Slovenian regulator confident in Adria solvency
The Slovenian Civil Aviation Agency, which also monitors the financial sustainability of airlines registered in the country, has said it believes Adria Airways is financially stable and has managed to prove its solvency for 2018. It comes just months after the regulator found the airline was solvent in 2017 after expressing initial doubt and ordering an audit of its results. "Adria has not yet provided us with their balance sheet for 2018. They have given us some material, which also contains documentation on the planned merger of two companies. Since we do not have the authority to check this, we have sent all the documentation we have received so far, which shows adequate solvency up until December 31, 2018, to the Agency for Public Oversight of Auditing", the head of the Civil Aviation Agency, Rok Marolt, told the "Večer" daily.
Adria Airways absorbed the company STBE through a merger and acquisition last year. The move increased the airline's share capital and changed its ownership structure. STBE, which is closely linked to Adria's owner 4K Invest, purchased the Slovenian carrier's brand name back in 2016 for just over eight million euros. Mr Marolt noted, "Solvency has been proven by the acquisition of the company that owns the Adria Airways brand, so, for the time being, based on what we have received, we consider that they were not insolvent. In addition, they provided a Letter of Intent mentioning a strategic partner that will invest ten million euros into Adria". He added that the Letter did not specify who was the planned strategic partner.
Earlier this month, Adria Airways' CEO, Holger Kowarsch, revealed that the planned partner was Russian plane manufacturer Sukhoi Civil Aircraft Company (SCAC). In addition to providing the airline with fifteen Superjet 100 aircraft, it was envisaged for the company to invest ten million euros into the Slovenian carrier, which would have been turned into equity. However, the deal never materialised. According to Slovenia's national carrier, the amount of shares SCAC would have received for its ten million euro investment was yet to be determined. SCAC itself said it walked away from the deal after reviewing Adria's 2018 finances. However, Mr Kowarsch noted that the Russian manufacturer had access to all information concerning his company's business prior to signing a Letter of Intent with the airline, including insight into the carrier's net loss for 2018, which will be in the double digits. It is speculated the carrier will post a loss of between fourteen and fifteen million euros, although the results are not expected to be made public until September.
Mr Kowarsch recently noted that following a four million euro capital injection in late 2018, Adria has been financially stable. "While there were still some liquidity problems last winter, the prospects for the summer season are good. The plan for this year is to get out of the red. Last year's loss is a result of several factors, among them damages Adria incurred for cancelled flights and delays, increased fuel prices, lack of staff and the delay in introducing Saab 2000 aircraft", the CEO said.
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