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.
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
STA, 3 October 2019 - The government has endorsed changes to the aviation act that create a legal basis for the state to subsidise crucial air links with the country following the collapse of flag carrier Adria Airways, if this proves necessary.
In line with the proposed changes, the state could subsidise flight connections with Ljubljana if other airlines did not set up commercial flights.
The changes had been drawn up by the Infrastructure Ministry as Adria was heading for receivership.
This is one of the two possible steps the state can take in the aftermath of Adria's collapse. The other is to found a new air carrier.
Finance Minister Andrej Bertoncelj said after Thursday's session that Slovenian Sovereign Holding and the Bank Asset Management Company had been tasked with calculating the potential costs of each solution.
The option of setting up a new company was not discussed by the cabinet today.
In line with the proposed changes, subsidies would be possible for connections that are of vital importance for the country in terms of economic and social development. State intervention in such cases is also allowed under the EU legislation.
But Betroncelj added the legislative proposal was yet to be coordinated with the European Commission. A decree will need to be passed and a call for applications published to create equal opportunities for all, he noted.
The Infrastructure Ministry would be able to launch a procedure to set up an "obligatory public service" if no air carrier with a licence of an EU member state offered connections that are important for Slovenia for economic reasons.
The necessary funds would be provided by the government. The ministry could not provide an estimation of potential costs of this service yet. "We have no way of knowing which routes will not be covered by the market itself," Infrastructure Minister Alenka Bratušek told the press.
She would like the legislative motion to be pushed through parliament, so that the state can act if necessary. Bratušek said she had also proposed to coalition partners to consider supporting connections with Maribor, Slovenia's second largest city.
For now it seems that the Ljubljana airport operator, Fraport Slovenija, will manage to restore some of the crucial connections with Ljubljana.
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.
The Belgian air carrier Brussels Airlines, also part of Lufthansa Group, is introducing six Brussels-Ljubljana flights a week.
Bratušek welcomed these solutions, saying she would be particularly pleased if the ticket prices will indeed be lower than Adria's.
Receivership proceedings for Adria Airways was officially launched yesterday, with unofficial information indicating the company's debt amounts to EUR 90 million.
Adria has not published its 2018 business report yet, but a document obtained by the newspaper Finance suggests that at the end of last year its long- and short-term liabilities reached EUR 21.5 million and EUR 54.6 million, respectively.
In the nine months of this year, the liabilities allegedly rose by another EUR 20 million to EUR 90 million.
Receiver Janez Pustatičnik said today that contracts for Adria's hired planes had already been cancelled. "If any real opportunity arose for continuing any potentially profitable segment, so that this would increase bankruptcy estate, we will look into it and act in line with the law."
He expects the situation to be assessed in the coming weeks. The amount of claims, which creditors can file within the next three months, will be revealed in the opening report, he said.
All our stories on Adria are here
While a number of airlines have announced new or increased services to fill the gaps created by the collapse of Adria Airways, no company has yet stepped in to serve the Ljubljana to Vienna route, with Austrian Airlines announcing that it has no intentions to do so, only serving the Slovene market via Klagenfurt. In an official statement, the company said: “Austrian Airlines will offer its passengers up to three daily connections from Vienna to Klagenfurt as an alternative to the termination of Adria Airways flight operations to Ljubljana.”
All our stories on Adria are here
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
Yesterday it was Brussels Airlines and Wizz Air, and today four other carriers have announced moves to fill the gaps in the market created by Adria Airways' bankruptcy, Lufthansa CityLine, Swiss International Air Lines, Aire Servia and Montenegro Airlines.
Lufthansa plans to run two flights a day from Frankfurt to Ljubljana starting 27 October, with more details here, while the carrier will launch a new daily service from Munich on November 1, with more information here. Swiss International Air Lines will begin a five flights a week service between Zurich and Ljubljana on October 16, becoming daily on October 27, with details here.
Air Serbia is adding a a new - and third - daily flight between Ljublajan and Belgrade for the winter schedule, with the service enabling connection with the carriers flights from belgrade to Amsterdam, Berlin, Brussels, Paris, Copenhagen, Dusseldorf, Rome, Mila, Prage, Podgorica, Stuttgart, Vienna and Zurich.
Finally, Montenegro Airlines is now offering discount fares to Adria Airways ticketholders for selected flights, with €60 getting you a one-way flight from Ljubljana to Podgorica, or from Ljubljana to Belgrade via Podgorica. The price includes 23kg of checked-in luggage, and the offer also extends to other destination the airline covers, although the cost for these routes is €90.
All our stories on Adria are here
Updated: 18:45 1 Oct. 2019
STA, 1 October 2019 - The Belgian air carrier Brussels Airlines, part of Lufthansa Group, announced it would restore its Brussels-Ljubljana route a day after Slovenian carrier Adria Airways filed for receivership. Travel agency Nomago also decided to organise several charter flights to mitigate the effects of Adria collapse on conference tourism.
Brussels Airlines, which had flown to Ljubljana a decade ago, announced six flights a week on its website today. Tickets should be available for sale as of Wednesday, while the first flights are scheduled for 4 November.
Brussels Airlines is to connect the Slovenian capital with Brussels every day a week except Saturday. Flights from Brussels are scheduled for 3:30pm and return flights for 5:55pm.
The Belgian air carrier is the first to introduce new flights to Ljubljana airport after Adria's collapse.
Adria's routes will also be partly covered by the Hungarian low-budget carrier WizzAir, which cancelled its Ljubljana-Brussels link for the 2019/2020 winter season but will restore it as of 31 March 2020.
Meanwhile, Nomago said today it was in contact with Ljubljana hotels, and all major tourism organisations and institutions hosting international events. It assured them it can expand its operations to provide for the transport of passengers through its InterCity bus service but also with additional charter flights.
According to Nomago executive director for tourism and mobility services Marjan Beltram, the network of the Nomago IntercIty services may be expanded within a month or two if necessary.
Nomago, which has the largest market share in plane ticket sales in Slovenia, has already arranged alternative connections from near-by airports for its passengers.
The receivership of Adria, which used to transport about half of all Ljubljana airport passengers, opens opportunities for other air carriers as well.
The most attractive appear to be the routes to Frankfurt, Munich, Zurich and Vienna. Two other Lufthansa subsidiaries, Austrian Airlines and Swiss International Airlines, are said to be interested in them as well.
Ljubljana airport operator Fraport Slovenija is in intensive talks with other air carriers as well and is hoping to replace the key connections soon. A comparable network of flights is to be set up in a year and a half, Fraport Slovenija said today.
Out of the 27 regular flights, 11 have been lost with the grounding of Adria's planes, of which five are crucial for Slovenia's connectivity with the world, said Janez Krašnja, the head of airline services.
According to Fraport Slovenija COO Zmago Skobir, these are connections with Brussels, Frankfurt, Vienna, Munich and Zurich. He expects them to be restored by the end of the year.
Asked whether founding a new national carrier would make sense in the current situation, Skobir said he could not comment. "I can only say that there is demand for the destinations that have been cancelled and that we have first signals that they will be replaced," he said.
Several companies already flying to Ljubljana are also increasing the number of flights to the Slovenian capital to make out for the fallout from Adria cancellations. Air France increased them from six to 13 a week, and will be using a larger aircraft to adjust to the number of passengers.
LOT Polish Airlines has raised the number of its flights from seven to eight a week and has recently been flying to Ljubljana with a larger plane, Boeing B737.
Air Serbia added Niš to the list of its routes in the summer, and adjusted to the number of passengers on the Ljubljana-Belgrade route with larger planes.
Montenegro Airlines will increase the number of its flights from four to five a week, while Russia's
Aeroflot has been using larger planes.
Turkish Airlines has made no changes yet but said it would secure larger aircraft if necessary.
A solution has however not been found yet for lights to Balkan cities. Fraport Slovenije is particularly working on setting up a connection with Skopje, which is an important business destination.
Fraport expects the airport to see 100,000-200,000 fewer passengers this year because of Adria's collapse, expecting the annual figure to stand between 1.5 and 1.7 million. But the airport still expects to end the year in the black.
Fraport Slovenija has more than EUR 4 million in claims to Adria, a part of which has been secured.
The Slovenian national postal operator Pošta Slovenije said today it had switched from Adria to other air lines and partly to Zagreb airport, while the mail for neighbouring countries and Germany was being transported by road.
Adria's collapse will be discussed by the coalition later this afternoon. Officials are expected to talk about potential steps the state can take in the aftermath of Adria's receivership.
One option is for the state to subsidise new routes and the other is to set up a new air carrier. Parties are divided as to what the best solution would be.
All our stories on Adria are here
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
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
The covers and editorials from leading weeklies of the Left and Right for the work-week ending Friday, 27 September
Mladina: If Germany can rescue its companies, why can't Slovenia?
STA, 27 September 2019 – Mladina, the left-wing weekly, criticises Slovenian governments for failing to protect the interests of Slovenian companies, including Adria Airways, saying they usually give EU rules as an excuse not to act, whereas engines of capitalism such as Germany always help their companies. What is more, they are indirectly buying Slovenian companies.
Due to the government's inactivity, nearly 600 Adria staff will lose their jobs and at least another 600 jobs will be lost indirectly, while the budget will suffer a loss of EUR 20 million, the weekly says in its editorial on Friday.
When Economy Minister Zdarvko Počivalšek met on Wednesday a group of Adria workers who are seeking a solution, he said the state was not indifferent to its troubles, and mentioned Adria's irresponsible owner, which had put at stake the company's operating licence.
But it is surprising he became aware of Adria's troubles only now when the rest of Slovenians realised how deeply in trouble it was much earlier, and that he forgot to mention he was the economy minister in the Miro Cerar government, which sold Adria to Germany's 4K Invest in 2016.
At the time, the government argued the sale would enable Adria to "develop, expand and provide for Slovenia's new links to the world", and those who warned this would not be the case because Adria was sold to a speculative venture capital fund were said to be ignorant of the very basics of capitalism.
When Počivalšek visited Adria, Germany announced it would help the airline Condor get a loan to prevent its bankruptcy. Two days before the German rescue effort, former Adria director Peter Grašek proposed a similar solution for Adria to the Slovenian government.
But the government is actually not seeking a solution, it is waiting for the situation to calm down so that it may start pointing fingers and complain about its hands being tied by EU rules. Yet, the same rules do not prevent Croatia or Estonia to help their airlines, or Germany to immediately rescue an airline or car factory when in trouble.
Mladina says that Slovenia's national airport operator Aerodrom Ljubljana was not sold just to any company in 2014, it was sold to Germany's Fraport, which is indirectly in majority ownership of Germany.
"Isn't it strange that we are being constantly told it is vital to sell companies and banks for the state to be successful and efficient, while at the same time it always turns out that the countries which are considered the culmination of capitalist efficiency and success, are buying our companies and banks?"
What is more, they purchase our companies in collaboration with their private companies, Mladina says, noting Fraport is partly owned by Lufthansa, the airline which will most certainly take over Adria's business.
Mladina says it is clear Počivalšek knew Adria was sold to speculative funds which would drain it. And as prime minister, Alenka Bratušek also knew airport operator Aerodrom was actually bought by the German state.
"She also knew that as soon as the national airport is sold, there will be an end to the complementarity between the airport and Adria, which will be fateful for Adria in five years' time," editor-in-chief Grega Repovž says in They Knew.
Reporter: Bratušek attempting power grab in corrupt energy sector
STA, 23 September 2019 - The right-wing weekly Reporter says in Monday's commentary that a recent failed attempt by Infrastructure Minister Alenka Bratušek to be given the final word in the appointment of executives at two state-owned energy companies had not been about wanting to end rampant corruption but merely about trying to seize control over it.
While managing to subjugate SODO, the state-owned electricity distribution system operator, to the government in this way, Bratušek failed to get same statue change proposals passed by the government last week for ELES, the transmission system operator, and for power market operator Borzen.
While Reporter's editor-in-chief Silverster Šurla says that Bratušek, whose proposal had been rejected by Pensioners' Party (DeSUS) president and Defence Minister Karel Erjavec while the remaining ministers abstained, should in fact be believed when she speaks of rampant corruption in the sector.
However, in any normal state accusations of such gravity as the ones issued by her would immediately be examined by authorities specialised in the prosecution of organised crime.
"The minister should report these things to the police immediately and share everything she knowns, including with all the names," Šurla says.
He argues Bratušek has not done that because she is part of one wing of the energy lobby herself. The two wings are engaged in a struggle for the executive posts and thereby for control over the bountiful money flow in state-owned energy companies.
Šurla says under The Fox and the Sour Grapes that Bratušek "is a cunning political fox, who will stop at nothing to reach her goals and is possibly even ready to bring down the government".
All our posts in this series are here