STA, 5 April 2019 - The boss of Slovenian air carrier Adria Airways, Holger Kowarsch, has told the STA the failed deal with Russia's Sukhoi Civil Aircraft Company (SCAC) to lease Russian planes would also have involved an around 10-million-euro capital injection. Adria is thus still looking for a strategic partner.
Kowarsch, general manager of the Slovenian company in German ownership which had some liquidity problems recently, said it had been Adria that exited the deal.
After preliminary contracts were signed, SCAC did not deliver when the payment deadline was due in end February, for which reason Adria quit the deal, he explained in an interview for the STA on Friday.
Earlier this week, Adria announced it would not expand its fleet with 15 Sukhoi Superjet SSJ100 planes, as it had failed to agree on the terms of the long-term lease.
It said on Tuesday it doubted SCAC's interest in a fair and stable long-term partnership and was worried about its lack of a common vision of further strategic development.
Meanwhile, SCAC said in a release on Wednesday it had opted against entering the deal due to Adria's poor financial standing, in which way it avoided potential losses.
According to Kowarsch, Adria was in talks with SCAC for almost ten months, the Russians had access to all business information and carried out an extensive due diligence.
He also noted Adria had never denied it would post a loss for 2018, which he said will amount to a two-digit figure in terms of millions of euro.
Despite a planned recapitalisation of around 10 million euro, Kowarsch said it had not been agreed yet what stake SCAC would get in the Slovenian air carrier.
However, EU law limits the stake of investors from third countries in air carriers to 49%, he explained.
Kowarsch said Adria had been at first disappointed as it considered the Russian company a good opportunity for the air carrier.
But he also said that in recent meetings with Adria's partners in Europe and the US, he received information which put SCAC in a bad light as business partners.
"We need a partner we can rely on and with which we can find common ground on Adria Airways's future development," he said.
Adria's owners, among them German fund 4K Investments, believe Adria still needs a strategic partner, and is already in talks with potential investors, but Kowarsch said there was no hurry.
He noted that after it was supplied with four million euro at the end of 2018, Adria is fit in terms of capital so there is no need for a new capital injection.
This is why he does not expect any more problems with the Civil Aviation Agency, which periodically checks their financial standing and had ordered K4 Investments to recapitalise Adria last year.
Kowarsch also said that contrary to some media reports, the recapitalisation was carried out in cash.
While there were still some liquidity problems last winter, the prospects for the summer season are good so Adria expects a two-digit growth in passengers.
The plan for this year is to get out of the red, Kowarsch stressed.
Last year's loss is a result of several factors, among then damages Adria had to pay for cancelled flights and delays, dearer fuel, problems with staff and a slow introduction of Saab's 2000 planes.
Kowarsch stressed that despite all the problems, the safety of passengers on board Adria planes has never been at risk. He noted that negative publicity in some media outlets has caused the company quite some business damage.
Adria will most probably lease Canada's Bombardier's planes, Kowarsch announced, saying the 2020 summer season was now being planned so they would see what fleet they needed.
He also expects the number of passengers to rise in 2021, when Slovenia takes over the EU presidency for six months.