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.
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.
ReplyDeleteCAA motto is "what Adria does must be the best"
Delete"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.
ReplyDeleteThey are doing really fantastic job with oversight of Adria.
DeleteThen everybody will act surprised when the first supplier pulls the plug.
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.
DeleteHvala na dobrim željama, ali inače se ne slažem. Pan Am, TWA, Sabena, Swissair bili su bitno veći brandovi
DeleteToo big to fail?
DeleteAdd Jet Airways, Monarch, Air Berlin and others to the list.
Adria is a small no-name airline in the industry outside of the Balkans.
so true....
DeleteI hope things will get better for them in the future.
ReplyDelete"The plan for this year is to get out of the red"
ReplyDeleteI think this is the plan from day 1 of the airline but it never manages to do it. What a mess...
Is there really hope they will be profitable this year?
ReplyDeleteWell they cut down on routes, increased ACMI leases, cut costs even more... so they should manage profit.
DeleteFuel is back at 75 USD as of this morning, forget about it.
DeleteThey will manage profit thanks to some accounting trick.
DeleteOr 4K will reshuffle money from one of their entities to the other.
Deleteyes but you dont pay fuel on daily prices
DeleteWell, in case of Petrol, you don't pay it at all.
DeleteGood to hear.
ReplyDeleteI 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...
ReplyDeleteIt'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.
DeleteAirlines 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.
Typical 4K's empty talk.
ReplyDeleteThe same agency which is made up of former Adria employees. Offcourse they found it was solvent.
ReplyDeleteExactly. Agency director used to be Adria's COO from 2012 to 2013 and assistant director of flight operations from 2006-2012.
Deleteand the CAA Head of Operations Department is Adria pilot. Active one I might add.
DeleteSMFH...
DeleteBalkans will always be Balkans no matter how many international organizations we join.
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.
Deletepa praksa dokazuje ovu teoriju - došao godine 2011 kamenorezac i sj...o kompaniju
DeleteWell done Adria.
ReplyDeleteWell done on what exactly?
DeleteBeing solvent.
DeleteWe don't know if they actually were. The agency only said they believe they were based on very flimsy evidence.
DeleteWhat are Adria's long term plans now?
ReplyDeleteTo survive as long as they can.
DeleteShort term they wet leased a Nordica CRJ700 for the week.
DeleteThey are also wetleasing again an ancient Carpatair F100.
DeleteWhy are they leasing all these planes?
DeleteBecause they wet leased half of their fleet and it is likely some of their planes went tech.
DeleteDo you guys know the registrations of these planes?
DeleteF100 - YR-FKB
DeleteCRJ900 - ES-ACF
Thanks for the quick response.
DeleteThat Fokker is 28 years old.
DeleteMy guess is that CRJ900 will be the one that will be wetleased to Air Serbia in June.
DeleteThere are two ways this could end. Either bankruptcy or 4K sets up for someone else to take over the company.
DeleteOpet ovo stara kanta F100. Unbelievable.
DeleteComparing to Air Serbia 737-300 and ATR 72-200 this F100 is young.
DeleteI'm glad for JP, hope things will get better for them in the future.
ReplyDeleteIt 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.
ReplyDeleteFewer flights from Ljubljana, big losses, focus on different markets... and Aviation agency is happy.
ReplyDeleteIt might not be happy but it doesn't change the fact that they were solvent.
DeleteThey 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.
DeleteDont believe them anything. SLO government is providing hidden subsidies thru Petrol etc
ReplyDeleteWe hve 9 open delay compensation cases with them, dating back as far as June 2018, no sign of payment
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?
Delete+1. I'm sure the government is secretly and propably illegally according to E.U. laws funding Adria.
DeleteSame 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.
DeleteAnonym 0926. Dont know of any time limit but I keep on pushing thru CH BAZL and I wont give up
DeleteSo, 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.
ReplyDeleteMakes sense.
+1
DeleteAdria has been very stable in the past months with very good operational performance.
ReplyDeleteIt is easyer to perform well in winter. Let's see what will summer season bring up.
DeleteEasier to work in winter????? Can you explain this? We are not Thailand you know...
DeleteBecause 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.
DeleteThis all looks very fishy.
ReplyDeleteYeo. Murkier than the Danube.
DeleteTo me, there is something "fishy" about why 4K is investing such large amounts of money to keep Adria flying.
Delete* which btw is not returning any profit on investment.
DeleteAgree. This is turning out to be an expensive investment for 4k.
DeleteThey are getting a management fee, not?
DeleteI hope 4K sells 100% of Adria to someone not involved in any way with 4K.
ReplyDeleteVery difficult to find anyone willing to buy an airline is such financial state.
DeleteTime to renationalize.
DeleteThe government cannot buy JP back. Because of the EU, first and foremost.
DeleteTime 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.
DeleteAnd LH Group will take care of hub connections.
And why LCC arent here already....becouse 6 Adria CRJs......some people will be very dissapointed if/when JP collapses.
DeleteIt's also called unfair competition. Any other airline flying to LJU has to pay for fuel and airport fees ... except JP.
DeleteSort of environment that a lot of airlines really enjoy working in, right?
Slovenian CAA would never do anything to impact Adria, even though the company is now 100% private.
ReplyDeleteThat 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.
DeleteIf they post 15 million EUR loss that's surprisingly low considering everything that's been going on.
ReplyDeleteI suspect that amount is not fifteen but fifty million...
DeleteUnfortunately we will have 3 years of consecutive losses and each year the losses increased.
DeleteThey had profit in 2016.
DeleteFictional profit from brand name sale.
DeleteHopefully things do get better like the CEO promised.
ReplyDeleteI don't know what to think about Adria anymore. Is there a light at the end of the tunnel?
ReplyDeleteOnly light would be 4K selling Adria.
Deletewhom will they sell this failed airline?
DeleteBravo Slovenija
ReplyDeleteWith what will they substitute the 10 million they were expecting from Sukhoi?
ReplyDeleteSlovenian 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.
ReplyDeleteWell, they have the authority by law to ensure all operators have required financial status to maintain safe operation of aircraft.
DeleteBut yes, they have been a mess themselves.
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.
ReplyDeleteThey 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.
DeleteBanana republika.
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.
ReplyDelete4k 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.
DeleteThe company that bought Adria has no experience in managing an airline. It was visible when they bankrupted Darwin. It is visible now too.
DeleteCEO seems optimistic about the future.
ReplyDeleteThat's what he's paid for. For beeing optimist.
DeleteJP should try long haul leisure routes. Sell seats to tour operators. Could be a good source of income.
ReplyDeleteYes because leasing a plane like the A330 is very cheap...
DeleteThey can't even pay for fuel for CRJ...
DeleteYou are talking leasing an 18-wheeler truck when you don't have pocket money to fill your vespa.
Good luck Adria.
ReplyDeleteThey will need it.
DeleteI would like to see when that 10 million € in cash injection will be made.
ReplyDeleteIt won't. CEO said there was no need since they didn't take Sukhoi planes.
DeleteYes, and 2 days later said they are still looking for strategic partner.
DeleteMakes sense, right? We don't need money that we promised CAA to maintain our licence, but we need strategic partner?
^That's exactly what makes these statements from CAA nonsense. They know too well that the LoI is no longer valid.
DeleteWhy do people who comment here hate Adria so much?
ReplyDeletePeople do not hate Adria. They just dislike the management and the games they are playing.
DeleteYou are mixing hate with facts. Adria owes huge amount of money to a lot of companies, which is not good.
DeletePeople 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+1 last anon
DeleteI just hope that they will ride the whole summer on "Adria to buy 10-15 COMAC C919 jets. Signed LOI" story
ReplyDeletelol :D
DeleteThe COMAC C919 looks like a more promising aircraft.
DeleteIt 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
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.
DeleteWhy such negativity? The Comac 21 has been flying since 2016. All safe and not 1 sole incident. What and where is the problem?
Delete