Business
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
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.
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.
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
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
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%.
STA, 27 September 2019 - While the Financial Administration (FURS) has just highlighted the continuing positive trend in the recovery of tax debt, it is bound to have a hard time recovering what are EUR 25 million owed by one of the biggest tax debtors in the country. Zlatan Kudić reportedly disappeared as a tax fraud trial against him was about to end.
According to Thursday's report by public broadcaster TV Slovenija, the former director of the Ljubljana company Maxicon, which went into receivership in 2012, has had an arrest warrant issued against him.
Kudić was undergoing a trial, along with two co-defendants, for tax evasion, money laundering and destruction of evidence.
The court ordered that he be detained when he stopped attending trial a few weeks ago and the police issued an arrest warrant, but so far to no avail.
According to TV Slovenija, Kudić and Maxicon have been erased from the list of tax debtors with the company's termination, but FURS could theoretically still go after the debt via a pecuniary claim in a criminal procedure.
The question, however, is whether Kudić will ever again be available to Slovenian courts and whether he officially has any assets at all, the report added.
STA, 26 September 2019 - Prime Minister Marjan Šarec has expressed regret about the developments at Adria Airways, sympathising with the passengers and the employees' families, but also noted that the air carrier is no longer state-owned and that the outlook for its rescue is not good.
Šarec instructed the relevant ministers on Thursday to weigh all the possibilities of potential aid to the German-owned airline, which is facing the treat of losing its operational licence due to a lack of liquidity.
"However, people need to be told clearly that the options are not good. I wouldn't like to paint an unrealistic picture so that the public opinion would be more favourable," Šarec said in New York on Thursday.
He noted that Adria Airways was sold by the state to the German turnaround fund 4K Invest in 2016 because the company was not doing well and needed a strategic owner.
"The owner is bad. It turned out Adria didn't come into good hands, and this fund which owns Adria then failed to present a financial plan requested by the ministry. In short, they behave completely frivolously."
He noted that a potential salvage of the company should be within the scope of the law. "To try a new variant, but I must say that like the passengers I don't trust Adria any more. I'm sorry to say this. I won't go into reasons from the past, but you know how it is. Those who cannot handle money, you can give them two millions today and they won't have them tomorrow."
The government cannot grant a loan guarantee to Adria Airways because it does not own it, Šarec said, adding that like in the case of retailer Mercator and some other companies "everything would be different today is a better owner was found for them when they were sold.
"As it is, throwing money while we don't know where the money will go and what comes of it, it is a bit risky."
Asked whether the government would help the carrier in case of a change in ownership, Šarec said that it would be a different story with a serious owner. Then we wouldn't have come into the present situation."
BAMC examines Adria’s finances
STA, 26 September 2019 - The Bank Assets Management Company (BAMC) has been looking into the financial situation in Adria Airways since Thursday morning to ascertain how long the money demanded by the air carrier's German owner would last, the business daily Finance has reported. The paper has also released the company's report for 2018,
The aim of BAMC's scrutiny, which comes under instructions from the government, is to establish how long the EUR 4 million that the company's German owner 4K Invest, demanded from the state as the condition not to file for receivership would last.
BAMC told Finance that it would not provide the money if it turned out the sum was not sufficient to rescue the company. BAMC also demanded of the Adria owner to submit proof of debt write-offs agreed with creditors.
Estimates by Finance's sources are that Adria would need about EUR 50 million merely to avoid a bankruptcy, and as much for sustainable operations.
Finance also cites estimates by experts that creating a new airline, which is another potential scenario offered by politicians, would cost some EUR 70 million.
Citing unofficial sources, the commercial broadcaster POP TV reported that BAMC suggested the government invest between EUR 15 million and 20 million in Adria on condition the company pay out on Friday the reminder of August pay to employees and settle its International Air Transport Association membership fee.
Economy Minister Zdravko Počivalšek told the STA today that the situation at Adria Airways was being examined by several institutions so that the government will take a decision on Friday or Saturday how to rescue the company to preserve Slovenia's air links with the rest of the world.
"We don't want to take decisions by heart, we don't want populist solutions, the figures will tell us what we need to do," he said.
It is in the government's interest to have a carrier that would link Slovenia well internationally. "If we come in a situation when we don't have such a carrier, the market will do its job, but I don't think we'll ever be linked with the world again as we are now," said the minister.
Adria Airways's audited 2018 report, released by Finance, puts its net loss for last year at EUR 18.95 million, up from EUR 5.44 million the year before, as revenue rose by 12.5% to EUR 179.08 million.
According to the report, Adria had EUR 2.63 million in capital in 2017, but last year its capital turned EUR 14.19 million negative.
The company's long-term debt amounted to EUR 21.5 million and short-term liabilities to EUR 54.6 million.
The auditor issued a qualified opinion on the report, for one thing because it established that Adria did not in fact lose control of its brand in December 2016, so the accounting treatment of the company from that year on did not lead to a fair value of events.
According to the auditor's calculations, unconsolidated receivables as of the end of 2018 should be reduced by EUR 5.6 million, and by EUR 5.4 million at the end of 2017, while the liabilities as of the end of 2018 should be reduced by EUR 0.8 million and the accumulated loss increased by EUR 4.8 million.
All our stories on Adria are here
STA, 25 September 2019 - The wine grapes harvesting season, which is in full swing, has a bitter side taste this year as well, as winegrowers and winemakers continue to struggle with sales in the face of large amounts of cheap imports.
The problematic situation was presented to the press on Wednesday by the Vinis Association of Slovenian Winegrowers' and Winemakers' Societies.
Its president Alojz Slavko Toplišek told the STA the growers had "truly found ourselves in a situation when we don't know what to do with the produce we invested our labour and money into through the whole year".
While the exact estimates of the amounts of grapes that could remain unpicked are not available yet, Toplišek said the key problem were excessive imports of cheap wine.
"We are at a major crossroads. We can either allow the market to completely quash us, or we can preserve our countryside," he warned.
He pointed out that the developments are already affecting the demographic situation at a number of farms where even small vineyards were an important source of income in the past.
Suffering the most are winegrowers with 3000 to 5000 square metre vineyards and without their own market, Toplišek said, while also noting the issue of local winemakers who already have established market routes being prohibited by law to buy grapes from smaller growers.
He feels the government should provide some protective measures for such cases, some "basic personal income", since those persisting with wine growing are for instance also preventing the overgrowing of rural zones.
Vinis in general has good relations with the Agriculture Ministry and has acknowledged the state's efforts in this field, with Toplišek pointing out that a ministry council for wine growing had held its maiden session today and also included a representative of the association.
Slovenian growers also struggled with sales seriously last year, which saw very high yields. Production increased by 42% compared to 2017, yields had however been poor in 2016 and 2017.
Slovenian winegrowers worked 15,630 hectares of vineyards in 2018, down from 15,839 the year before. In 1991 Slovenia still had over 20,000 hectares of active vineyards.
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
