Whilst calls for expressions of interest failed to factor in Adria’s subsequent troubles that include the need for an €8 million recapitalisation injection to keep the airline viable through the traditionally fallow winter season and industrial action instigated by Adria’s pilots slated for 30th November, it appears that would-be suitors hold more of the cards than Slovenian Sovereign Holding(SSH), the state-run enterprise tasked with overseeing the disposal of publically-owned assets. Acutely aware of the urgency with which Slovenia’s incumbent administration are keen to divest themselves of Adria, a financial millstone that the country is no longer willing to shoulder, talks between the state and the triumvirate of German companies has seen the interested parties playing hardball, demands including the restructuring of the airline’s debt and in some cases, a complete write off of its liabilities. A balance will have to be struck that doesn’t leave creditors high and dry but won’t place an unrealistic financial burden on the new owner of Adria, especially if their modus operandi is predicated on streamlining and selling on the airline rather than consolidating and growing the business.
Having failed three years ago to acquire Adria during the state’s first, aborted attempt to divest itself of the airline, Intro Aviation’s business model of turning around distressed carriers seems to be an ideal fit for the myriad challenges that lie ahead for a future owner. It is though unlikely that Intro will only need to wave its magic wand should they acquire Adria and its full complement of liabilities, although there should be some room for manoeuvre during negotiations which will indicate that the disposal and acquisition of Adria falls into a ‘buyers’ market’ category.
The level of investment required to move Adria Airways away from the unedifying spectacle of the denudation of its assets that has resulted in none of the aircraft at its disposal actually being owned by the Brnik-based airline is though considerable. With a depleted fleet of jets reduced to sale & lease back agreements and Wet Lease arrangements to keep Adria airborne, for any investment company to restructure and sell on the airline in a better condition than which it was found will surely have to speculate on aircraft Adria can call their own. With even the unit cost of the versatile and popular but small capacity Bombardier CRJ-series retailing in the tens of millions, turning around Adria will prove to be both a costly and time-consuming process.
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