Business
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
STA, 24 September 2019 - Strapped for cash, Slovenian carrier Adria Airways suspended virtually all its flights for Tuesday and Wednesday, causing frustration among passengers and prompting calls for help from the government. The latter is adamant not to give money to the company under the existing owner, German turnaround fund K4 Invest.
"The decision to suspend aircraft operations is the consequence of the current lack of access to fresh money that the carrier needs to continue operations," the company said in a press release late on Monday, prompting speculation about a looming bankruptcy.
Although the carrier has been beset by delays and cancellations for months, media reports suggested the decision to suspend operations from Adria's bases in Ljubljana, Prishtina and Tirana followed the expiry of Adria officials' ultimatum to the government to provide a EUR 4 million loan guarantee.
The decision affected all routes linking Slovenia's capital with Amsterdam, Brussels, Copenhagen, Manchester, Munich, Paris, Podgorica, Praga, Prishtina, Sarajevo, Skopje, Sofia, Tirana, Vienna and Zurich. However, Adria did say it would fly out to Frankfurt on Tuesday and back on Wednesday.
Flight cancellations caused a lot of frustration for passengers at Ljubljana Jože Pučnik Airport, especially among foreign visitors, many of whom did not learn about their flights being cancelled until after they had arrived at the airport.
The cancellations prompted the Polish government to dispatch its own jet to get the Polish volleyball team from the Netherlands, where they beat Germany in the quarter-finals of the Eurovolley, to Ljubljana to play Slovenia in the semis on Thursday.
Ljubljana airport operator Fraport Slovenija said it was helping passengers that had arrived at the airport for the morning flights - the suspension was announced just before midnight - and had arranged transport from the airport for them.
It is not clear how many passengers have been affected because Adria has kept communications with the media to a minimum. But the figure is likely substantial, as the suspension also affected airlines for which Adria operated flights on a contractual basis.
More details are expected tomorrow as the Civil Aviation Agency conducts a hearing in a procedure concerning the airline's operating licence. The agency's director Rok Marolt said they were closely monitoring the situation at the carrier.
Adria's woes are already affecting hoteliers, who are due to meet Ljubljana tourism officials and companies providing shuttle bus links between Ljubljana and other airports tomorrow in a bid to find solutions.
Concern over flight cancellations has also been expressed by businesses, with fears that increasing numbers of passengers will be travelling abroad from foreign airports. They urged the government to find alternative solutions.
"Tourism has already suffered major economic damage due to a low volume of lines operated by the domestic flag carrier, and in the future our wings will actually be clipped," the Slovenian Tourism Board said, urging the government to save Adria.
An appeal for a government bailout also came from Adria pilots, whose union said that the state was responsible for the situation because it sold the company "to incompetent owners" so they "expect the state will assist in the resolution of the situation".
Having struggled for years, Adria was sold to 4K Invest for a mere EUR 100,000 in 2016. It received several state-sponsored capital injections between 2007 and 2011, including a EUR 50 million cash infusion in 2011 and a EUR 38.4 million debt-to-equity conversion the same year.
Economy Minister Zdravko Počivalšek ruled out investing any money into the company under the current owner, which he blamed for the situation, saying that the only thing that could save Adria was a well thought-out restructuring plan, agreed with the creditors.
"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," the minister said, noting that Adria could not get state aid again.
A solution whereby the state would help Slovenia preserve its carrier, Adria's expertise of 60 years, and its staff, while not helping its current owner also appears to be favoured by political parties, with the Left proposing the company be taken over by employees.
Meanwhile, the Infrastructure Ministry has drawn up a bill that would allow the government to subsidise selected air links from Ljubljana, including to Brussels. The bill could be adopted as early as this week, and, providing clearance from the EU Commission, would take effect if Adria was grounded for good.
The carrier itself said it was busy looking for solutions together with a potential investor, but previous attempts to find a strategic partner failed or turned out to be merely preliminary talks with few if any prospects of succeeding.
The decision to temporarily suspend operations came less than a week after two of Adria's leased aircraft were repossessed by their owner over unpaid debt. Media reports suggest Adria owes up to EUR 60 million in debt.
STA, 24 September 2019 - Flight cancellations by carrier Adria Airways have caused a lot of frustration for passengers at the Ljubljana Jože Pučnik Airport on Tuesday. Long lines have formed in front of Adria's information desks, as many passengers learnt about the cancellations only after they arrived at the airport.
Adria Airways has cancelled all of its flights scheduled for today and tomorrow, with the exception of flights to Frankfurt. The airline seems to be at a dead end, having ran out of money. The fate of what used to be Slovenia's flag carrier will expectedly be known in the coming days.
Meanwhile, at Slovenia's biggest airport passengers are frustrated about being stranded and receiving little help from the airline.
Two Americans who are supposed to fly to Texas and California via Munich later today were angered by the fact that they had not been informed about their flight being cancelled before arriving at the airport this morning.
"We've received no phone message, no email, no message whatsoever," one of them told the STA, adding that they booked their flights without any problems a week ago.
Adria personnel advised them to turn to the agency that booked their flights, but the agency sent them back to Adria. "They can't offer us a hotel, or transportation, they can't offer anything. At the same time, they can't put us on another flight because all flights are full."
They do not know what to do. They intend to contact Lufthansa once again. They flew to Europe with Lufthansa and the carrier also booked their flights with Adria. "I don't know where we'll end up. We're trying to stay calm, but we are far from happy."
A Massachusetts couple, who were supposed to return home today via Frankfurt, said they had not received any help. "They've given us information about EU rules that say carriers need to help passengers in case of flight cancellations or delays, but they don't follow the rules."
They were instructed by Adria to send them receipts proving additional cost incurred and do not know yet what they will do. They intend to go back to Ljubljana and probably stay another couple of days.
A man from Rijeka, Croatia, who has booked a flight to Tirana was very critical about being stuck at Brnik airport. "This is a disaster." He was given the passenger rights leaflet but was not offered a different flight to Tirana. But even that would not have helped him. "I need to be in Tirana today. But I won't be."
A couple from Australia, who visited family in Velenje and was supposed to return today through Frankfurt, arrived at the airport hours early after hearing about Adria's troubles on the news. Adria helped them get a different flight from Zagreb.
They said that their family had visited Slovenia at least 40 times in over six decades and had never faced anything like this.
Another passenger, who booked a seat to Stockholm, said Adria got her on a different flight, but ten hours later than scheduled.
Adria pilots hoping for state bailout
STA, 24 September 2019 - The pilots of Adria Airways have asked the state for a bailout after the carrier temporarily suspended operations due to lack of cash, making bankruptcy an imminent prospect.
"We're aware of the unenviable position, but we are confident the situation can be resolved in agreement with the state," Luka Radovic, the head of the Trade Union of Commercial Pilots, said in a press release on Tuesday.
Everyone stands to lose, not only Adria staff but also the economy in general, said the head of the union, which just recently signed a new collective bargaining agreement with Adria.
"By selling [the carrier] to incompetent owners, the state has brought us to this situation ... we expect the state will assist in the resolution of the situation," according to the union.
The union thus called on the government to extend a loan guarantee, but in doing that it should also appoint a temporary management and squeeze out the current owners.
"Adria has operated successfully before and we believe that a competent management can return it to the right path, making the search for a new strategic owner much easier," he said.
The appeal comes after Adria grounded almost all planes and temporarily suspended operations, a move widely interpreted as the end of the troubled carrier.
The company has been beset by delays and cancellations for months and has long been bleeding passengers and has apparently unsuccessfully attempted to sell itself to several potential strategic owners.
Media reports suggest Adria representatives have even asked the state and state-owned funds for money outright, going as far as giving the government an ultimatum until yesterday evening to provide a EUR 4 million loan guarantee or risk the airline collapsing.
But the government has made it clear on several occasions it cannot help Adria, which had received ample state aid less than ten years ago, without running afoul of EU competition rules.
Adria was sold to 4K Invest, a German turnaround fund, for a mere EUR 100,000 in 2016, having before that struggled for years.
It received several rounds of state-sponsored capital injections between 2007 and 2011, including a EUR 50 million cash infusion in 2011 and a EUR 38.4 million debt-to-equity conversion the same year.
All our stories on Adria Airways are here
STA, 23 September 2019 - Sales of new housing properties have dropped to the lowest level on record in the second quarter of 2019, according to data released by the Statistics Office. Meanwhile, more than 1,360 second-hand houses were sold this second quarter, the most since the second quarter of 2017. In total, sales reached highest value since 2017.
New flats are on the other side of the spectrum, as only 42 were sold, the least since new real estate sales have been recorded. But faring even worse were new houses, with only 18 of them being sold in the second quarter.
The prices of new housing properties dropped by 3.1% over the first quarter. Prices of new houses went down by 9.3%, while apartments grew by 0.3% after growing by 9% in the first quarter.
On the yearly level, prices of new real estate increased by 3.6%: flats went up by 9.3%, while houses were 6.3% cheaper.
Prices of second hand real estate went up by 1.5% over the previous quarter; houses by 2.5% and apartments by 1%. Compared to the same period last year, prices of second-hand properties were up 2.1%; apartments increased by 2.3% and houses by 1.7%.
In total, EUR 330 million deals were closed, the most since the second quarter of 2017, when the figure reached EUR 354 million.
Prices have gone up by 1.3% in the second quarter compared to the first and have grown by 2.2% compared to the same period last year.
Updated 10:50, 24 September
STA, 24 September 2019 - Slovenian carrier Adria Airways has suspended all operations from its three bases in Ljubljana, Prishtina and Tirana for Tuesday and Wednesday due to a shortage of cash.
"The decision to suspend aircraft operations is the consequence of the current lack of access to fresh money that the carrier needs to continue operations," the company said in a press release late on Monday.
The carrier said it was busy looking for solutions together with a potential investor. "The goal of all those involved is that Adria Airways takes off again and that the suspension is merely temporary."
The decision affects all routes linking Ljubljana with Amsterdam, Brussels, Copenhagen, Manchester, Munich, Paris, Podgorica, Praga, Prishtina, Sarajevo, Skopje, Sofija, Tirana, Vienna and Zurich.
The flight to Frankfurt, a major hub and one of Adria's most important destinations, will take place. Adria will fly out today and return on Wednesday.
Ljubljana airport operator Fraport Slovenija said it was helping passengers that had arrived at the airport for the morning flights - the suspension was announced just before midnight - and had arranged transport from the airport for them.
Thousands of passengers on scheduled and charter flights are likely to be affected, but the exact figure is not clear since Adria has kept communications with the media to a minimum.
Many passengers appear to have opted for ground transportation and business daily Finance reports that shuttle and bus operators have seen their bookings, in particular to nearby airports, surge.
The suspension also affects airlines for which Adria operated flights on a contractual basis. Austrian Airlines thus announced this morning that it had to cancel three flights due to the suspension.
The decision to temporarily suspend operations comes less than a week after two of its leased aircraft were repossessed by their owner over unpaid debt, which capped months of cancellations and delays for the cash-strapped carrier.
As late as yesterday the Adria management insisted it was busy trying to stabilise operations and was conducting intensive talks with a possible strategic partner.
Previous attempts to find a strategic partner have failed or have turned out to be merely preliminary talks with few if any prospects of succeeding.
The carrier used to be in state ownership but was privatised in 2016 and sold to 4K Invest, a German turnaround fund.
Since then it has sold all of its aircraft and leased them back, but media reports suggest its debt to suppliers have been mounting; some reports put it as high as EUR 60 million.
Since Adria accounts for about half of Ljubljana airport's passengers despite its woes, it is likely plans will soon be set in motion to help the airport.
The state cannot salvage the carrier because it had already injected millions in state aid into Adria less than ten years ago, but it appears to be ready to subsidise key routes. Fraport has also said it has a contingency plan but has not revealed any details yet.
The carrier is also subject to an operating licence review by the Civil Aviation Agency. The agency was due to reach a decision by the end of October and it remains unclear how the suspension will affect its procedures. A press briefing is scheduled for Wednesday.
STA, 23 September 2019 - Pošta Slovenije, the state-owned postal operator, plans to acquire 72% of the logistics company Intereuropa at EUR 1.45 per share. It is to purchase 9,168,425 regular and 10,675,965 priority shares, which totals EUR 28.75 million, Intereuropa says on the web site of the Ljubljana Stock Exchange.
This is in line with the contract that Pošta Slovenije made with a consortium of sellers, comprising SID Banka, NLB, NKBM, Gorenjska Banka, SKB Banka and Banka Intesa Sanpaolo, on 10 May.
The takeover was green-lighted by the Competition Protection Agency at the beginning of the month.
There was much speculation about the value of the deal, with the business daily Finance reporting of a EUR 40 million range, or EUR 100 million together with debt.
But the amount revealed today is closer to the stock market value of the 72% stake, which was estimated at roughly EUR 30 million at the beginning of the month.
Pošta Slovenije is now expected to publish a takeover bid for the outstanding stock in line with competition law. The price per share is also set at EUR 1.45.
Last Friday, a share of Intereuropa was worth EUR 2.54 on the Ljubljana Stock Exchange.
The long-running story of Ascent Resources and its attempts to get permission to use a form of hydraulic stimulation in its gas fields in Petišovci has taken another turn, one that may have more success for the UK firm. The company announced on Friday that it will now use conventional drilling techniques to extract more gas, taking “advantage of the newly reprocessed Petišovci 3-D seismic survey to appraise new conventional targets", in the words of CEO John Buggenhagen, who took over management a few months ago. The company is also appealing the decision that prevents the use of hydraulic stimulation.
Ascent Resources’ non-executive chairman Louis Castro is also quoted as saying: "Over the next six weeks or so -- together with our partner Geoenergo -- we will be evaluating and prioritising potential shallow conventional oil and gas targets and associated well site locations.”
All our stories on Ascent Resources can be found here
STA, 21 September 2019 – The newspaper Večer accuses Adria Airway's German owners, 4K Invest, of making good money out of the former Slovenian flag carrier, saying the German "vultures" have squeezed every cent out of the company since they bought it in 2016.
The Miro Cerar government sold flag carrier Adria Airways in January 2016 after the Alenka Bratušek government put it on a list of 15 companies to be privatised in 2013.
For the German financial fund, which has absolutely no experience in aviation industry, to buy it, the state had injected Adria with EUR 3 million in taxpayer money.
Then the "experienced" German rescuers of troubled companies, skilled in creative accounting, squeezed from Adria a few million euros, and nobody knows where they have ended up.
In the same way, it took over Switzerland's Darwin Airline only to send it into receivership six months later, a case the Swiss law enforcement is still investigating.
But eventually the inevitable happened: passenger numbers started to fall, bank accounts have been blocked and part of its fleet grounded.
The last attempt by the German financial magicians to get a capital injection from the Slovenian state to keep Adria alive has fallen through, which is good news.
"If Adria's vital routes had to be temporarily kept alive, the German vultures should not be part of this story anymore," Večer says in the commentary Aviation Vultures.
Both pilots and Slovenian aviation experts have been warning the Adria owners do not know what they are doing, and it seems they are right.
4K Invest's business record shows the fund has sent into receivership at least four companies under the guise of restructuring. And when the rescuers left, several thousand workers have been left jobless.
"Adria is now in a similar position, a shell with negative capital, without assets and with an unmanageable debt," Večer says on Saturday.
Note: Updated 20:30, 20/09/19
STA, 20 September 2019 - The Civil Aviation Agency has grounded two Adria Airways Bombardier CRJ900 planes, after lessors have terminated lease contracts for the two planes due to payment default. Adria has already cancelled several flights scheduled for today and several were rescheduled.
According to Adria, the Civil Aviation Agency issued an oral ban for the two planes that Adria leased from Trident Aviation Leasing Service on Thursday afternoon.
A written decree is to be issued within the next five days.
Adria management met the agency's supervisors on Thursday evening to discuss the current situation. Adria asserted in a written statement that their flight operations with the remaining planes were safe, which the agency's head Rok Marolt confirmed for the STA today.
The agency is still deciding on Adria's operating licence. According to Adria, these are two separate procedures.
However, Marolt added that the procedure which is related to the financial situation of the company was "definitely related" to the licence procedure. "All this will definitely affect the final decision," he said.
Marolt said the agency was monitoring the situation at Adria by the hour. "If any deviations from flight security were detected, we will act immediately irrespective of the licence procedure."
So far, five morning flights have been cancelled, including the Skopje-Ljubljana, Ljubljana-Zürich, Munich-Ljubljana, Zürich-Ljubljana, and Vienna-Ljubljana flights.
According to Adria's web site, the flights scheduled for this afternoon will be carried out but most have been delayed by an hour and a half.
Delays were already reported on Thursday. Passengers going to Paris, Copenhagen and Amsterdam were stuck at the airport. Flights to Brussels, Tirana and Prague were also cancelled.
Adria has not commented on the matter yet. CEO Holger Kowarsch denied media reports that lessors have terminated lease contracts for the two planes in a comment for the STA last night, saying that talks with lessors were still under way.
News portal 24ur reported today that Adria employees had staged a spontaneous protest at noon. Pilots and cabin crew reportedly gathered to protest about the uncertainty and lack of information about the state of the company and their careers.
Trident Aviation Leasing Service is part of the Falko group, which owns the Irish low-budget carrier CityJet and is one of the biggest creditors of Adria, according to Siol.net.
Falko was also mentioned as a possible saviour of Slovenia's former flag carrier which has been in German ownership since 2016.
Adria's potential receivership would cause problems to the state administration, given the upcoming Slovenia's EU presidency in the second half of 2021. Kowarsch reportedly discussed this with Prime Minister Marjan Šarec in the spring.
The Infrastructure Ministry said today that it did not have means at its disposal to assist Adria; however it was sorry to hear about the airline's unfortunate situation.
"Our priority at the moment is that maximum safety of Adria's flight operations is ensured," reads the ministry's press release.
The state, which sold Adria in 2016, will be obliged to provide Slovenia's air connectivity with the world in case Adria's operating license is revoked.
The ministry has thus already prepared a proposal which would enable co-funding of certain flight routes in line with relevant regulations.
If Adria goes bankrupt and no other airlines step up to provide necessary services, then the state would have to set up a public airline enterprise - a long and complicated procedure which would have to be approved by the EU.
Meanwhile, Adria said today that the company was facing serious financial issues and was looking for solutions to tackle them.
Adria's fleet includes 16 planes at the moment, but the carrier is leasing many of them to other airlines together with flight crews.
All our stories on the troubled airline can be found here
STA, 19 September 2019 - Finance delves into Slovenian wages in a commentary on Thursday. It looks for reasons why wages are low compared to the west, before concluding that Slovenians in fact do not really want higher pay and everything it entails.
"For me one of Slovenia's big failures is in how low wages are compared to 'western' Europe. Wages reflect know-how, innovativeness, competitiveness, the value of products and services on the global market," the paper says.
In Slovenia political decisions "have always been geared towards low wages. Geared against profit, getting rich and money. Towards equality at low levels" the commentary argues as it berates past bailouts of old industrial companies and progressive taxes.
The second failure is that Slovenians do not even want higher pay. "They are smug in this comfortable space ... They do not need broader horizons, possibilities, challenges changes."
"This is why money is not an animating force for Slovenians ... This is why I roll my eyes whenever I hear that with higher wages, Slovenians - teachers, doctors, managers - would work better. In Slovenia it is exactly the opposite."
Slovenians are "happy at low revs," which is why money is "something for the weirdos, not a general incentive," the paper says in Why I'm Not Giving You Higher Pay (Zakaj vam ne dam višje plače?).
All our stories on pay in Slovenia can be found here
STA, 18 September 2019 - The Amber Rail Freight Corridor, which connects industrial centres and inter-modal terminals in Poland, Slovakia, Hungary and Slovenia, was formally launched in a ceremony in Koper on Wednesday. It has been operational since January as the first rail freight corridor established on the initiative of member states.
The corridor connects the Adriatic Sea - with Koper being the only maritime port within the corridor - with the Poland-Belarus border, and its position represents an alternative to the transport routes between the north and south of Europe.
The name Amber Rail Freight Corridor refers to the name of an important ancient trade route, which broadly followed the same alignment.
Gerhard Troche, the managing director of the project, said at the ceremony that the corridor was a platform which enabled all stakeholders to address joint issues and challenges.
These include differences in work processes, technical differences or different transport rules in countries, which cause delays and problems in international rail freight transport, he added.
Its purpose is to improve cross-border rail freight transport, Troche said, adding that "we operate on several levels", including relevant ministries in individual countries, operators of rail networks and advisory groups for railway infrastructure users.
He believes that the Amber Rail Freight Corridor is a great advantage compared to practice in the past, when a certain rail operators needed to communicate separately with stakeholders in each individual country.
"Communication has thus become much easier," Troche said, adding that the project also offered a one-stop-shop service for regulating issues related to transport capacities and providing information to clients.
Andrea Mosoczi, the chair of the management board, added that a study would be carried out which would help recognise open administrative, infrastructural and operational issues and priorities.
You can learn more about the project here
