Adria Airways, which has experienced a number of operational issues over the past few months related to staffing and equipment, expects to post a financial loss in 2018 for a second consecutive year. The carrier's CEO, Holger Kowarsch, said, "It won't be a positive result. Adria Airways is a privately owned company, so I will not reveal our forecast, however, the business surely won't be positive this year. With these oil prices, it is impossible. On a different note, revenues will considerably increase compared to last year". The Slovenian carrier, which has been cancelling or combining a select number of flights on an almost daily basis over the past month, has been forced to pay out hundreds of thousands of euros in compensation to affected customers and several million euros to wet-lease aircraft from other airlines. It comes after the carrier reported a loss of 5.4 million euros in 2017.
Mr Kowarsch told Slovenia's "Delo" that the route cause of the operational difficulties is a lack of crew affecting airlines across Europe. The company has also been forced to deny media reports that it is on the brink of bankruptcy. It noted, "We fully understand and accept discussions over flight irregularities but not that such are connected to our financial state. We wish to clarify that our financial status doesn’t influence and is not the reason for flight delays or cancellations as stated by some media. There has been an increase of 150% in the number of delayed flights in the European Union in 2018 compared to last year. Only in August, 56% of all flights were delayed. Adria Airways’ delays are way below the EU average, but this cannot be counted as an excuse since each irregularity damages the carrier. This year, Adria Airways significantly increased the number of aircraft in its fleet but the number of crew did not grow proportionally. Each unplanned absence of crew members due to sick leave or an unfit-to-fly condition could, together with unpredictable weather or technical issues, influence flight operations. In order to avoid flight cancellations, we decided to combine flights on numerous ocassions. Even though this was unpleasant for passengers, we believe that combining flights is a better solution than cancelling them". Mr Kowarsch noted that Adria currently has an insufficient number of standby crew but believes the issue will be resolved by November.
Commenting on the airline's future plans, the CEO noted, "We will have a similar number of flights this winter. We are considering additional flights for the coming summer season, and have started discussions with the airport. The problem is that Ljubljana Airport is operating at full capacity during peak hours. However, I am delighted with Fraport's decision to build a new terminal, which will also allow us to introduce additional flights. The terminal will be completed by the end of 2020, which is a bit of a long time for us. For the coming summer, we are looking at some northern destinations and thinking about Rome or Madrid. These airports are the main gateways to South America, but we are studying whether the routes are financially viable".
Why is anyone surprised? Germans were so arrogant when they took over.
ReplyDeleteor JP is the only ex-yu airline that is posting real financial result without 'creative' finance books
DeleteAre you serious? They sold Adria's brand name to another company owned by them so they could show a profit in 2016.
DeleteOn top of that no one knows where the money they took out of Darwin disappeared and it is under investigation under Swiss authorities. In a month millions disappeared.
The first two years after the arrival of the Germans, Adria provided liquidity and financial sustainability through loans from the German company 4K KNDNS, one of the many in the 4K Invest group. KNDNS went bankrupt this year. We will see where they will shift money from this year.
Delete@10:35
DeleteWhich means, they are sucking the money from Adria to their tax heaven bank accounts via fictitious loans.
And which basically proves, that there is no LH behind 4K.
If oil prices continue to grow, I wonder will tickets go sharply up? Looks like more and more legacy carriers are struggling to make a profit.
ReplyDeletewillingness to pay ins not bound to the costs the airlines have.
DeleteThe situation has been ridiculous, as is their explanation. If you can't keep up with your growth then you don't open seven new routes. It doesn't matter anyway since out of the seven half have already been cancelled.
ReplyDelete2 out of 7 is never half
DeleteWhich ones have been cancelled?
Deletewell you open new routes when the risk of failure is least- that measn when oil is cheap. All other costs are fix. So when oil costs 40$ is a different story than when it costs 100$ like some 5 years ago. Today we are at 84 and rising !!
Delete@ 9.15 Brac and Geneva will not be returning in 2019.
DeleteThis is not going to end well.
ReplyDeleteAren't oil prices still way below what they were around 4, 5 years ago?
ReplyDeleteGot it, thank you for the explanation
DeleteThis is quite a polished article - the news in Slovenian media has been for the past two days, that JP is in serious financial trouble (ie owes a lot of money to fuel providers, airports etc), and there's a real possibility of CAA grounding its fleet due to JP's inability to finance its day to day operations.
ReplyDeleteEven Ščurić has backed down quite a bit from his Lufthansa conspiracy in an interview.
The media have been going over the top and dramatizing the situation.
DeleteIt's acctually quite simple - they will need another capital injection come Decembre/January. If they magically come up with several million EUR, then we'll know there's a bigger player behind all of this. If not, they will go bankrupt.
DeleteIt's a fact they cannot survive another pilot strike.
And there are actually rumors that a strike might happen -.-
DeleteNews overdramatizing...Right.
DeleteIn one of the interview CEO clearly says they weren't making money last year with oil prices 30 USD/barrel lower than now and that they can't make profit at this level. So they made loss last year, which will increase this year (+all the wet leasing drama), and if oil doesn't go down the loss will continue.
I know it's hard to understand in Exyu, but airline cannot survive with continuous losses unless they have a rich uncle, which Adria at the moment doesn't.
Why would pilots want to strike. What are they unhappy about now?
DeleteThey don't have to be unhappy in order to strike.
DeleteThey might just want a pay rise to be extra happy! 😀
The instructors in the past were making good money for almost no training. Now with the expansion they have to train a lot and apparently that's not what instructor's job is. Classic Adria story.
DeleteNo, I did not.
DeleteI said that it is obvious that Adria modus operandi is collaborating with Lufthansa (most of aircraft is leased to Lufthansa, Eurowings, Austrian, Swiss + feeding routes from Priština, Tirana, Paderborn, in past Lodz + not a one Austrian, Swiss, Lufthansa and Eurowings flights from Ljubljana and those companies have hundreds of flights in region especially in Croatia + special task for Lufthansa group like VIE-MUC route several years ago to show that Lufthansa group "does not have monopol on that route") and by so many moves one can conclude 4K is cleaning and preparing company for Lufthansa.
4K is company is specialized in doing those jobs for others. In same cases they take companies, clean them (sack some workers, sell infrastructure, downsize, unification...) and than sell to someone else (in some cases they knew who they will sell it in advance, before they buy problem company) and in some cases they buy companies with task to put it out of work (competition take this share of business).
So, I said that if 4K would be successful in task of cleaning company and making it profitable they will most likely do that for Lufthansa, but for sure if the will not be successful they will put Adria out of work (Lufthansa will not want problematic company). Just like Darwin. They will not have problem with that and will not think a second to do so. So it is simple: be successful and sell it to Lufthansa with some "profit" (reword for that job) or not successful, will not loose money in future and Adria will be closed.
@purger
DeleteOf course you are backtracking.
'LH behind 4K' implies there was a contact between Slovenian governments and LH prior to selling the company. And that LH is financially backing 4K.
In reality there was a LH audit in JP just around the time of 4K stepping in. All of the acmi crumbs jp is getting are the result of that audit. And JP has been LH feeder since ... forever. So LH is 'behind' 4K just as much as they were behind Adria before 4K came in.
So yes, you did tweal your argument quite a bit since the privatisation took place - your currwcu argument is such, that you are right whichever direction this goes.
Pruger, so have no clue about whats going on at Adria. Maybe you do about whats going on in Croatia, but you are way off about LH and 4K.
DeleteSo no LED next summer as some people were writing in the comments. Seems like we will get Moscow and maybe Rome and Madrid.
ReplyDeleteHe said north so maybe LED and ARN?
DeleteDefinitely ARN. In an article a couple of day ago Lljubljana Airport CEO said Stockholm is certain for next year.
Deletehttps://www.exyuaviation.com/2018/10/ljubljana-airport-unveils-2019-growth.html
They should introduce 2 destination tops so they avoid the operational disasters they had this summer.
DeleteThey are getting 3 more CRJ900s next year so there will be opportunity to grow.
DeleteThe problem isn't getting planes. It's getting the crew for them. There's no point in getting equipment if you can't operate it
DeleteIf they are able to combine flight's, obviously they are not selling many tickets on some routes!
ReplyDeleteTrue. Especially since they are not upgrading equipment to say A319 on these flights they combine.
DeleteThey should merge with OU, Adria is a neutral name anyway!
ReplyDeleteDo you even know how people function in Croatia (and Slovenia)? Croatian government would NEVER go for this option. Maybe a merge done by a third player but they would ask for another name. Yes, neutral, but different.
DeleteThere is no need to change names. You can merge them but they can both keep separate brand names. Look at Lufthansa. It has Austrian, Swiss and Brussels in its ownership and all have kept their names.
DeleteOr AFR and KLM.
DeleteWhy? OU is not in such a bad financial or operational situation. Don’t get me wrong, OU is not in a great financial situation either, but at least they plan on generating some profit this year. Also, these two airlines have bases that are too close to each other. For operational reasons they would need to choose which one to move forward with. Also, this would increase commonality costs, as OU doesn’t have CRJs (they wet lease them) or Saabs and Adria doesn’t have Dashes. Finally, OU and Adria have different business models: OU wants to grow into a hub carrier, while Adria is shifting more and more towards P2P and ACMI.
DeleteOU wants to grow into a hub model? How exactly? C'mon, let's get real here!
DeleteSuch a messy summer for Adria. From a lot of optimism I had for them, they completely flopped. While I do agree that some of the media reports are over the top, I really do fear for Adria,, knowing how 4K (mis)treated Darwin and had now issue bankrupting the airline in months.
ReplyDeleteAlso I'm not over the moon with information that one of 4Ks subsidiaries is issuing Adria with loans. Basically 4K is filling its coffers while Adria is struggling.
4K has no experience in running an airline whatsoever. Airline industry is not like others. What did you expect?
DeleteGet rid of the unreliable Saabs!
ReplyDeleteThey seem to be reliable enough for Swiss since they are wet leasing three of them this winter.
DeleteWe will see how happy Swiss will be this winter.
DeleteJbt. Ti su avioni vec deceniju u saobracaju iz Lugana. Njima su dobri i pouzdani. I kad propadne Adrija oni ce tamo leteti.
DeleteThey would have had a loss in 2016 too had it not been for the brand name sale and the aircraft sale. So 3 years under new owners, three years of losses.
ReplyDeleteThe government didn't have a better track record either.
DeletePerhaps but two years under 4K and worst financial result in 5 years...
DeleteWell at least it's not -50mio (yet).
DeleteSelling the brand name was a master stroke from 4K. They sold brand to themselves, manage to post profit for Adria that way and when they sell Adria they will not only get money from the sale but will also get money each year for renting the brand to someone.
DeleteWhat a shame. At least passenger number are improving.
ReplyDeleteJust because of volume of traffic increased. With all the cancellations and delays I'm sure many won't be returning to Adria anytime soon.
DeleteConsidering that the fuel prices are much higher this year, the 5,4 loss from 2017 is likely to be in double digits in 2018.
ReplyDeleteJust when I thought they were recovering :(
ReplyDeleteThe honeymoon with 4K is over unfortunately.
DeleteWhat made you think they were recovering? Profit in 2016 due to sale of the brand?
DeleteI think many people in this blog took airline/airport CEOs' public statements as true, without querying. How naive :)
DeleteThe funny thing is, these guys (and I mean 4K) will soon take over Croatia Airlines and Montenegro Airlines. Wait and see next year. And although I know people don't believe it, you will also see Lufthansa's involvement next year.
ReplyDeleteI wish I could see into the future like you.
DeleteWhy next year? JP will go bankrupt by the end of this year if they don't get a capital injection - so we will see, if they get fresh capital, there is someone behind it all. If not, it's over.
DeleteI have to ask Adria CEO which other airlines are having such huge issues with staffing that they are cancelling flights every day or combining them with different flights?
ReplyDeleteRyanair, Lufthansa...
DeleteYou forget these companies are 10x the size of Adria but have the same number of flights cancelled as Adria. So it's not the same.
Deletelufthansa je otkazala preko 11.000 letova , da o eurowingsu ne govorim koliko je on otkazao letova ili su avioni kasnili po vise sati.
DeleteTurns out the only stable and profitable company around the region is AirSerbia xD
ReplyDeleteNot to forget transparent! ;)
DeleteSve im vidis u izvestaju. Niko ne krije dotacije vlade Srbije.
DeleteAir Serbia is profitable, but only with heavy government aid. If we subtract the aid from the profits, they are making a loss as well.
DeletePrivate company. They are burning their own money. I'm not too concerned. Even if they go bust, another player will come and take their sport. Only unfortunate thing would be the end of the Adria brand after 60+ years but even that is not owned by the airline anymore but by Germans.
ReplyDeleteThey are not burning their own money... They don't have any assets and capital. Who will be left to cover the financial hole that they will leave behind? Small businesses, passengers and employees, business partners...
DeleteEmployees have been around far too long and only a quick glance at the aviation market would have them in a better airline in very short time. But it seems they prefer to stay on the Titanic and play along with the orchestra till the very end. Don’t feel sorry for the, the entire world is looking for pilots at the moment.
DeletePassengers: anybody buying tickets with JP directly without travel insurance or insured credit card is insane. Given all the media publicity they should now better by now.
Suppliers: they can easily stop supplying their goods or ground an aircraft and thus force Adria to either pay or go straight into liqudiation, which would hopefully result in some debts being paid off to suppliers.
The Swiss authorities are preparing to launch a criminal investigation on the supposedly fake bankruptcy of Darwin and emptying the company's account by 4K: https://www.rsi.ch/news/ticino-e-grigioni-e-insubria/Darwin-l%E2%80%99inchiesta-decolla-10990190.html
ReplyDeleteI wonder if something like that can happen with Adria as well...
Oh this 4K thing is going to collapse like a house of cards sooner or later. I'm sorry that Adria is mixed up with this entire mess.
DeleteIt says in the article that the money 4K gave to JP last year (ie when it 'bought' the brand and thus saved the company from insolvency) was actually stolen from Darwin.
DeleteIs there a chance for SOF to be increased next summer? CR9 was operated in some days and not Saab as initially planned meaning route is doing great.
ReplyDeleteJU has already upgraded BEG-SOF to A319 on some days next year.
I hope silly FB wakes up and operates to ZAG or SKP. There is clearly demand to connect Balkan capitals.
I'm surprised by all the demand from Sofia. Who would have thought.
DeleteSofia market is saturated by LCCs. There are people who want to fly to actual cities and hub airports and not a village 100km from the city center as offered by the good people at Wizz Air.
DeleteJP will sooner or later be history, probably somewhere 2019-2021. Also there is no need for them on the market. Not every little village needs an own airport or an own airline. If this is thru all the European political heads, we will see a healing development for the good of all (passengers, taxpayers, employees, environment and citizens). Balkan politics would rather invest into faster rail links and better and faster public transport system. I am currently in Japan. Here u need for 500 km lit bit over 2 hours by train and Tokyo to Osaka there is every 5 to 8 minutes a Shinkansen travelling with 320 km/h max. Not one country in Europe can just near match what Japanese offer day by day. Did you know that Shinkansen sped trains network amounts to 2700 km. From 0600 to 2130h there is every couple minutes a train into all thr various directions, amounting to 100s of Shinkansen trains a day. Do you know what the total cumulated delay time is per day for all Shinkansen trains in Japan: 5 minutes. 5 god damn minutes. After 1 minute you are already entitled for compensation payment. Thats performance. Europe is losing ground, more and more!
ReplyDeleteYou are way too optimistic, just read the news someone posted above:
Deletettps://www.rsi.ch/news/ticino-e-grigioni-e-insubria/Darwin-l%E2%80%99inchiesta-decolla-10990190.html
The Swiss are launching an investigation into fraudulent bankurptcy of Darwin, where about 9 mil euros disappeared. Part of that money was used to keep JP machine rolling in the past year in hope of selling it. They will go bankrupt before the end of this year.
Yes, we are all aware Japan is having out-of-this world transportation. That's because JR East owns the land around the railways and lets it out, which is how they make a lot of money, that they can invest into modern technology. Even if the Balkans followed the same strategy, the economy of all Ex-Yu countries combined is way smaller then Japanese - meaning people wouldn't move closer to the rail and pay high rents just to be able to move between major cities quickly. So what's your point?
DeleteThere is enough need for every nation to have a national carrier. And while I agree that every village doesn't need an airport, I disagree that every country doesn't. Airports and airlines help economy by opening doors for international business and tourism. If you don't have a national carrier, you are depended on others and can only hope that some other airline will want to connect the territories of your strategic efforts.
You are probably right though, Adria might collapse. But that's another discussion.
Not matching, Balkans is 2 centuries behind Asia. No chance to match but at least invest into infrastructure. How long is Belgrade waiting for a subway? 30, 40 years? How much more?? All Balkans care is this god damn past instead of looking ahead. Makes me so mad if I see how Asia is developing, same time our politicians discuss still WW2 topics.
DeleteAviation market is a liberalized and free market, where nations have agreed to leave regulators behind. There is no space for taxpayers money injectiins if other airlines can do it for free. If there is demand, airlines will fly. If not, not. All other is a waste of money and could be invested in infrastructure. Just look at Bus Stations, even in Slovenia: Kranj, Ljubljana. It looks there like 1949
Tx Anonymous 1046h. Appreciated. LX LH OS SN will step in, plus probably Easy. JP wont be missed
DeleteYou cheerypicked the worst bus station in Slovenia for your argument. And even that one has been designated as temporary station for past few dacades. New location for the station has been set and construction should start in year or two (per incumbent mayor).
DeleteFair points JU520 BEGLAX. I agree, Balkan politics are a very dark comedy. However, I think looking too much in the future will only over-promise things, let's first fix the current problems and then move to fast railways.
DeletePointing at bus stations - yes, that's exactly what I mean. First we need to solve the current problems and update the infrastructure to be at least on the level of current time. Then we can start talking about alternatives.
... "temporary bus station for past few decades" ... Right! And incumbent mayor needs his 10% ...
DeleteIf you would be from Kranj, you’d know what I meant by that. And the mayor won’t run for second term (elections are next month)
DeleteIn ne branin tega krsitelja svojega lastnega kodeksa.
If 4K is struggling with Adria, why don't they just sell it?
ReplyDeleteWhat is there to sell? Adria does not own any planes, it does not have lucrative slots at Heathrow, it has very poor long-term aircraft leasing contracts, its main market is very small, it doesn't even own it's name. So what would a perspective buyer see in Adria?
Delete+1 last anon
Delete4k has failed in its promise. They came to Adria saying they would turn around the business. That they are turnaround specialist. It turned out they are now planning a second (in reality third) year with a loss and it increases each year.
ReplyDeleteHow much money has been thrown into this airline over the last 5 years ? It went through restructuring for several years which now turns out to have been an epic fail.
ReplyDeleteAdria should talk to LOT and become LOT's partner in the Balkans (like Nordica became LOT's partner for Scandinavia and Baltic States). Adria could operate a few routes for LOT to feed their hub in Warsaw. With the help of LOT Adria could develop its network from LJU and build regional hub.
ReplyDeleteNot going to happen.
DeleteThis is all OK and normal, no need for alarm. They are just fine tuning the company and streamlining their product and finances ��
ReplyDeleteThe situation at Adra is very serious and is no laughing matter. To my great sadness I think we will soon bid farewell to Adria.
ReplyDelete- the company finances business almost exclusively with debts, and not capital. The share of debt in financing according to the latest data is already 95%.
- the company is increasingly being financed at the expense of suppliers and with advance payments, with a significant increase in short-term operating liabilities.
- Adria's uncovered loss on the last day of last year exceeds half of its share capital, which is one of the signs of long-term insolvency or insolvency.
- liquidity is very poor.
- Adria has not been able to do business in the past few years without the flow of funds from recapitalization or disposal of assets, and such a trend continues.
- this year, the company predicts a new loss, which will further aggravate the capital structure.
This does not sound good
DeleteHasn't been a pleasant week for Adria's PR department.
ReplyDeleteA mene su ismijavali kad sam rekao da će propasti. Šteta. Bila je to jedina necentralna aviokompanija u istočnoj Europi. Možete mislit, da bi Ukrajinci imali tamo neki Dnipro Airways u doba Soyuza?
ReplyDeletepa ljudi ti se i dalje smiju, jer nista pametno ne kazes, nego samo ponavljas jedno te isto...godinama
Delete"...Mr Kowarsch told Slovenia's "Delo" that the route cause of the operational difficulties is a lack of crew affecting airlines across Europe..."
ReplyDeleteI call it bs excuse!! If you pay fair market salaries then you would attract pilots and other personel. But you are not, and the fact that their is a huge demand in the world means you are not keeping up with times and therefore directly responsible for the bad performance of your airline. Don't blame staffing....OU has same issues and people continue to leave. Air Serbia on the other hand is "lucky" as their crews can not just pick up and go work in Europe because of not being memeber of EU...otherwise the flood gates would be open too.
So please Adria management stop with poor excuses and fix the problem or close the shop.
u investiciskom ciklusu su zagube su normalna stvar za Slovence.
ReplyDelete