Slovenian regulator confident in Adria solvency


The Slovenian Civil Aviation Agency, which also monitors the financial sustainability of airlines registered in the country, has said it believes Adria Airways is financially stable and has managed to prove its solvency for 2018. It comes just months after the regulator found the airline was solvent in 2017 after expressing initial doubt and ordering an audit of its results. "Adria has not yet provided us with their balance sheet for 2018. They have given us some material, which also contains documentation on the planned merger of two companies. Since we do not have the authority to check this, we have sent all the documentation we have received so far, which shows adequate solvency up until December 31, 2018, to the Agency for Public Oversight of Auditing", the head of the Civil Aviation Agency, Rok Marolt, told the "Večer" daily.

Adria Airways absorbed the company STBE through a merger and acquisition last year. The move increased the airline's share capital and changed its ownership structure. STBE, which is closely linked to Adria's owner 4K Invest, purchased the Slovenian carrier's brand name back in 2016 for just over eight million euros. Mr Marolt noted, "Solvency has been proven by the acquisition of the company that owns the Adria Airways brand, so, for the time being, based on what we have received, we consider that they were not insolvent. In addition, they provided a Letter of Intent mentioning a strategic partner that will invest ten million euros into Adria". He added that the Letter did not specify who was the planned strategic partner.

Earlier this month, Adria Airways' CEO, Holger Kowarsch, revealed that the planned partner was Russian plane manufacturer Sukhoi Civil Aircraft Company (SCAC). In addition to providing the airline with fifteen Superjet 100 aircraft, it was envisaged for the company to invest ten million euros into the Slovenian carrier, which would have been turned into equity. However, the deal never materialised. According to Slovenia's national carrier, the amount of shares SCAC would have received for its ten million euro investment was yet to be determined. SCAC itself said it walked away from the deal after reviewing Adria's 2018 finances. However, Mr Kowarsch noted that the Russian manufacturer had access to all information concerning his company's business prior to signing a Letter of Intent with the airline, including insight into the carrier's net loss for 2018, which will be in the double digits. It is speculated the carrier will post a loss of between fourteen and fifteen million euros, although the results are not expected to be made public until September.

Mr Kowarsch recently noted that following a four million euro capital injection in late 2018, Adria has been financially stable. "While there were still some liquidity problems last winter, the prospects for the summer season are good. The plan for this year is to get out of the red. Last year's loss is a result of several factors, among them damages Adria incurred for cancelled flights and delays, increased fuel prices, lack of staff and the delay in introducing Saab 2000 aircraft", the CEO said.




Comments

  1. So they determined that Adria was solvent last year based on a LoI of a 10 million EUR investment which is not happening and the airline itself has confirmed is not happening. Great.

    ReplyDelete
    Replies
    1. CAA motto is "what Adria does must be the best"

      Delete
  2. "Adria has not yet provided us with their balance sheet for 2018. They have given us some material" - April 2019 is almost over. Sounds legit.

    ReplyDelete
    Replies
    1. They are doing really fantastic job with oversight of Adria.

      Then everybody will act surprised when the first supplier pulls the plug.

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    2. I hope they find a way to resolve all issues. Adria is too big of a brand to just let go bankrupt or close down.

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    3. Hvala na dobrim željama, ali inače se ne slažem. Pan Am, TWA, Sabena, Swissair bili su bitno veći brandovi

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    4. Too big to fail?

      Add Jet Airways, Monarch, Air Berlin and others to the list.

      Adria is a small no-name airline in the industry outside of the Balkans.

      Delete
    5. so true....

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  3. I hope things will get better for them in the future.

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  4. "The plan for this year is to get out of the red"
    I think this is the plan from day 1 of the airline but it never manages to do it. What a mess...

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  5. Is there really hope they will be profitable this year?

    ReplyDelete
    Replies
    1. Well they cut down on routes, increased ACMI leases, cut costs even more... so they should manage profit.

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    2. Fuel is back at 75 USD as of this morning, forget about it.

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    3. They will manage profit thanks to some accounting trick.

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    4. Or 4K will reshuffle money from one of their entities to the other.

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    5. yes but you dont pay fuel on daily prices

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    6. Well, in case of Petrol, you don't pay it at all.

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  6. Good to hear.

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  7. I have a question and I apologise for my ignorance as I'm in no way shape or form interested in finance and am purely an aviation enthusiast. If Adria is still flying to this day, why do they have to determine if they were solvent in 2018? I mean wouldn't it have gone bankrupt by now if they were insolvent last year? Again I'm sorry if this is a stupid question...

    ReplyDelete
    Replies
    1. It's acctually a good question no one is asking. The regulation in the airline industry is quite stringent. One of the rules airlines have to abide by is the rule that they have to have enough money on their accounts to pay for certain things, mostly related to safety.

      Airlines are like any other companies and are inclined to cut corners - especially airlines run by shady company such as 4K.

      People have very well-founded suspicions that 4K is basing its operations on a mountain of debt and is basically misleading the CAA. The merger with the company STBE didn't bring any money to Adria, yet you can magically write on your accounting sheets that it did - and voila, JP is solvent.

      As you can read here in the comments, JP owes money left, right and center. The reason no one is calling in the debts is probably quite simple - in the short run they would lose massively if JP goes bankrupt, so they are buying themselves some time. Petrol, Fraport, some other smaller airports, various hotel chains etc. I personally do not bellieve in collusion between the Slovenian government and 4K, but there also this 'theory'.

      But this cannot go on forever, when one of the contractors starts demanding money or else cut its service, the dominos will fall.

      Delete
  8. Typical 4K's empty talk.

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  9. The same agency which is made up of former Adria employees. Offcourse they found it was solvent.

    ReplyDelete
    Replies
    1. Exactly. Agency director used to be Adria's COO from 2012 to 2013 and assistant director of flight operations from 2006-2012.

      Delete
    2. and the CAA Head of Operations Department is Adria pilot. Active one I might add.

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    3. SMFH...
      Balkans will always be Balkans no matter how many international organizations we join.

      Delete
    4. A kako ćeš u državi s 2mil stanovnika v totalno specifičnoj branši kao što je aviacija naći ljudi koji nisu u prošlosti bili nekako vezani za JP? A da je došao netko iz rudnika Velenje opet bi bilo da nema pojma, jer je outsider.

      Delete
    5. pa praksa dokazuje ovu teoriju - došao godine 2011 kamenorezac i sj...o kompaniju

      Delete
  10. Well done Adria.

    ReplyDelete
    Replies
    1. Well done on what exactly?

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    2. Being solvent.

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    3. We don't know if they actually were. The agency only said they believe they were based on very flimsy evidence.

      Delete
  11. What are Adria's long term plans now?

    ReplyDelete
    Replies
    1. To survive as long as they can.

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    2. Short term they wet leased a Nordica CRJ700 for the week.

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    3. They are also wetleasing again an ancient Carpatair F100.

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    4. Why are they leasing all these planes?

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    5. Because they wet leased half of their fleet and it is likely some of their planes went tech.

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    6. Do you guys know the registrations of these planes?

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    7. F100 - YR-FKB
      CRJ900 - ES-ACF

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    8. Thanks for the quick response.

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    9. That Fokker is 28 years old.

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    10. My guess is that CRJ900 will be the one that will be wetleased to Air Serbia in June.

      Delete
    11. There are two ways this could end. Either bankruptcy or 4K sets up for someone else to take over the company.

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    12. Opet ovo stara kanta F100. Unbelievable.

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    13. Comparing to Air Serbia 737-300 and ATR 72-200 this F100 is young.

      Delete
  12. I'm glad for JP, hope things will get better for them in the future.

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  13. It was indeed necessary for them to do some reforms and place many loss-making routes under the knife, in order to survive. It seems that the German routes, CH + MK, BiH and AL are generating revenue. Lets see how they will perform this summer.

    ReplyDelete
  14. Fewer flights from Ljubljana, big losses, focus on different markets... and Aviation agency is happy.

    ReplyDelete
    Replies
    1. It might not be happy but it doesn't change the fact that they were solvent.

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    2. They don't know it themselves. They said they were solvent based on the evidence they were given, but they haven't actually seen their financial report.

      Delete
  15. Dont believe them anything. SLO government is providing hidden subsidies thru Petrol etc
    We hve 9 open delay compensation cases with them, dating back as far as June 2018, no sign of payment

    ReplyDelete
    Replies
    1. I've heard many are still waiting to be compensated. Is there some sort of time limit until when they need to cash out the claims?

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    2. +1. I'm sure the government is secretly and propably illegally according to E.U. laws funding Adria.

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    3. Same way it was funding Adria for years. The only reason the European Comission didn't order Adria to pay back all the money in 2014 is because of Violeta Bulc who is the European Comissioner for Transport. She is the only reason why for example Adria didn't have to pay back any of the tens of millions they got while Malev had to and went bankrupt as a result.

      Delete
    4. Anonym 0926. Dont know of any time limit but I keep on pushing thru CH BAZL and I wont give up

      Delete
  16. So, Adria is solvent. But still owes money to Sloveniacontrol, Petrol, Fraport and EU261 compensation for hundreds of passengers for much more than the legal limit.

    Makes sense.

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  17. Adria has been very stable in the past months with very good operational performance.

    ReplyDelete
    Replies
    1. It is easyer to perform well in winter. Let's see what will summer season bring up.

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    2. Easier to work in winter????? Can you explain this? We are not Thailand you know...

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    3. Because you have several planes grounded as there is no so many flights and ACMI as in summer. Also LF is much smaller and it is easier to reroute passengers in any cancellation or problem.

      Delete
  18. This all looks very fishy.

    ReplyDelete
    Replies
    1. Yeo. Murkier than the Danube.

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    2. To me, there is something "fishy" about why 4K is investing such large amounts of money to keep Adria flying.

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    3. * which btw is not returning any profit on investment.

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    4. Agree. This is turning out to be an expensive investment for 4k.

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    5. They are getting a management fee, not?

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  19. I hope 4K sells 100% of Adria to someone not involved in any way with 4K.

    ReplyDelete
    Replies
    1. Very difficult to find anyone willing to buy an airline is such financial state.

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    2. Time to renationalize.

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    3. The government cannot buy JP back. Because of the EU, first and foremost.

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    4. Time to let the market forces do their own, let JP go bust and LCCs will come and people will no longer have to drive 5 hours to catch a flight to Spain.

      And LH Group will take care of hub connections.

      Delete
    5. And why LCC arent here already....becouse 6 Adria CRJs......some people will be very dissapointed if/when JP collapses.

      Delete
    6. It's also called unfair competition. Any other airline flying to LJU has to pay for fuel and airport fees ... except JP.

      Sort of environment that a lot of airlines really enjoy working in, right?

      Delete
  20. Slovenian CAA would never do anything to impact Adria, even though the company is now 100% private.

    ReplyDelete
    Replies
    1. That is correct. It is farfetched to think that the agency which is made up of former Adria employees would do anything that would be negative towards Adria.

      Delete
  21. If they post 15 million EUR loss that's surprisingly low considering everything that's been going on.

    ReplyDelete
    Replies
    1. I suspect that amount is not fifteen but fifty million...

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    2. Unfortunately we will have 3 years of consecutive losses and each year the losses increased.

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    3. They had profit in 2016.

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    4. Fictional profit from brand name sale.

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  22. Hopefully things do get better like the CEO promised.

    ReplyDelete
  23. I don't know what to think about Adria anymore. Is there a light at the end of the tunnel?

    ReplyDelete
    Replies
    1. Only light would be 4K selling Adria.

      Delete
    2. whom will they sell this failed airline?

      Delete
  24. Bravo Slovenija

    ReplyDelete
  25. With what will they substitute the 10 million they were expecting from Sukhoi?

    ReplyDelete
  26. Slovenian CAA has been a mess itself for years, so I don't think they should really have the authority to decide whether Adria is solvent or not.

    ReplyDelete
    Replies
    1. Well, they have the authority by law to ensure all operators have required financial status to maintain safe operation of aircraft.

      But yes, they have been a mess themselves.

      Delete
  27. The CAA seems very very naive or they are purposely closing their eyes. They speak about a letter of interest that 10 million will be invested in Adria. I assume they know full well that this is realted to Sukhoi and that nothing has come out of it.

    ReplyDelete
    Replies
    1. They are both naive and closing their eyes. CAA will never revoke any AOC, they had an example years ago when everybody knew a certain operator in Slovenia was not paying salaries and social contributons for months, yet they still manage to hold an AOC.

      Banana republika.

      Delete
  28. What is worrying is that Adria is still not profitable after all these years. And I doubt 4K is willing to invest 10 mio EUR every year indefinitely just to keep Adria afloat.

    ReplyDelete
    Replies
    1. 4k has failed in its promise. They came to Adria saying they would turn around the business. That they are turnaround specialist. It turned out they are now planning a second (in reality third) year with a loss and it increases each year.

      Delete
    2. The company that bought Adria has no experience in managing an airline. It was visible when they bankrupted Darwin. It is visible now too.

      Delete
  29. CEO seems optimistic about the future.

    ReplyDelete
    Replies
    1. That's what he's paid for. For beeing optimist.

      Delete
  30. JP should try long haul leisure routes. Sell seats to tour operators. Could be a good source of income.

    ReplyDelete
    Replies
    1. Yes because leasing a plane like the A330 is very cheap...

      Delete
    2. They can't even pay for fuel for CRJ...

      You are talking leasing an 18-wheeler truck when you don't have pocket money to fill your vespa.

      Delete
  31. Good luck Adria.

    ReplyDelete
  32. I would like to see when that 10 million € in cash injection will be made.

    ReplyDelete
    Replies
    1. It won't. CEO said there was no need since they didn't take Sukhoi planes.

      Delete
    2. Yes, and 2 days later said they are still looking for strategic partner.

      Makes sense, right? We don't need money that we promised CAA to maintain our licence, but we need strategic partner?

      Delete
    3. ^That's exactly what makes these statements from CAA nonsense. They know too well that the LoI is no longer valid.

      Delete
  33. Why do people who comment here hate Adria so much?

    ReplyDelete
    Replies
    1. People do not hate Adria. They just dislike the management and the games they are playing.

      Delete
    2. You are mixing hate with facts. Adria owes huge amount of money to a lot of companies, which is not good.

      Delete
    3. People hate it because ultimately it will be Slovenian taxpayers paying for all these games and CAA's ineptness when it comes to exercising proper oversight of an AOC holder.

      Delete
    4. +1 last anon

      Delete
  34. I just hope that they will ride the whole summer on "Adria to buy 10-15 COMAC C919 jets. Signed LOI" story

    ReplyDelete
    Replies
    1. The COMAC C919 looks like a more promising aircraft.

      It has a range of up to 5,555km
      Seat capacity: up to 168.

      Although a much better option for JP can be the ARJ21-700, which looks pretty much like the Bombardiers.
      Up to 90 seats and range of up to 3,700km meaning it can easily cover the JP network.

      https://www.youtube.com/watch?v=IKceAmkLbeI

      Delete
    2. Absolutely, because failing to arrange deal with 15 f* up SSJ100 planes is best recommendation to buy a different, not yet released model, from same manufacturer. Jesus.

      Delete
    3. Why such negativity? The Comac 21 has been flying since 2016. All safe and not 1 sole incident. What and where is the problem?

      Delete

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