ƒата: 25-09-19 11:35
Adria Airways temporarily suspends flights
The national flag carrier of Slovenia, Adria Airways, has announced that the airline will not commence flight operations on September 24 and September 25, 2019, because it needs Уaccess to fresh cash which airline needs for further flight operationsФ. Adria will resume flights if a solution can be found Уin cooperation with potential investorФ, according to the airline. Adria Airways will only operate one-way flights from Frankfurt Airport (FRA) to Ljubljana, Slovenia (LJU) and back on both days.
The current financial situation, repossessed aircraft, unsuccessful privatization and struggles to stay afloat due to unfavorable market conditions seem to have put Adria AirwaysТ under a lot of financial stress, as it was forced to cancel almost all flights for two days.Betting on the wrong horse twice
There is no denying that regional carriers in Europe are struggling, especially those that are not subsidiaries of network carriers. In the past few years, the aviation industry has seen the collapse of several flag carriers serving smaller Eastern European states, including HungaryСs MALEV, EstoniaСs Estonian Air and the currently struggling Nordica and, LithuaniaСs FlyLAL and Air Lituanica.
But some have achieved success Ц airBaltic, Air Serbia and Croatia Airlines are some profitable examples, excluding Croatia AirlinesС loss in FY2018, which came after two subsequent years of profitability. The successful examples have found their niches, including hybrid business models Ц case in point is airBalticand Air Serbia. Croatia Airlines strives on the fact that the country is very popular among tourists Ц 10.5 million passengers landed or departed from Croatian airports, with Croatia Airlines claiming 25% of the market, according to data presented by the airline.
Adria Airways also tried to find its niche and offer flights from several cities in the Balkans. However, it bet on the wrong horse in 2016 and again in 2018. Firstly, the Slovenian government was fed up with constant losses of the airline and in 2016, it decided to privatize Adria. The same year, the carrier finally achieved a net profit, as it sold its shares and branding rights to a new investor, called 4K Invest Ц a company, which had no experience in the aviation industry. To this day, 4K Invest prides itself on the fact that it Уhas performed successful restructuringФ in various industries.
But amongst the successful examples, aviation is nowhere to be seen.The not so superjet
The Slovenian carrier also tried to bet on an aircraft that, according to its manufacturer, Уoffers standards of economy, performance, environmental efficiency and passenger comfort never before seen in a 100-seat airlinerФ. The aircraft? The then-known Sukhoi Superjet 100, which is now the Superjet 100 Ц a name Rostec considers changing once again.
Adria Airways and Sukhoi Civil Aircraft Company (SCAC) shook hands and inked a deal in 2018. The carrier signed a Letter of Intention for 15 Russian aircraft, including a Memorandum of Understanding to establish a joint organization to maintain and repair the SSJ100 in Europe. The deal looked great on paper Ц Adria Airways would receive a state of the art aircraft fairly cheaply (USD 50.5 million in list prices according to SCAC) that is much more fuel-efficient than any of the aircraft used by the airline. When comparing the SSJ100 with its class rival, the A220-100 and A220-300, which cost USD 81 and USD 91.5 million, the Russian jet is much cheaper to purchase. Although the true price for an aircraft does differ significantly, it still provides a starting point to estimate the final sum airlines have to pay for a jet.READ MORE: Why did Airbus stop publishing aircraft list prices?According to recent media reports, Airbus is halting its long-held policy of publishing the catalog prices for its product line. The European manufacturer has been providing the list prices for its aircraft models on an annual basis, but so far has not released its 2019 data. The company stresses that the list-price data do not reflect the actual values of finalized deals. So what are the uses of list prices and in what way can they be deemed as irrelevant?
The cheap acquisition payment, combined with the promising operating economics of the jet compared to the current fleet of Adria Airways may have provided the opportunity for the carrier to turn its fortune around. Yet the deal was never finalized, because the partnership between Sukhoi and Adria Airways Уwas only viable if given objectives set by the strategic business plan were attainableФ, according to the Managing director of the airline, Holger Kowarsch. Thus, Adria Airways canceled the SSJ100 order in April 2019, without receiving a single aircraft from the East.
Ljubljana-based airline has to renew its fleet in order to sustain its business. Adria operated five Saab 2000 aircraft of an average age of 24 years. Its youngest aircraft, two Bombardier CRJ-900LR (average age 7.3 years), were grounded by the Civil Aviation Agency (CAA) of Slovenia on September 19, 2019, over unpaid debt to the leasing company, Trident Aviation Leasing Service. The total average aircraft age in AdriaТs fleet was 15.7 years, according to planespotters.net data.
Without an investor, Adria Airways is stuck in a Catch-22 situation Ц without new aircraft, it cannot grow further or reduce its operational costs, yet it does not have enough capital to acquire new planes to grow or cut down on expenses. And finding a potential investor, when the airline already had to suspend operations temporarily, is almost an impossible task unless the Slovenian government steps in and provides a helping hand.Stuck between a rock and a hard place
Simply put, the Slovenian market is not enough to support several airlines competing for the same routes. The countryТs main airport and Adria AirwaysТ hub Ljubljana Airport (LUJ) had a record-breaking year in 2018 Ц it transferred 1.8 million passengers, according to a press release by the airport Ц a number definitely not high enough to support a flag carrier, foreign mainline carriers and low-cost options like easyJet, Transavia and Wizz Air.
Thus, Adria expanded its operations to several airports in the Balkans and in Germany Ц it operated flights from Pristina International Airport (PRN), Sarajevo International Airport (SJJ), Tirana International Airport (TIA) and the German airports of Frankfurt (FRA) and Munich (MCU). But Adria AirwaysТ Sarajevo (Bosnia and Herzegovina) and Tirana (Albania) connections were challenged by the newly established flag carriers FlyBosnia and Air Albania, both of which commenced operations in 2019. And Germany is a different beast on its own Ц Adria has to compete on flights to PRN, SJJ and TIA with the Lufthansa Group airlines that have more commercial power and flexibility.
But that was just the rock. The hard place for Adria Airways is the fact that the already thin routes from Ljubljana were not even subsidized, according to reports by exyuaviation.com. A government subsidy to ensure connectivity on certain routes is a must for the route to be commercially viable. But the Slovenian government has only prepared the Уlegislative proposalФ which would Уenable subsidies for some airlines" Ц a process that is Уcomplicated and time-consumingФ and must be given the stamp of approval by the European Commission.
Unfortunately, Adria Airways seems to have run out of time. If the airline were to close its doors for the final time, the bankruptcy would create a massive gap in SloveniaТs connectivity to the outside world. Adria Airways accounts for 16 destinations out of the total of 27 served to and from Ljubljana Airport (LUJ) Ц while some of these flights are codeshared with EuropeТs biggest airlines, the question is whether those partners will accept the commercial risk and still serve the routes after the collapse of Adria Airways.
The final fate of the airline will be decided on September 25, 2019, as the CAA of Slovenia will hold a press conference regarding the continuation of AdriaТs license after the CAA concludes a meeting with representatives from the airline in question.
»сточник информации: AeroTime
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