Adria Airways shelves fleet renewal amid funding delay
Adria Airways has abandoned plans to overhaul its fleet as negotiations continue over a delayed €9 million ($11.8 million) loan that chief executive Klemen Bostjancic says will be necessary for the airline to continue flying this winter.
The revolving credit facility was due to arrive in late September and would have been the first instalment of a €50 million cash injection pledged by Slovenia's government in August 2011 in response to a two-and-a-half-year turnaround plan.
Local media reports on 16 October 2012 quoted Bostjancic as saying that the flag carrier would be grounded unless the outstanding loan from Nova Ljubljanska Banka and UniCredit Banka materialises.
Clarifying those remarks, the chief executive now tells Flightglobal that all of the preconditions stipulated by the banks have been met and that he expects funding to arrive in due course.
"Negotiations with the banks on the conditions for the loan have been ongoing for months," he explains. "The basic condition is that Adria executes the turnaround plan as agreed a year ago. Based on an analysis of our performance in the first eight months of the year, the banks found out that Adria is actually ahead of schedule.
"In 2011 the operational loss was approx €15 million. In 2012 the plan was to have an operational loss between €7 million and €8 million, and it looks at the moment that we will do better than this."
However, Bostjancic goes on to say that earlier plans to overhaul the fleet by phasing out two Airbus A319s and one A320 are no longer being considered, despite being part of the original restructuring plan.
"Adria decided that it will make use of the fleet it has and fly with it on a profitable basis," the chief executive insists. "We are not thinking of finding a fleet solution through removing aircraft or replacing them. We have a fleet as it is and we will fly it...We don't expect big changes in the fleet."
He rejects suggestions that the fleet renewal is a sticking point between the airline and the banks, insisting that factors "out of Adria's hands" such as inflated fuel and airport costs are a more pressing concern.
Adria is 99.9% owned by Slovenia's government and a group of banks comprising Nova Ljubljanska Banka, UniCredit Banka, Abanka Vipa and Hypo Alpe-Adria-Bank. The banks became co-owners following a €20 million debt-to-equity swap that accompanied the €50 million cash injection from the government.
