The long-term future of aircraft maintenance concern Adria Airways Tehnika(AAT) continues to be mired in uncertainty, the binding-tender process initiated by Slovenia’s incumbent administration’s desire to denationalise fifteen state-owned companies has as of yet failed to yield bids deemed acceptable by the two owners, state-run majority shareholder PDP and Fraport, the German owner-operator of Ljubljana’s Brnik-based airport.

Three of the rumoured five interested parties have been ordered to firm up their binding bids, lending credence to the notion that Slovenia’s fire sale will attract speculators seeking to acquire some of the country’s biggest assets on the cheap, such is the urgency of Miro Cerar’s government to uncouple the likes of AAT from the state. It does though seem that the privatisation process isn’t an exercise in desperately divesting the Slovenian state of its family silver at any price, the noises coming from within Adria Airways Tehnika suggesting a busy order-book and turnover for 2015 to increase by €1 million on the €18.6 million posted for 2014 indicates the sale of the company isn’t a necessity for it to remain viable.

Whilst a small net profit of €49,000 suggests operating margins are incredibly tight and efficiency savings being potentially needed to bridge the gulf between turnover and profit, a surplus for any Slovenian company is a rare beast indeed, vindicating the insistence of PDP and Fraport to hold out for bids that more accurately reflect AAT’s market value and growth forecasts. It is difficult to say if such posturing reflects a wider defiance of the privatisation process in general, or is a carefully choreographed tactic to extricate larger bids from the German, Lithuanian and Croat companies interested in acquiring AAT. The financial data does though suggests that a private sector company who specialise in the aviation maintenance field would expect greater profit levels from a turnover of close to €19 million although, Adria Airways Tehnika’s figures were dented by ongoing geopolitical turmoil in the Middle East, North Africa and Ukraine, where several projects slated for completion were unable to be fulfilled.

With much of AAT’s business coming from its former owner and namesake Adria Airways, it is unclear if  the flag-carrier’s current penchant for hiring the overwhelming majority of its fleet on Wet Lease terms includes AAT performing the routine maintenance, the conditions of such agreements usually include the lessor providing the upkeep of any aircraft it leases out. Adria currently own only one of the twelve planes it plans to operate this summer, the wider implications of ultimately how such a business model tallies with the airline’s projected forecasts for growth running in tandem with the possibility of AAT being unable to rely on its national counterpart for a significant portion of its business.

Both Adria Airways and AAT are clearly not allowing speculation surrounding their respective futures to hinder their day to day operations; it is obvious that for both to flourish rather than stagnate remaining in public ownership isn’t an option although, it’s by no means a foregone conclusion that a private investor with pockets sufficiently deep to recapitalise both businesses will materialise. Slovenia’s aviation industry in all its forms has seen a remarkable period of transformation over the last year, the fortunes of Adria Airways and AAT sharing column-inches with Ljubljana and Maribor airports who are both experiencing an upturn in fortunes under new majority owners Fraport and Delavska hranilnica, respectively.

Further reading on this matter can be viewed at:

Delo: Adria Airways Tehnika rejects initial bids