The Slovenia Times

Bad bank looking into struggling carrier's finances


The aim of BAMC's scrutiny, which comes under instructions from the government, is to establish how long the EUR 4 million that the company's German owner 4K Invest, demanded from the state as the condition not to file for receivership would last.

BAMC told Finance that it would not provide the money if it turned out the sum was not sufficient to rescue the company. BAMC also demanded of the Adria owner to submit proof of debt write-offs agreed with creditors.

Estimates by Finance's sources are that Adria would need about EUR 50 million merely to avoid a bankruptcy, and as much for sustainable operations.

Finance also cites estimates by experts that creating a new airline, which is another potential scenario offered by politicians, would cost some EUR 70 million.

Citing unofficial sources, the commercial broadcaster POP TV reported that BAMC suggested the government invest between EUR 15 million and 20 million in Adria on condition the company pay out on Friday the reminder of August pay to employees and settle its International Air Transport Association membership fee.

Economy Minister Zdravko Počivalšek told the STA today that the situation at Adria Airways was being examined by several institutions so that the government will take a decision on Friday or Saturday how to rescue the company to preserve Slovenia's air links with the rest of the world.

"We don't want to take decisions by heart, we don't want populist solutions, the figures will tell us what we need to do," he said.

It is in the government's interest to have a carrier that would link Slovenia well internationally. "If we come in a situation when we don't have such a carrier, the market will do its job, but I don't think we'll ever be linked with the the world again as we are now," said the minister.

Adria Airways's audited 2018 report, released by Finance, puts its net loss for last year at EUR 18.95 million, up from EUR 5.44 million the year before, as revenue rose by 12.5% to EUR 179.08 million.

According to the report, Adria had EUR 2.63 million in capital in 2017, but last year its capital turned EUR 14.19 million negative.

The company's long-term debt amounted to EUR 21.5 million and short-term liabilities to EUR 54.6 million.

The auditor issued a qualified opinion on the report, for one thing because it established that Adria did not in fact lose control of its brand in December 2016, so the accounting treatment of the company from that year on did not lead to a fair value of events.

According to the auditor's calculations, unconsolidated receivables as of the end of 2018 should be reduced by EUR 5.6 million, and by EUR 5.4 million at the end of 2017, while the liabilities as of the end of 2018 should be reduced by EUR 0.8 million and the accumulated loss increased by EUR 4.8 million.


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