Adria Crisis: All But Frankfurt Flights Suspended Till Friday, Company Has One Week to Present Restructuring Plan

By , 25 Sep 2019, 18:07 PM Business
Ljubljana Airport Ljubljana Airport Wikimedia - Jeremy Segrott CC by 2.0

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STA, 25 September 2019 - Slovenian carrier Adria Airways has extended its suspension of operations at least until Friday. All flights except one daily flight to and from Frankfurt will remain grounded.

"Adria Airways continues active talks with potential new owners and principal creditors and it remains committed to achieving a positive outcome for all," reads a press release circulated on Wednesday.

The continuation of suspension adds to the woes of the company, which is teetering on the brink of bankruptcy after months of delays, cancellations and questionable management decisions.

On Monday evening it abruptly announced it was grounding all of its flights for two days, which was followed by news that creditors are stepping up to seize aircraft it is currently leasing.

Adria given a week to present restructuring plan

STA, 25 September 2019 - The Civil Aviation Agency (CAA) has given the struggling Slovenian airline Adria Airways a week to submit a confirmed financial restructuring plan or otherwise its operational licence will be revoked, CAA director Rok Marolt told the press after meeting Adria management on Wednesday.

The restructuring plan must be supported among other things with signed lease contracts for aircraft and an air operator's certificate (AOC), according to him.

The ultimatum comes after the German-owned airline suspended almost all of its operations yesterday due to financial issues, with all companies leasing the aircraft to the company reportedly threatening with withdrawals.

The decision was made at an oral hearing at the agency's seat involving representatives of Adria Airways, including officers responsible for safety and the financial director.

If Adria fails to provide the required documentation in a week, it will no longer be permitted to operate commercial flights, and if it does, the CAA will make a quick decision about whether the proof is solid enough for the licence to be preserved.

Marolt told the press conference in Ljubljana that the agency would no longer approve recapitalisations of Adria with "various merger manoeuvres, transfers of brands and similar. Even guarantees from a potential strategic partner would need to be solid."

Asked how much fresh capital Adria would need, he said that it was a "high amount of money, tens of millions of euro", adding that he would not comment on the 2018 annual report as it had not been published yet.

The management of Adria Airways has meanwhile given the owner, the German turnaround fund 4K Invest, until Monday to decide whether it will embark on financial restructuring of the company which unofficially owes up to EUR 60 million in debt.

If they decide for financial restructuring, they will have 30 days to implement it, and in the opposite case the company is likely to end up in receivership, which means automatic revocation of operational licence.

In order to regain licence, Adria would need to submit proof that it has enough funds to secure safe flight operations in the next 12 months.

The carrier is insolvent under two criteria and the only remaining criteria it meets is that it has paid out a majority of outstanding wages to employees.

A quarter of wages for August has not been paid and proof that this was done in the meantime is what the agency will expect to be on its table in a week.

The CAA also ordered Adria today to formally ground two Bombardier CRJ 900 and three Airbus A319 aircraft based on requests from the companies which have leased them to the airline.

The company's AOC currently features ten aircraft - six Bombardier CRJ 900s and four Saab 2000s, but Marolt revealed that the agency had already received requests from owners for deletion of six aircraft from the certificate.

As for safety, he said that the aircraft operated by Adria Airways were safe and added that the company's management had assured him that there were enough funds to provide safety of flights scheduled to be carried out in the coming days.

"If there were any doubt about safety, Adria would not be flying even a minute," Marolt said, adding that immediate measures would be taken if any signs of safety risks were detected by the deadline for the restructuring plan.

All our stories on Adria are here

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