A report from IEDC-Bled School of Management claims that Slovenia and Serbia have the most “hidden champions” in Southeast Europe, with these being successful and innovative but not well-known small and medium-sized companies, among the best in the world in terms of market share in their respective niche or among the top two in a region.

The European Bank for Reconstruction and Development (EBRD) co-financed the report and said that it was “based on field research in 2018 and 2019 in 22 countries in the central, eastern and south-eastern Europe (CESEE) region”. The country with the greatest number of “hidden champions” was Poland (with 11), followed by Belarus (10), Serbia (10) and Slovenia (10).

A PDF of the full report can be found here, although note that no company names are given

Airport / Audit / Wizzair

Ljubljana Airport yet to evaluate impact of Adria collapse

STA, 12 October 2019 - The CEO of the company operating Ljubljana airport cannot say yet how its business will be affected by the collapse of the air carrier Adria Airways, but he did say in an interview run by the newspaper Dnevnik on Saturday that the airport would definitely bear consequences.

"It's hard to say how business will go until the end of the year. But there will certainly be consequences," Zmago Skobir, the CEO of Fraport Slovenija, told Dnevnik.

Adria Airways's collapse is affecting the airport in two ways; one through the carrier's past operations and the debts it left behind, and the other through the current loss of income.

Until the end of September this year the airport had been seeing 2% growth in passenger numbers; the throughput by foreign carriers was up by 18%, while Adria Airways's was down by 10%.

Out of the 29 links under the summer schedule, including Adria Airways's, eight have been lost. Slovenia currently does not have links to Sarajevo, Tirana, Prishtina, Sofia, Skopje, Prague, Copenhagen and Vienna. "I don't think this is a critical situation, we still have 21 links," said Skobir.

In the long run, he finds it unlikely that links will be re-established with Tirana and Prishtina because these do not affect Slovenia's economy or tourism.

Out of those vital to Slovenian business and tourism Skobir mentioned Skopje for which efforts will be made to re-establish a link.

Flights to Prague will likely be resumed by Czech Airlines, and a service to Copenhagen will be re-established sooner or later, said Skobir.

Commenting on the impact of Adria Airways's failure on the country, Skobir said the important thing "is that we are linked with the world in quality and competitive ways and that as many tourists as possible leave their money in the country".

The essential thing is not by whom but how much the country gets by way of investment and tourism, he said, adding that taxes and social contributions were of secondary importance.

It will transpire by June or July 2020 what interest foreign carriers have in Slovenia, only then would it make sense to look for alternative solutions.

"I wouldn't prioritise founding a new flag carrier. Especially, since no business scenario in Adria in the past fifteen years proved successful."

The links the government was willing to subsidise do not appear to be necessary at all. "But let's wait for the market to do its job first, before assessing, based on analysis, whether we need extra links."

The airport has been trying for years to attract carriers such as Qatar Airlines or Emirates, "and I believe we'll see the day when Qatar or Emirates arrive", Skobir said.

"The key question is whether Slovenia as a market is interesting for long, let's say trans-ocean links; my answer is probably not for a long while yet. The market size is essential," he added.

MPs want Adria Airways privatisation audited

STA, 12 October 2019 - The parliamentary Finance Committee has decided to ask the Court of Audit to review the 2016 sale of Adria Airways to the German turnaround fund 4K, and to present its findings to parliament as soon as possible.

The decision was taken at a session late on Friday called by the opposition Left after the erstwhile Slovenian flag carrier declared insolvency and entered receivership at the start of the month.

Luka Mesec, the leader of the Left, noted that Slovenia Sovereign Holding (SSH) sold the airline to a fund whose capital, at EUR 25,000, equalled but a quarter of the symbolic sum it paid for Adria.

This was after more than EUR 90 million had been injected into the airline by the state in recapitalisations, plus EUR 3 million invested in the company upon privatisation.

"Given all that, you don't have to be a clairvoyant to predict a disaster," Mesec said, adding that he would like the institutions in charge to look into the sale and find answers for the present situation.

"As early as March pilots were warning of difficulties that would lead to the bankruptcy. However, the government didn't draw up any plan until September. Why did't you act," he challenged government officials.

He said that through the airline's bankruptcy Slovenia was losing not only its connections to the rest of the world and its competitive edge, but also a lot of expertise.

"I'm afraid dreams of a new airline are just a way for the government to throw sand in the eyes of the staff so they wouldn't have to face up to the fact that we've lost the air carrier."

SSH CEO Gabrijel Škof told MPs that Adria Airways had been on the brink of bankruptcy before the sale and that the buyer was supposed to make a turnaround.

He argued that the sale process was conducted in a professional and transparent way, and in adherence to international standards. All the bids were conditional on the seller being involved in recapitalisation.

"If we didn't sell it, Adria Airways would have likely gone into receivership at the time. The German fund submitted the best bid and recapitalised the company," Škof said.

He argued that the sale plus the EUR 3.2 million injection cost less than receivership would as the company had paid about EUR 10 million in the state budget a year in tax and social contributions.

Economy Ministry State Secretary Eva Štravs Podlogar said that alternatives were being studied how to fill the void created by the airline's bankruptcy, but could not present any details yet.

Andrej Šircelj, a deputy of the opposition Democrats (SDS), agreed that it should be scrutinised who was responsible for the company's demise, but disagreed with the idea the state should form a new airline.

He said that Adria Airways was clearly a company important for politics and its leverage in the economy. "The sale to such an owner was not a case of negligence but a premeditated act to bleed the company," fellow SDS member Franc Breznik commented.

Several MPs questioned the point of having a debate on the impact of privatisation after the company ended up in receivership. "Do you know what's this today? It's a wake," the Social Democrat (SD) Soniboj Knežak said, calling the session but a futile show for the public.

The problem of Adria Airways is economy of scale, which is an issue in Slovenia in other fields as well, said Jože Lenart of the Marjan Šarec List (LMŠ). "Add political interference in the economy, and we end up where we are."

Wizzair to fly from Ljubljana to Brussels this winter

STA, 12 October 2019 - The Hungarian low-cost carrier Wizzair will continue to fly between Ljubljana and Brussels in winter despite its initial decision to suspend flights for the 2019-20 winter season, Finance reports.

According to the online edition of the business newspaper, Wizzair will be operating flights between Ljubljana Jože Pučnik Airport and Brussels Charleroi Airport on Tuesdays, Thursdays and Saturdays from 19 December on.

Wizzair had initially planned suspending the link for the winter season because the route had not met its expectations. The carrier had planned to resume the flights on 31 March 2020.

Adria Airways, the German-owned Slovenian carrier which went into receivership on 2 October, had operated daily flights to Brussels.

In the wake of Adria's bankruptcy, the Belgian air carrier Brussels Airlines announced it would link Brussels and Ljubljana on six flights a week starting from 4 November.

Brussels Airlines, part of Lufthansa Group, had been flying between Brussels and Ljubljana a decade ago.

According to information on the website of Ljubljana Airport, the Lufthansa Group Airlines will be connecting the Zurich, Brussels, Munich and Frankfurt hubs with Ljubljana Airport as of mid-October.

SWISS will be operating five weekly services from Zurich to Ljubljana starting on 16 October. From October 27 onwards, the airline will be operating daily flights.

From its Frankfurt hub, Lufthansa will operate twice a day 14 weekly links to Ljubljana from 27 October when the winter schedule kicks in. Daily links to Lufthansa hub in Munich will follow as of 1 November.

Ex-Yu Aviation reports that former employees of Adria Airways are claiming that a foreign carrier, which cannot be named for confidentiality reasons, is planning to set up a new business based at Ljubljana Airport, one that will hire some of the staff who lost their jobs in the collapse of the Slovenian carrier. The new firm would lease aircraft and use the Air Operator’s Certificate of its foreign owner, making a rapid start to operations possible. More details can be found here, while all our stories on Adria are here

STA, 9 October 2019 - Slovenia remained 35th in the latest World Economic Forum's Global Competitiveness Report, scoring 70.2 points on a scale from 0 to 100, up from 69.6 points last year. It ranks just behind Portugal and ahead of Saudi Arabia, while Singapore claimed the throne of the most competitive among 141 countries.

Slovenia received the maximum 100 points for its macroeconomic stability and scored 90 points for the situation in the health sector to rank 36th.

In infrastructure, it received 78 points, which earned it 33rd place, and ranked 26th in labour force know-how and skills (75 points).

Slovenia was given the lowest score, 48 points, for the size of its market (82nd place), followed by innovation ability (58 points and 28th place) and product market (62 points and 30th place).

The country improved its overall performance calculated from 12 pillars, by 0.6 points compared to 2018, when it climbed 13 spots due to changes in the methodology.

The list was bottomed by Chad, while Singapore took over the top post from the US, which dropped to the second place because of trade wars led by its President Donald Trump. Hong Kong is third, followed by the Netherlands and Switzerland, which topped the list in 2017.

Germany lost four places to rank 7th and the UK lost one spot to place 9th.

The average score of the 141 countries involved in the survey this year is 61 points.

A PDF of the full report can be found here

STA, 9 October 2019 - Economy Minister Zdravko Počivalšek expects that a draft agreement creating safeguards for Slovenian suppliers of retailer Mercator after its transfer to Fortenova will be ready soon. He was assured today that the retail group would not be cut up into pieces.

Počivalšek met representatives of Mercator suppliers, its bankrupt Croatian owner Agrokor, Agrokor's successor Fortenova, and its key creditor, Russian Sberbank in Ljubljana on Wednesday following reports that Fortenova was planning to cut off the Slovenia-based core company from its subsidiaries in Croatia, Bosnia and Serbia.

Related: Secret Plans to Cut Mercator into Parts to Repay Owner’s Debt to Sberbank

Speaking to reporters, the minister said that such a slash-up of Mercator would be unacceptable for the government. He was assured at the meeting today that a plan to that effect was not in the making.

He reiterated Slovenia's desire for Mercator to be allowed to continue to grow and develop. Being Slovenia's largest grocer, Mercator is an important company for the country in terms of jobs, suppliers and the revenue it generates, Počivalšek said.

He added that the government expected that the Slovenian suppliers would preserve an equal status under economic terms in the new group, and that Fortenova ensures Mercator's growth and development, and keep the group headquartered in Ljubljana.

"If they can guarantee us that, we won't have any problem with Mercator's transfer to Fortenova," he said, even though he does not have direct leverage on the process.

He noted that he had told as much to Russian officials at the Saint Petersburg Economic Forum last year and during Prime Minister Marjan Šarec's recent visit to Moscow, so he was critical the matter had not been dealt with.

He expects that Slovenian suppliers can agree a draft deal securing their present position on Mercator shelves also in the future with Fortenova and Sberbank within 10 days.

The suppliers' representative Izidor Krivec said the agreement could be agreed next week, by which time it needs to be aligned with the commitments negotiated by Croatian suppliers of Fortenova, as well a mechanism defined to monitor whether the agreement is being honoured.

The commitments would roughly pertain to a five-year period, but Krivec believes that they can keep their position also in the future as the consumer would dictate the choice on store shelves.

Fortenova's business policy would give priority to local suppliers, while Slovenian suppliers would like to come first in Slovenia, and right behind local suppliers in other markets.

Krivec also said that they had been given clear assurances today that Mercator would stay headquartered in Ljubljana, and that it would preserve its comprehensive business system.

Krivec expects Fortenova officials to honour their promises. Fortenova is to develop Mercator as the leading retailer in the region, invest in it and boost it. If so, Krivec is not concerned about Slovenian suppliers losing their market shares.

Agrokor's assets cannot be transferred to Fortenova until it gets a regulatory approval and the go-ahead from the 56 creditor banks of Mercator, including the Slovenian state-owned SID Bank.

When asked whether the agreement protecting Slovenian suppliers would prompt SID Bank to give its go-ahead, Počivalšek said the decision would be taken once the agreement was clinched.

STA, 8 October 2019 - Adria Airways, a German-owned Slovenian airline in receivership since last week, ended 2018 with a net loss of EUR 18.6 million, up from EUR 5.4 million in 2017, shows the audited financial statement, which was released on Monday.

The air carrier's operating loss amounted to over EUR 16 million, up from EUR 3.3 million in 2017, with its negative working capital standing at EUR 14.2 million.

The airline's revenue, on the other hand, increased by 12.5% to EUR 179 million, of which the revenue from passengers rose by 1.5% to EUR 149 million.

By leasing its planes and flight crews to other airlines, Adria generated more than EUR 17 million in 2018, says the business report, which official receiver Janez Pustatičnik posted on the website of the AJPES agency yesterday.

The company attributed the loss to growing fuel prices (EUR 7.7 million) and to the cost of hiring planes with flight crews (EUR 5.5 million).

And while Adria carried 1.23 million passengers in 2018, up 1.5%, its occupancy seat rate dropped by 3.7 percentage points to 64%.

The financial statement also shows the company had 503 employees at the end of last year, a rise of almost 27% over the year before.

The auditor PwC gave the financial statement a qualified opinion because of Adria's manoeuvre with selling its brand in 2016 and then acquiring it back in 2018.

The auditor said Adria had actually never really lost control of its brand, so its sale was in fact presented in its books inappropriately.

The financial statement, which Adria had failed to release within the set deadline, was supposed to serve as the basis for Slovenia's Civil Aviation Agency to decide on whether the airline should keep its operating licence.

However, before the expiration of the deadline to submit it to the agency, Adria filed for receivership on 30 September, thus automatically losing the operating licence.

All our stories on Adria are here

STA, 7 October 2019  The official receiver of Adria Airways started serving notices of job termination to the airline's employees on Monday while pilots and cabin staff are reported to be interviewed with potential new employers.

The official receiver, Janez Pustatičnik told the STA on Monday that he started serving notices today, but he could not say when all of the 558 airline's employees would receive them.

Some of the staff are currently abroad, these will get termination notices by post, said Pustatičnik, who held first meetings with the employees on Wednesday, as the Kranj District Court ordered receivership for the company.

Those of the redundant workers who would like to claim unemployment benefit, need to register with the Employment Service and ask for the benefit within 30 days.

Those who register within three days after the expiry of the notice period, will be eligible for an allowance equalling 80% of the average of their salaries and the others to 60% of the average.

The receiver expects to be able to assess the scope and the duration of the receivership procedure by the time he compiles an opening report when the amount of registered claims, the size of the bankruptcy estate and a detailed state of the company's finances are clear.

The receivership was started at the request of the management of the German-owned carrier due to insolvency after the government declined its calls for aid. Unofficially, the company ran up EUR 90 million in debt.

Citing unofficial sources, the newspaper Finance reports that the Polish flag carrier LOT has conducted job interviews with Adria pilots, while cabin staff have received offers for jobs from Wizz Air, the Hungarian low-cost carrier.

According to Finance, LOT is looking for at least ten pilots for smaller aircraft, which suits Adria pilots well-being that they are licensed to fly Canadair aircraft, now rarely used planes worldwide.

Some of Adria Airways' major links have been taken over by foreign airlines, while the government has proposed legislative amendments that would make it possible to subsidise commercially unpopular links.

Speculation is also rife about potential incorporation of a new air carrier. Some media have been reporting that a foreign airline might step in and employ at least part of Adria staff.

All our stories on Adria are here

Local media are reporting that the government is considering setting up Air Slovenia, a new national carrier. This would take the place of Adria Airways, the former national airline that was sold to a Luxembourg-based investment company, “4k Invest”, in 2016, and is now in the early stages of bankruptcy proceedings, with all flights cancelled.

Adria Airways 1961 – 2018: A Brief History

Air Slovenia was proposed by Zdravko Počivalšek, the Minister for Economic Development and Technology, as establishing a new company would enable the government to provide subsidies for the carrier. While nothing is certain yet, the Minister claimed that the new national airline could launch services at the end of February 2020, with a ten to twelve aircraft and a schedule serving fifteen destinations.

All our stories on Adria are here