New owners plan to optimise Adria

The German turnaround fund, 4K Invest, which will officially become Adria Airways' new majority shareholder by the end of April, plans to optimise the carrier and reduce the airline's costs per passenger. The Munich-based investment fund has communicated its plans to the Slovenian Sovereign Holding (SSH), which has managed Adria's sale. "The fund had told SSH that it would stick to the current strategy. This means reducing costs per passenger, as well as an analysis of the processes and optimisation", Adria Airways' CEO, Mark Anžur, said. He added that one of the measures for cost optimisation includes reducing the workforce, especially in the back office. 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.

Despite possible layoffs, Mr Anžur is confident in the deal struck with 4K Invest, but admits he does not have the full details regarding the investment fund's plans since the bulk of the takeover talks were conducted by SSH. The carrier's CEO noted that the one million euros provided by the German fund and the further 3.1 million by the Slovenian government, as part of the capital hike, will keep the airline afloat until its new owners take over, after which they will implement their own strategy. Recently, the Slovenian Infrastructure Minister, Peter Gašperšič, said, "I hope and expect that Adria will emerge from this process stronger. I hope Adria will continue to operate in Slovenia, as well as in the region, where it can be competitive".

The early publication of Adria's summer timetable indicates the carrier will continue developing its network. The SSH recently said, "In addition to paying-up capital, [4K Invest] will provide for the viability and the development of the Slovenian national airliner, and enable other long-term positive impacts. Adria Airways will get a buyer who will restructure it, maintain the Slovenian airline and provide for its future development, enabling thus long-term positive impacts to the budget, the Slovenian economy, the development of the industry and of all the stakeholders of the company”. It added, "The money from the capital increase will be used to return Adria Airways to growth. Under its new ownership, the airline will maintain its hybrid business model, its Star Alliance membership and stay focused on the Slovenian, Albanian, Kosovo and Macedonian markets. The airline is expected to add more modern aircraft in order to grow its international network, according to the buyer".

The Slovenian Civil Aviation Agency, which is responsible for issuing operating permits to airlines, recently conducted an oversight of Adria Airways, under which it checked whether the carrier's finances are stable enough for it to retain its operating license. While Slovenian media speculated the Agency would ground the airline, as it is believed Adria recorded a five million euro net loss in 2015, the regulator issued a temporary license, which will be reviewed following the completion of the 4.1 million euro capital hike - on April 20. With the fresh capital, Adria is expected to easily extend its permit.

Comments

Anonymous said…

Expected this would happen. Investment fund buy outs usually lead to job losses. But I wish Adria all the best. It's a brand worth preserving.