiered,but desirable.unless they are hiding something.

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  4. In translation that means they had 4 million euro loss last year. Just as Slovenian media were reporting early this year.

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    1. Overall profit on paper, but operationally still a big loss. Nothing unexpected, really.

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  5. So in reality the airline posted a 4.8 million loss. I'm still trying to understand how Adria, owned by 4K, sold the name to 4K. The other, more likely, option is basically state aid of a provate airline.

    Disappointed to see this creative accounting at play, but the truth always catches up - one day they'll run out of things to sell, nobody is fooled.

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    1. the same way etiad sold its loyalty program to the other company it owns 100%.
      this sale is not visible on 4K level, where everyting is consolidated (prebilo se, što se kaže), but on adria level, it boosts profit.

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    2. Anon 9:14 4.8M loss is the best guess, as we've no idea about the amount they receive for selling 2 CRJ200's and spare engines. I would estimate revenue from A/C and engine sales somewhere between 2-10M range (range is quite wide due to the lack of information on the condition of aircrafts, engines.. even the no. of spare engines :) )

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  6. So much for that profit.

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  7. Balkan business model: we would sell our mother for the right amount!

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    1. Ja svoju poklanjam.
      P.s. nije to Balkanski model vec normalno promisljanje.
      Svaka cast mojoj materi,ali njen izbir je njen izbor a ne moj.
      To je nesto sto vizantijski nacin promusljanja ne moze shvatiti.

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    2. Ne razumem te jer si jako napredan...

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  8. Basically when they saw they would be unprofitable in 2016 they went and sold the brand name for exactly the amount they wanted to make a profit.

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  9. What will they sell this year?

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    1. They still have a few things. Ownership in Amadeus Slovenia, flight school, slots...

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    2. No valuable slots left. They sold their LHR slota 15 years ago.

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  10. Is Adria Airways as a brand name really worth that much?

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    1. Well it has been around for 56 years.

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    2. or, the buyer (most probably the Slovenian Government) needed something to justify yet another financial injection into Adria

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    3. of course not. what could you do with that name to earn that amount of money?

      my guess is that next year they will sell cutlery for €10mil to 4K to show profit

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  11. I doubt they sold it to the government. Otherwise this would have been uncovered earlier.

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  12. I still find it shocking that not a single Slovenian media has published that Adria had a 'profit' in 2016 let alone what's in it.

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    1. Quite a difference to when Air Serbia's financial report was published and at least 10 media outlets dissected it to the last cent.

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    2. The difference being that Adria is private and Air Serbia is still majority government owned.

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    3. Easy to conclude that Slovenian media is not paid/asked to investigate Adria.

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    4. @ 9.42 true but Adria has a huge impact on the Slovenian economy even if it is private so it is of national interest.

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    5. the difference is that adria is a private company and JU bad business is compensated by tax payers. also since vučić showed off with JU it is a good platform to attack him since it is his vulnerable spot

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    6. Exactly. Despite politicans and Adria's management claiming Adria is strategic company for Slovenia, the fact is no-one cares unless they have to finance it with taxpayers money.

      What huge impact does Adria have on the Slovenian economy? Tax from profit (look at the past 25 years and see how much they paid vs. government subsidies), employees (400 is nothing huge, especially when you fail to pay their social contributions on time), ...

      If they close shop, LH will be there tomorrow morning with flights to all the hubs.

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    7. Quite the opposite, no one is attacking Serbia's electric car industry, that would be just one of many vulnerable spots. What is being attacked is what is important for Serbia, Air Serbia as a functional economic vehicle to bring more tourists and cash into the country. On the other hand, no one is on a mission to weaken Slovenia by going after Adria.

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    8. Dakle, po tvojoj logici aki zelis udariti na Hrvatsku udaras na CA?
      Ne budi smjesan.

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    9. Ko zeli udariti po Hrvatskoj?

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    10. Kome smetaju jake regionalne aviokompanije? >:

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  13. Even if you deduce this sale they managed to narrow their losses.

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    1. Not really. The company has no assets to sell, all the aircraft are leased and they are still loosing almost 500k/month. Assuming summer season is positive, it's most likely almost a million/month in the winter.

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  14. Master stroke from 4K. They sell brand to themselves, manage to post profit for Adria that way and when they sell Adria they will not only get money from the sale but will also get money each year for renting the brand to someone.

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    1. Except no investor is stupid enough to buy an airline from an investment fund with practices like this.

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  15. This is a good indication to me that they will sell Adria soon. Just need to turn a quick profit in 2016 and 2017 and present it to buyers as a healthy business.

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    1. They will *try to sell. Major difference. Buyers aren't exactly lining up.

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  16. So much for Adria being the new success story in ex-yu.

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  17. That Adria Switzerland livery is not very appealing.

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    1. Does Darwin also have to pay for the use of the Adria brand?

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  18. Don't get why people are shocked by this?

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  19. And just 2 weeks ago everyone was praising them how they are the only REAL profitable EX YU airline .... LOL

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    1. No, surely not everyone...

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  20. Well they might have sold it but they also have to rent it back. I wonder how much?

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    1. Around 600K give or take (400K +0.15% of revenues)

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  21. I don't think it was such a bad year for Adria. They introduced new routes, planes. That's more than most airlines in the region.

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    1. For some airlines in the region it indicates a good year. For some other it is just another reason to thrash them, hate them and search for some dark conspiracies behind their good year.

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    2. We are talking about 2016 here not 2017.

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    3. In 2016 they closed a lot of routes and cut frequencies which is visible from the sharp decline in passenger numbers. Don't see how it can be good.

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    4. Umm they were the most profitable in ex-Yu in 2016. That's more than good.

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  22. Na kraju ce ostati od svih kompanija samo Montenegro :D

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    1. Oni barem ne kriju da su u katastrofalnom stanju, a ovi drugi jesu, a prave se da nisu.

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  23. I read here on Tuesday that Adria turned its first profit in 1997! I can't believe it took them so long :O what about Yugoslav times?

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    1. Adria was always in some financial problems in 60s, 70s, 80s. That's why it changed owners.

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    2. Interesting. Thanks.

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  24. Virgin Atlantic is doing the same, Richard Branson owns the Virgin brand and keeps renting it to all "his" companies.

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    1. That old man really knows, what to do.

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    2. True but he also built up that brand :)

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    3. Trump also has a brand.
      Lets see how it does in the next few years.

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    4. Virgin Atlantic is a small part of Virgin brand. Adria Airways on the other hand...

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  25. Desperate times call for desperate measures

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  26. Admin you should not have posted this, you will give Croatia Airlines and Air Serbia ideas :D

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    1. I think the name of those to is worthless. At least Adria has some legacy.

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    2. Legacy of loss-making.

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  27. A company in Finland 4K was also turning around last year filed for bankruptcy. I really hope Adria does not have the same fate.

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  28. While it might be a new concept in the ex-yu region, this is not such an uncommon practice in the west.

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  29. Anyone know how Adria is performing financially this year?

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    1. Well judging by their expansion this winter it is probably positive.

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    2. They posted a loss of about 4 million euros (if it hadn't been for the acounting magic).

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  30. What happened with JAT brand name?

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    1. It got tossed by Etihad with the rest of JAT's legacy.

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    2. Prilicno sam siguran da su i dalje vlasnici marke.

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    3. Na žalost nisu. Jedino ime i logotip koji su bili zaštićeni su JAT - Yugoslav airlines čuveni plamenovi i njihova registracija je istekla 2008 god. Važila je samo za teritoriju Republike Srbije.

      Nakon što je registracija istekla, taj isti logotip u crno beloj boji zaštitio je jedan francuski građanin samo za teritoriju Francuske.

      Ni jedan drugi logotip ili ime Jat Airways, JAT - Jugoslovenski Aerotransport ili Yugoslav Airlines nije bio zaštićen.

      Air Serbia naziv je međutim zaštićen: i ime i logotip na nivou svetske organizacije za zaštitu intelektualne svojine. Vlasnik bredna je Air Serbia

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  31. Not a bad price whoever they sold it to.

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  32. LOL now this is a new creative way to achieve profitability. Well done 4k.

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  33. If the government bpught it then that is state aid.

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  34. Sooner or later all of those ex-Yu airlines that survive will be part of Lufthansa group.

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    1. The sooner the better if you ask me!

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    2. They may learn something about actual profitability.

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  35. Selling slots, names, engines... if only all our national airlines were as innovative with increasing revenue from ticket sales.

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    1. Doesn't make sense to own the engines (or spare engines), if you don't own any aircraft.

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  36. So what does that mean? The current Adria will change its name? And the new owner is building up a new airline called Adria?! Very suspicious!

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    1. I think they leased back the name. So they still using it, but pay for it. For me, verry stupid. But they needed monney as soon as posible.

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  37. Still a pity the JAT original brand is gone. It was known everywhere.

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  38. from 12.12. Windrose (W7 761) 2W from KBP2LJU each 2,6 12:40, return 16:10 (bookable at amadeus)

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  39. Do you know what's called creative accounting? To sell the brand for 8m, then buy it back for 8€, and re-sell it again for another 8m :)

    Watch and see :)

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  40. If someone would want to set up a regional airline in the Balkans, Adria would be a good brand. Unlike Croatia Airlines, Air Serbia... it is distinctive yet neutral. So if governments in the region chose to join forces (as had been discussed, years ago) or an outside actor chose to smash them and create a regional feeder airline (Lufthansa?), Adria could be a useful brand.

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