The phony war seems to be over, the gloves finally coming off in a saga so protracted that it threatens the very premise Slovenia’s denationalisation programme was founded on, namely, the swift privatisation of fifteen of the country’s foremost publically-held companies aimed at reducing the national deficit and shrinking the state, a concept almost unthinkable when the former Yugoslav republic seceded from Belgrade twenty four long years ago.

The chain of events surrounding the potential sale of flag-carrier Adria Airways is a convoluted tale although, finally, KPMG – the global professional service provider widely known as one of the “Big 4” – who’ve been tasked to assist in the disposal of Adria are sounding out prospective interested parties, the first stage being to field non-binding bids for the Brnik-based airline. Whilst more likely to be the end of the beginning than the beginning of the end, the sale process has at least finally started in earnest, despite Slovenian Sovereign Holding(SDH), the government agency overseeing the disposal of assets understandably refusing to commit to a timetable that it might struggle to honour.

Amid a backdrop of industrial unrest within Adria’s front line rank and file that has resulted in strike action from the airline’s cabin crews being narrowly averted and, dissatisfaction at levels so high amongst the Slovenian Pilots Union that the very future of the carrier has been brought into question, the mood music broadcast by the airline’s management has been relentlessly upbeat, increased passenger numbers and revenue being promulgated alongside bullish five year projections for both these two key aviational metrics. Whether Adria’s pilots are able to leverage a buy out of their employer with the help of the trade union-backed savings bank Delavska hranilnica remains to be seen although, it is anticipated their case will be heard sympathetically by a financial institution already heavily involved in Slovenia’s complicated aviation sector, having secured in 2014 a majority shareholding of Maribor’s Edvard Rusjan Airport. Longstanding overtures to Middle Eastern Sovereign Wealth Funds who in effect control several of the regions airline giants have fallen on deaf ears, the restriction of owning a maximum of 49% of a European Union-based venture by a speculator from outside its borders presumably garnered lukewarm responses from the likes of Qatar Airways. Despite predictions of smaller European airlines or venture capitalists being a more realistic fit to acquire and grow Adria, it is hard to imagine that such strategic alliances will add any value to an airline heavily restricted to short-haul services that link Slovenia with much of the former Yugoslavia, Albania and a raft of continental destinations. There is also the added problem of Adria Airways only owning one of the twelve aircraft it will operate this summer, a spate of short-term sale and lease back agreements designed to keep the airline in business morphing into a longer-term business model that has seen additional planes being wet leased, leaving little in the way of tangible assets on the balance sheet.

Adria states it can manage without being denationalised, and who’s to say it cannot. All though does not appear to be rosy in the garden and despite not initially being the preferred solution to take the airline forward, an employee buy-out by its pilots would be popular with a general public who’ve become increasingly uneasy of many of Slovenia’s best known public and private companies falling into foreign ownership, a scenario unthinkable during the heady days and immediate aftermath of independence. Whilst some members of older generations will hanker for the security blanket of guaranteed employment and pensions, many of which were swept away at a stroke when Milan Kucan came to power on a dream ticket of democratic reforms, the majority of Slovenians will accept that free-market reforms have come at a price, one that many will deem to be unacceptably high. Nevertheless, in its controversial programme to divest the state of much of its family silver, it is to be hoped that ownership of many of the gang of fifteen companies earmarked for privatisation will stay within Slovenia’s borders, a trend pioneered when Maribor Airport was acquired by Delavska hranilnica, the bank now seen as playing the role of kingmaker should Adria’s pilots successfully secure the requisite finance to keep the airline ‘in house’.

Further reading on this item can be viewed at:

Ex Yugoslav Aviation: Adria Airways’ sale process to ratchet up