Govt Will Not Save Adria, Calls on Managers to Devise Rescue Plan

By , 25 Sep 2019, 09:56 AM Business
Govt Will Not Save Adria, Calls on Managers to Devise Rescue Plan Wikimedia - Konstantin von Wedelstaedt, CC-by-0

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STA, 24 September 2019 - Economy Minister Zdravko Počivalšek has reacted to the deepening crisis at Adria Airways by saying that the only thing that could save the air carrier was a well thought-out restructuring plan, agreed with the creditors, but added that under the given owner, the state would not invest a single euro in the company.

The minister would not specify how the restructuring of the company, which has been in the ownership of the German fund 4K Invest since 2016, could be conducted.

"Anything is possible, if you want it," he said in Ljubljana on Tuesday. "Things are not simple, and the ownership is not important there. It's absolutely necessary to examine the routes, act fast, conduct financial restructuring, reach a deal with the creditors and tap on the potential of the staff so the company can start from scratch."

Another possibility is letting the company go bankrupt, which in the short run would damage Slovenian business, not only tourism. In the mid- and long run other airlines would likely take over Adria routes. In this way, the potential and expertise of the well-qualified staff would be lost, said the minister.

The air carrier's management had already sought the ministry's help in spring. Počivalšek said that the government could have helped Adria Airways within the scope of the law in a way that would not constitute state aid.

"We could have helped them with promotion, but we demanded a clear business plan. Without knowing what is going to happen to them today, tomorrow or the day after, the state cannot give a single euro," he said, adding that the company failed to present the plan required in four months.

When acquiring the formerly state-owned company in 2016, the new owner pledged to restructure and preserve the flag carrier and to continue to develop the company in the future, which would create long-term positive effects on the state budget, economy and all stakeholders in society.

"It's more than obvious that this has not been the case, so we regret the attempts now to pin the sole blame for the company's troubles on the state," the Economy Ministry said.

"It's unacceptable that on the one hand the owner sets short deadlines for the state's response, while on the other it hasn't put forward in four months a business plan as a basis for any step the state could take."

Back in 2011 Adria Airways received a EUR 70 million injection from the state and creditor banks. The European Commission found the recapitalisation was in compliance with the EU's state aid rules for companies in troubles.

The company cannot benefit from new state aid within ten years after the last bailout. "When Adria Airways's business is healthy, the company will be able to ask for other forms of help because it cannot get them until then," said Počivalšek.

Due to a lack of liquidity Adria Airways today suspended most of its operations, except for its link to Lufthansa's hub in Frankfurt. Media have reported that Adria Airways' "ultimatum" to the government demanding up to EUR 4 million in bridging loan or guarantees expired last night.

All our stories about Adria Airways are here

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