State aware of "Adria's liquidity issues"

Fresh concerns over Adria's finances as airline rebuffs claims

The Slovenian Ministry of Finance has said it is aware of ongoing liquidity issues at Adria Airways, with local media reporting the airline is facing its biggest challenge since 2011, when it successfully negotiated a cash injection with stakeholders, banks and business partners in order to continue operating. At the time, the airline said that "the funds represent the basis for a serious and fundamental restructuring of the company". However, similar problems have arisen once again, as the state looks to sell a majority stake in the carrier. In a statement, the Ministry said, "The Ministry is aware of the liquidity problems at Adria Airways. The company cannot be granted state aid to tackle its liquidity issues for another ten years since it has already received restructuring aid".

Adria Airways benefitted from three public capital injections in 2007, 2009 and 2010, amounting to around 15.2 million euros. Furthermore, in 2011 it received fifty million euros worth of state aid. Last year, the European Commission concluded that the aid was compatible with its 2004 guidelines on state aid for the rescue and restructuring of companies in difficulty. In 2014, Adria posted its first net profit in seven years, amounting to 921.123 euros. During the 2014/15 winter season, the carrier took out a bridging loan in order to stay afloat and concluded a sale and leaseback arrangement for two of its Bombardier CRJ900 aircraft in order to boost liquidity. However, auditor KPMG has warned that profitability was achieved thanks to the sale and leasebacks. Furthermore, the auditor highlighted that the Slovenian carrier generated a loss of 5.3 million euros during the first four months of this year. Adria's management board has already voted to replace KPMG with Deloitte as its auditor for the review of this year's results.

Adria has rebuffed claims it is facing financial problems. While it admits that the carrier is "in need of fresh funds as winter remains a problem due to weaker performance", it added it has "no problems with liquidity". However, Adria has called on the state to do more to create a better business environment within the Slovenian aviation industry. The carrier says that relevant ministries should deal with high handling and landing fees as well as high fuel prices in the country. "The business environment has become an excessive burden on the industry and the development of air transport in Slovenia, because it is uncompetitive", Adria says, adding that it holds regular meetings with relevant stakeholders in order to resolve these issues. The Slovenian carrier is in the midst of a privatisation process with the government offering a 91.58% share in the airline. A public call for the expression of interest was published in July, while a call for binding offers is expected by the end of the month.