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 “access to fresh cash which airline needs for further flight operations”. Adria will resume flights if a solution can be found “in cooperation with potential investor”, 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 Airways’ 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 Hungary‘s MALEV, Estonia‘s Estonian Air and the currently struggling Nordica and, Lithuania‘s FlyLAL and Air Lituanica.
But some have achieved success – airBaltic, Air Serbia and Croatia Airlines are some profitable examples, excluding Croatia Airlines‘ loss in FY2018, which came after two subsequent years of profitability. The successful examples have found their niches, including hybrid business models – case in point is airBaltic and Air Serbia. Croatia Airlines strives on the fact that the country is very popular among tourists – 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 – a company, which had no experience in the aviation industry. To this day, 4K Invest prides itself on the fact that it “has performed successful restructuring” 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, “offers standards of economy, performance, environmental efficiency and passenger comfort never before seen in a 100-seat airliner”. The aircraft? The then-known Sukhoi Superjet 100, which is now the Superjet 100 – 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 – Adria Airways would receive a state of the art aircraft fairly cheaply ($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 $81 and $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.
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