Adria considering bankruptcy!

Uncertain times for Adria

The Slovenian national carrier Adria Airways may go into receivership or even file for bankruptcy, Maks Tanjikar, the chairman of the company’s Management board told Radio Television Slovenia. According to Tanjikar, Adria has accumulated losses of up to a whopping 86 million Euros in the past 10 years with banks no longer willing to extend the loan repayment period. Adria’s CEO, Tadej Tufek, was more moderate with his words telling Reuters on Friday that the company is expected to end 2010 with a loss of between 8 and 9 million Euros, after a 14 million Euro loss in 2009, but hopes to return to profit in 2011 by cutting costs, including a 20% cut in employee wages. "Talks with possible strategic partners are ongoing but are still at the initial stage", he said. Slovenian media are reporting that Lufthansa is interested in taking over the carrier which would give it unprecedented access to the Balkan market. However, the German giant might once again come under scrutiny from the European Commission’s competition watchdog. "In 2011 we need to decide whether to become a part of a larger air carrier or change our business model to become competitive with low cost airlines”, Tufek concludes.

Tanjikar, on the other hand, said that if the company failed to find a strategic partner within the next 6 months it could declare bankruptcy. On top of the 86 million Euros debt, the airline owes a further 29 million Euros to suppliers.

Adria Airways is owned mostly by the Slovenian Government although a certain number of shares are held by minority stock holders. These stock holders wrote a letter to the Slovenian Government last week, urging them to sack the current management team stating that they have brought the company in a dire financial state.