The Slovenia Times

Govt gives up on Adria, carrier files for receivership


The Kranj District Court is to decide on the proposal within three days. All Adria flights scheduled have been cancelled and the airline's operating license revoked.

The flag carrier, which was sold by the state to the German turnaround fund 4K Invest in 2016, wrote that the proposal had been filed due to insolvency and in line with legal provisions applying for such a situation.

The government also said earlier today that receivership was the only option, as the state was not ready to invest in or enter the carrier under the current owner and in its current financial state.

While suggesting that Adria would need EUR 28 million to start operating at least remotely normally again, Počivalšek pointed the finger at the "irresponsible" German owner, stressing Adria still had not published a revised financial statement for 2018.

Počivalšek said that the economy and infrastructure ministries had been trying hard since the spring to help the carrier, but they demanded that 4K Invest put forward a viable business plan that could serve as the basis for any form of aid.

In recent days, the Bank Asset Management Company (BAMC) and Slovenian Sovereign Holding (SSH) conducted a detailed analysis of Adria's state on the basis of available data. The state asset custodians established the shortfall to be much higher than expected, with the company's very poor state also indicative of very poor corporate management, the minister said.

The government had already stressed it would not invest a single cent into the carrier under the current owner, while any chances of the state investing or entering the company have now also been eliminated by the figures, the high debt.

"This would entail us taking over a high debt and enabling the owner to avoid any accountability. This would be irresponsible to the citizens and the budget," the minister said.

Thus the only possible option is receivership, which could be followed by two scenarios. Under one of them, the situation would be left to the market and the supply and demand principle, however this would take quite a few months and it is not guaranteed that the flight connections established would benefit Slovenia's economy, Počivalšek said.

He assessed that given the talks held with Lufthansa, Adria's main parter so far, and Ljubljana airport operator Fraport, it would be possible to revive about a half of Adria's routes.

The second option would have the state establish a new company. The government is examining this scenario, as this would make it easier to secure vital flight connections. A decision is expected soon, but such an operation would also take a few months to execute, the minister warned.

Obtaining the needed permits would take three to six months, possibly less under an "ideal scenario", but this would only be possible in a firm agreement with Lufthansa. A business plan would need to be drawn up first and then coordinated with Lufthansa, Počivalšek added.

"During the first talks, Lufthansa expressed readiness to cooperate also if we took the second route, not in terms of ownership but in terms of connectivity," the minister said.

While Lufthansa responded by only saying they would "not comment on media speculations", Počivalšek pointed out Adria had played a strong role in the recent period when it came to connecting the Balkans to Ljubljana and then onward to European airports.

"This involves a significant number of passengers that other carriers are interested in," he said.

Moreover, political consensus on this would be needed at home, while it would also need to be examined how much the sate would need to invest annually in such a company. The Economy Ministry estimates that the figure would range between 4 and 5 million euros.

A decision will be adopted fairly fast, Počivalšek said, announcing the government would continue the discussion at its regular session on Thursday, when the agenda is also expected to include proposed legislative changes that would allow the government to subsidise certain routes to preserve Slovenia's air links to major hub airports.

The in-house trade union meanwhile criticised the government for choosing what it believes is the less-viable option and also criticising the subsidies plan.

Meanwhile, the Market Inspectorate slapped Adria today with another EUR 3,000 fine for continuing with the sale of tickets for flight whose execution is uncertain.

The first fine was issued last week over the sale of tickets for flights whose aircraft had already been grounded - another one was grounded today. The second fine also came with a direct ban on continuing with this practice.


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