Business

02 Oct 2019, 17:54 PM

STA, 2 October 2019 - The Kranj District Court launched today receivership proceedings for Adria Ariways, after the German-owned air carrier filed for receivership on Monday.

The procedure, in which creditors will have three months to file their claims, will be managed by receiver Janez Pustatičnik.

Passengers who had bought tickets for Adria's flights which were subsequently cancelled have been urged to report their claims as well.

Those who bought the tickets with their bank card can ask their banks for a refund, the Market Inspectorate said today. If their motion is denied, they can turn to the Slovenian Bank Association.

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

Adria had been struggling with financial difficulties for some time, with the problems deepening further after the sale, even though the new owner announced growth, several capital increases and a new strategic partner.

Adria ended up selling all of its planes, while several of those rented were confiscated in recent years by leasing companies due to unpaid debts. The company, which employs 558 people, also owes part of the August wages and has reportedly failed to pay the social contributions for September.

After the management filed for receivership on Monday, the Civil Aviation Agency also automatically revoked the air carrier's operating license.

Other airlines are already moving to fill the void created by Adria's collapse. The German Lufthansa and its subsidiary Swiss International Airlines, both of which are members of the Star Alliance, will be offering flights connecting Ljubljana to Frankfurt, Munich and Zurich, in the winter season.

Next to the links with Brussels and Vienna, these connections are considered crucial for Slovenia's connectivity with the world.

The Belgian air carrier Brussels Airlines, also part of Lufthansa Group, is introducing six Brussels-Ljubljana flights a week. Tickets are available for sale as of today, while the first flights are scheduled for 4 November.

Several other companies already flying to Ljubljana are also increasing the number of flights to the Slovenian capital and using bigger planes for the route to adjust to the larger number of passengers.

Receivership proceedings were also launched today at the Kranj District Court for Adria's subsidiary Adria Airways Letalska Šola, which used to train Adria's pilots. Blaž Poljanšek was appointed receiver.

Adria's school for pilots was set up in 1980 in cooperation with the Ljubljana Faculty of Mechanical Engineering. Initially, it was to train only future Adria pilots, but later offered training for pilots of private sports planes as well as professional pilots of the highest ranks. It has trained more than 2,800 pilots.

Its last year's revenue topped EUR 300,000, while net lost almost reached EUR 340,000. The company also had more than EUR 840,000 in short-term liabilities.

All our stories about Adria are here

02 Oct 2019, 16:40 PM

STA, 1 October 2019 - Wine growers in Brda, one of the most famous wine growing districts in Slovenia, are satisfied with this year's grape harvest despite the overall numbers being lower than expected - the wine is expected to be of excellent quality.

Representatives of the wine cellar Klet Brda, the largest wine producer in the western region, told the press on Tuesday that the company and its partners produce a total of 6,300 tonnes of grapes this year.

This is 15% below the average expected annual yield, but the quality of wine is expected to be excellent by all parameters, the company's chief enologist Darinko Ribolica said.

Vineyard owners in Brda are satisfied the most with rebula, whose quantity was also the largest, followed by merlot. They are satisfied with all red grape varieties, with the sunny and warm September making for excellent quality.

This year's prices will be similar to last year's, but will be higher in the highest quality class. The prices will range from EUR 0.40 to EUR 1.20, compared to last year's average price of EUR 0.64 per kilogram.

The special guest for this year's grape picking session for the press was former Formula 1 pilot Ralf Schumacher, who owns a Mediterranean cuisine restaurant near Germany's Cologne.

Klet Brda director Silvan Peršolja added that, while its wine was consumed on all continents, the company was not planning to enter new markets, but strengthen its brand on the existing ones, from the US and UK to China.

02 Oct 2019, 10:30 AM

STA, 1 October 2019 - Krka, the Novo Mesto-seated pharmaceuticals group, has launched a new research and development centre to nearly double its R&D, and control and analysis capacities.

"With the new facility, which has state-of-the-art equipment for laboratories, analysis and technology, we've almost doubled Krka's development as well as control and analysis capacities, thus significantly improving R&D, which is at the core of Krka's vertically integrated business model," said Aleš Rotar, R&D director.

The Research and Control Centre 4 (RKC 4) is a EUR 55.6 million investment located on the outskirts of Novo Mesto, and is connected with a bridge to RKC 3 and then on to RKC 1.

The eight-storey building with 18,000 square metres of offices accommodates new control and analysis labs and R&D areas, CEO Jože Colarič said before Tuesday's inauguration.

Rotar stressed the centre was especially important for pilot development of solid pharmaceuticals as a key component in the development of new products.

The company believes RKC 4 will enable it to carry out advanced R&D tests at the very early laboratory stage and define the key features of a product in early stages.

At today's inauguration ceremony, Prime Minister Marjan Šarec labelled Krka as one of Slovenia's flagship companies, praising the company for its exports trends, development strategies, independence and its role in the local community.

He considers the investment an important milestone and an opportunity for development.

In the first half of 2019, the group posted a net profit of EUR 139.9 million, up 37% from the same period in 2018, on EUR 761.8 million sales revenue, up 12%.

The plan for this year is to finish with EUR 1.38 billion in sales revenue and EUR 172 million in net profit.

The group allocates 10% of its revenue for R&D and new technologies, and has more than 170 development projects for new products are under way.

It generates 29% of its sales with the new medicines which they have started selling over the past five years.

Related: Prevalje Will Be Lek’s Global Centre for Technical Operations, Antibiotics Production Will Go to Austria

02 Oct 2019, 09:03 AM

STA, 30 September 2019 - A piece of land east of Ljubljana's central station, which has been lying abandoned for years, is set to get a mixed residential and commercial building within two years, shows a recent release by the Environment Agency. The Masarykova project, planned by developer K. Tivoli, is expected to include 81 flats, a ground floor store and a car park.

The agency announced last week that K. Tivoli, which also built the Belle vie Tivoli housing complex near Ljubljana's Tivoli park a while ago, does not need to conduct an environmental impact assessment and obtain an environmental permit for the project.

Aside from providing housing for up to 300 people, the project involves an underground garage with 90 parking spaces and an extended ground floor, which is expected to be used by German retailer Lidl and three smaller bars. The total surface area is estimated at 16,910 square metres, 12,327 of which above ground.

The property on Masarykova street was owned by the municipal housing fund until last year. The newspaper Dnevnik reported it was sold for EUR 2.5 million to Iskra Impuls. Together with household appliance maker Gorenje, the Kranj-based engineering company owns Gorenje Project, one of two partners in K. Tivoli, the other being builder Kolektor Koling.

01 Oct 2019, 14:18 PM

STA, 1 October 2019 - Lek, the Slovenian subsidiary of Swiss multinational Novartis, has announced phasing out the production of antibiotics in Slovenia's Prevalje in two years' time and moving it to neighbouring Austria. In the meantime, Prevalje will become one of the two locations of Novartis's emerging global centre for technical operations. 

The news comes a month after the company said it would not expand production in the northern town of Prevalje despite having just built a new facility there.

Along with Hyderabad in India, Prevalje will become one of the two locations of Novartis's new global centre which will support the multinational's entire production network, Lek's new director general Robert Ljoljo said on Tuesday.

"The centre will be a hub for logistics, the supply chain, purchases, quality control, production science and technology, and engineering," he told the press after today's meeting with employees.

The new centre in Slovenia will employ "several hundred people", mostly experts in logistics, quality control and production science and technology, he explained.

He said that by assuming an additional role within Novartis, Lek was consolidating its presence in Slovenia and "pledges to remain in Koroška".

All Prevalje workers will be given a chance to retrain for new jobs, explained Roman Burja, director of Antiinfektivi Prevalje, the name of Lek's Prevalje company.

As production is being phased out in the coming two years, new jobs will be created gradually and the production will be gradually moved to Austria's Kundl, he added.

Lek has 250 employees and another 70 agency workers at Antiinfektivi Prevalje.

Production has already been suspended and the employees are on a paid leave, coming to meetings with their bosses to discuss the company's future plans for Prevalje.

Lek managers also met the local authorities, with Prevalje Mayor Matic Tasič hoping "they realise in Ljubljana that Prevalje could well be the seat of the new centre".

Ljolja meanwhile also said that TAB Mežica, a local maker of starter batteries for cars and industrial batteries, was interested in buying the recently-built Lek production facility.

A letter of intent has already been signed, he said, but would not disclose any other details.

Lek also expects some of its Antiinfektivi Prevalje employees to get jobs at TAB, which is planning to branch out into production of lithium-ion batteries.

01 Oct 2019, 12:30 PM

STA, 1 October 2019 - After almost 60 years since its establishment, Adria Airways, Slovenia's flag carrier privatised in 2016, is grounded. By selling it to German fund 4K Invest, the state claimed it wanted to give the troubled company a fresh impetus, but with the management filing for receivership, the opposite scenario has happened.

March 1961 - Charter airline Adria Aviopromet is set up, operating DC 6 planes. In December of the same year, it operates the first flight with a home crew.

1964 - Adria Aviopromet gets its own airport in Brnik, after landing and taking off at Croatia's Zagreb airport.

1968 - Adria Aviopromet introduces the first regular route, between Ljubljana and Yugoslavia's capital Belgrade, and is renamed Inex Adria Aviopromet.

December 1981 - An Inex Adria Aviopromet plane crashes into Mt San Pietro in Corsica. All 180 people on board die.

1986 - The company is renamed Adria Airways. In the years to come, the number of routes grows, and so does the number of passengers.

25 June 1991 - Slovenia declares independence, and Yugoslavia's civil aviation administration soon bans Adria Airways from flying for three months.

1992 - Adria Airways relaunches its business and focusses on regular routes rather than charter flights.

1995 - The company enters a code share agreement with Germany's Lufthansa.

2004 - Adria Airways becomes a member of Star Alliance, the world's largest global airline alliance.

2010 - The airline establishes Adria Airways Tehnika, a subsidiary for the maintenance of its fleet.

2011 - Due to financial trouble, Adria Airways sells its 100% stake in Adria Airways Tehnika to two state-owned companies and is recapitalised by the state with EUR 50 million.

2012 - An international call to sell a 74.87% stake in Adria Airways is published, but falls through. The European Commission launches a probe into state aid.

2014 - The European Commission establishes that four state capital injections Adria Airways received in 2007-2011 were not in breach of EU rules.

July 2015 - A call to sell a 91.58% stake in Adria Airways is published, with an almost 70% stake held directly by the state and the rest indirectly through state assets managers.

January 2016 - A contract to sell the 91.58% stake to the German turnaround fund 4K Invest is signed. Before selling it, the state recapitalises the company with EUR 3.1 million and receives purchase money to the tune of EUR 100,000.

March 2016 - The privatisation is completed. CEO Mark Anžur hands over to Arno Schuster as the last Slovenian manager at its helm.

July 2017 - Through a subsidiary, Adria Airways takes over Swiss regional airline Darwin Airline, which in November files for bankruptcy. Swiss prosecutors then open a probe into financial irregularities.

February 2018 - Schuster resigns as CEO, and is replaced by Holger Kowarsch.

summer 2018 - Due to a shortage of staff, Adria Airways starts merging flights. Its fleet grows to 21 planes, the highest number ever.

December 2018 - Despite a capital injection of EUR 4 million from Adria Airways owners, the Civil Aviation Agency threatens to revoke its operating licence.

January 2019 - The Civil Aviation Agency finds the airline is solvent in the long-run.

February 2019 - STBE, a company said to be the owner of Adria Airways brand, is folded into Adria Airways to increase its capital.

June 2019 - Adria Airways is cancelling ever more flights.

September 2019 - Pilots threaten to go on a strike, but the two sides manage to sign a new collective bargaining agreement.

10 September - Adria Airways delivers to the Civil Aviation Agency an audited financial report for 2018. Nine days later, the agency bans it from flying with two CRJ900 Bombardier planes.

24 September - Adria Airways stops flying to all destinations expect once a day to Frankfurt and back to Ljubljana.

25 September - Adria Airways is given until 2 October to provide a financial restructuring plan, or else it would lose its operating licence.

30 September - As the government discusses Adria Airways' financial situation, Economy Minister Zdravko Počivalšek says receivership seems to be the most viable option. The management files for receivership as it cancels the remaining flights, and the airline loses its operating licence. Počivalšek indicates the state could set up a new air carrier.

All our stories on Adria are here

01 Oct 2019, 11:43 AM

STA, 30 September 2019 - The Slovenian Chamber of Commerce and Industry (Gospodarska zbornica Slovenije  - GZS) and the Council of Saudi Chambers of Commerce and Industry signed a memorandum of understanding to facilitate cooperation, as a business forum was held at the GZS in Ljubljana on Monday.

Saudi Arabia is Slovenia's 33rd export market and 36th in terms of imports.

GZS director general Sonja Šmuc highlighted the constant growth in trade between the two countries.

She also drew attention to the threat of trade wars which could significantly affect future trade growth at the global level.

Šmuc labelled today's signing of the memorandum of understanding as an opportunity for strengthening bilateral cooperation.

With the memorandum, the Council of Saudi Chambers has gained access to the GZS partnership network with more than 160 chambers of commerce.

The council's vice chairman Munir bin Saad said the Ljubljana meeting was an excellent opportunity to strengthen economic cooperation, in particular in tourism, the agri-food industry and commercial business.

The forum, which was attended by more than 40 Slovenian and Saudi business executives, also featured a number of bilateral meetings.

The Saudi delegation also met Foreign Ministry State Secretary Dobran Božič, with the ministry saying in a press release that this was the first large delegation of Saudi government and business representatives in 19 years.

The ministry also said that the visit was taking place in the context of Slovenia's efforts to diversify its foreign trade and enter new markets.

Saudi Arabia is Slovenia's biggest trade partner in the Persian Gulf, with trade growing steadily, accompanied by efforts to boost cooperation in the service industries and investments, the ministry said.

In the coming days, the delegation will also visit the ministries in charge of technology and infrastructure, as well as the SPRIT agency, the Koper port and the Ljubljana Jože Pučnik Airport, as well as various investment funds and high-tech companies, the ministry announced.

30 Sep 2019, 16:55 PM

Updated: 18:55, 30 Sept. 2019

STA, 30 September - The management of the struggling air carrier Adria Airways filed for receivership on Monday. The Kranj District Court is to decide on the proposal within three days. All Adria flights scheduled have been cancelled.

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 in such a situation.

On news of the proposal, the Civil Aviation Agency revoked Adria's operating license, which is an automatic measure when a carrier files for receivership.

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

In recent days, the Bank Asset Management Company (BAMC) and Slovenian Sovereign Holding (SSH) conducted a detailed analysis of Adria's situation 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, Economy Minister Zdravko Počivalšek said, suggesting Adria would need EUR 28 million to start operating at least remotely normally again.

"This would entail us taking over a large debt and enabling the owner to avoid any accountability. This would be irresponsible to the citizens and the budget," he 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-demand principle, but it could take several few months and there is no guarantee the flight connections established would benefit Slovenia's economy, Počivalšek said.

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

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

That a new company could be up and running quite fast was indicated by the director of the Civil Aviation Agency, Rok Marolt, who said a new company could get an operating licence quite quickly if the state was behind it.

"If we're dealing with a partner who knows their business, knows what they want, what planes they will have, knows the maintenance programme and all EU regulations", then this could happen quickly, he told the newspaper Večer.

It would, however, take a bit longer for a new carrier to obtain its air operator's certificate (AOC), said Marolt, indicating it could take a month or two.

However, the government believes such a project 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, Europe's largest carrier and Adria's main partner so far.

Lufthansa responded by saying they would "not comment on media speculations".

A political consensus on a new company would also have to be reached at home. It would also need to be examined how much the sate would have to invest annually in such a company. The Economy Ministry estimates the figure would range between 4 and 5 million euro.

Meanwhile, Adria employees are rather critical of the government's handling of the situation.

The group of employees pushing for a viable solution for Adria believe the government has not chosen the best scenario for the company or Slovenia, so they demand it presents a financial analysis on the basis of which it decided there was no point in saving Adria.

The group also wonders why the employees have not been invited to talks on a solution, and expect the government to resign if it turns out Adria's restructuring is the best solution.

Fraport Slovenija meanwhile regretted that Adria, its biggest business partner, ended up in receivership. The company said it would focus on ensuring that the airport is well-connected.

30 Sep 2019, 11:54 AM

STA, 30 September 2019 - The government will examine today reports on troubled flag carrier Adria Airways compiled by several state institutions and discuss potential steps to keep Slovenia connected with relevant destinations via Ljubljana airport. Adria's management also expects the owner, the German fund K4 Invest, to say whether it will pursue financial restructuring.

With several of its planes grounded and the bulk of flights cancelled, the Economy Ministry called on the relevant state institutions last week to examine Adria's financial situation.

According to unofficial media reports, the probe showed Adria having around EUR 90 million in debt and needing EUR 30 million to continue with operations, substantially more than the carrier's representatives allegedly claimed in recent days.

It is still not clear how the government will proceed, but the Infrastructure Ministry has already prepared changes to the aviation act to keep Slovenia connected to the world in case of Adria's bankruptcy. There has also been speculation the government could let Adria go into receivership and then found a new company.

PM Marjan Šared said on Sunday that Šarec government was getting ready for the next period, be it through a new company or by securing links needed by Slovenia via other carriers. He repeated he did not trust Adria's leadership, saying it obviously perceives the state as a dairy cow "that needs to be milked for every cent that can be squeezed out and then taken nobody knows where".

Adria's management meanwhile expects K4 Invest, which bough the carrier from the state in 2016, to say today whether it plans to pursue financial restructuring. A confirmed restructuring plan is a condition for Adria to preserve its license and the deadline for it set by the Civil Aviation Agency is Wednesday.

Should K4 fail to present a plan, this would very likely mean receivership and thereby an automatic license loss for the carrier.

Adria was already hit this weekend by a fine for the sale of tickets for flights scheduled for last Thursday and Friday, which the management must have known will not be carried out. The Market Inspectorate said the air carrier had been misleading customers.

Adria, which was only flying to Frankfurt in recent days, announced it would execute 11 flights today: to Frankfurt, Munich, Brussels, Zurich and Vienna. Return flights should be carried out for all these destinations as well, while Adria also plans to fly from Ljubljana to Tirana.

All our stories on Adria are here

27 Sep 2019, 16:45 PM

STA, 27 September 2019 - The flight cancellations by Slovenia's troubled airline Adria Airways have increased demand for and accordingly the supply by rival carriers already operating the Ljubljana route. The first changes are already being made to the winter schedules, while new carriers are reportedly also expressing interest to start flying to Ljubljana.

The airport's operator Fraport Slovenija told the STA on Friday that current data showed Air France increased the number of flights per week from six to 13 and is also using larger capacity aircraft if needed.

LOT Polish Airlines added one flight to its seven per week and is also flying more frequently with the larger Boeing B737.

Air Serbia is also frequently resorting to the Airbus A319 solution in place of the smaller ATR planes, Montenegro Airlines has increased the number of flights from four to five, and Russia's Aeroflotis is also increasing capacity by using Airbus A319 planes instead of the Sukhois.

Turkish Airlines is preserving its number of flights so far, but Fraport said it would secure larger planes if needed.

The airport operator said Adria's cancellations had also boosted interest in the airport on the part of new carriers, but no details could yet be provided.

Also responding are airports in neighbouring countries, with Austria's Klagenfurt airport for instance posting an ad in the Slovenian newspaper Delo.

The Graz airport in Austria could also benefit, as Lufthansa has announced it would revive its Graz-Frankfurt route at the end of October.

Also noted have been ads by foreign carriers which are inviting Slovenian pilots among their ranks.

Meanwhile, Adria announced today it would execute but two evening flights to Frankfurt this weekend.

For Monday, the plan is to execute 11 flights: to Frankfurt, München, Brussels, Zürich and Vienna. Return flights will be carried out for all these destinations as well, while Adria also plans to fly from Ljubljana to Tirana, the company said today.

Adria's owner, the German turnaround fund 4K, is still waiting for the government to decide whether to grant it the EUR 4 million in aid which 4K claims can prevent receivership. According to the newspaper Finance, a decision could already come today.

It is unlikely that aid in this form will occur. This has also been stressed by Prime Minister Marjan Šarec, while Economy Minister Zdravko Počivalšek said Adria would not get a single euro from the state as long as it is owned by 4K.

All out stories about Adria are here

27 Sep 2019, 14:15 PM

STA, 27 September - Employer representatives announced at Friday's session of the Economic and Social Council (ESS) they were withdrawing from the industrial relations forum because bills were being filed in parliament without any regard for the forum. The trade unions followed suit and the head of the ZSSS trade union confederation resigned as the ESS president.

The latest development that angered the employers was Wednesday's decision of the Left, an opposition partner of the minority government coalition, to end a deadlock in talks with the coalition and table a bill that would in effect abolish supplementary health insurance and replace it with a progressive levy that would increase costs for employers.

Slovenian Employers' Association (ZDS) secretary general Jože Smole told the STA that this had been just the most recent blow, with the council being completely sidetracked under this government. He went on to list several pertinent legislative proposals, all of which were tabled by the Left.

Smole said it all began with the raising on the minimum wage, continued with the proposal to raise wages for students and later with proposed changes to the labour relations act that would give all parents a paid day off on their child's first school day.

Smole stressed that even though all of these changes had a major impact on the social partners, they had not been supplied with any material, analysis, calculations "on the basis of which we could discuss things, let alone decide on them".

"Social dialogue is dead," he said, adding that legislative proposals could no longer be affected by the social partners once they were filed in parliament.

The ball is now in the court of Prime Minister Marjan Šarec, Smole summarised the position of the employers.

Commenting on the situation, Labour, Family, Social Affairs and Equal Opportunities Minister Ksenija Klampfer told the STA that she had warned the Left on several occasions that "this is not how things should be done".

The filing of bills without coordinating them with the ESS also bothers the representatives of trade unions, who thus joined the employers, the ZSSS's Lidija Jerkič told the STA, adding she also resigned as the council's head. Her term would have expired at the end of October.

The employers said they were withdrawing until further notice, while Klampfer said she would try to solve the situation as soon as possible.

Notably, before suspending the forum, the social partners okayed both legislative proposals on the agenda of the session, one dealing with the minimum monthly unemployment benefit and the other equalising women's and men's pension rates for those with 40 years of pensionable service.

The Labour Ministry wants to increase the minimum monthly unemployment benefit from EUR 275 net to EUR 392 net while simultaneously stiffening conditions.

The proposed EUR 530 gross, or EUR 392 net, would level the minimum unemployment benefit with the basic minimum income for single-person households.

As for the pension rate, the plan is to increase it to 63.5% of the long-term average wage by 2025. This rate is already in place for women, while for men it presently stands at 57.25%.

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