For the past week, Adria Airways has operated a very limited number of flights, as financial trouble has severely impacted the airline’s ability to fly to its best ability and schedule. The carrier is on the lookout for potential investors, as it “remains dedicated in reaching positive solution for all”.  But the situation is looking quite grim – massive debts, local government’s unwillingness to cooperate with the current owners and a looming deadline regarding the continuation of its air operator's certificate (AOC) have resulted in a difficult situation for Adria to navigate out of.

In the early morning hours of September 30, 2019, the Slovenian airline announced that it will now increase the number of flights from Ljubljana (LJU) today. Adria will once again operate return-flights to Munich (MUC), Vienna (VIE), Brussels (BRU), Zurich (ZRH) and Tirana (TIA), while flights to Frankfurt (FRA), which were the only ones operated by Adria since the temporary suspension, will continue. However, after the latest announcement by the government, all flights have been canceled. 

The latest news, announced by Zdravko Počivalšek, the Slovenian Minister of Economic Development, has complicated the situation even further. Počivalšek said that the only “possible scenario” out of the situation is a bankruptcy of the airline. Subsidized routes or a new Slovenian flag carrier were outlined as the options to replace the drop in capacity in case of Adria’s bankruptcy.

Adria Airways owes at least $98 million (€90 million) to various parties, including aircraft lessors, who already began to withdraw aircraft from the airline’s fleet, according to 24ur. Latest reports have indicated that out of 18 aircraft, the airline has access to ten. $30 million (€28 million) would allow the airline to continue operating normally as a restructuring process would be completed. If the government refuses to provide the cash needed, a private investor is the last resort for Adria Airways.

And the clock is ticking – on September 25, Slovenia’s Civil Aviation Agency (CAA) decided not to terminate Adria’s AOC. But the airline has to provide a restructuring plan by October 2, 2019, 23:59 (GMT+2) to the CAA if Adria Airways wants to continue flying.

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UPDATED: The airline has indicated that it will continue flying. However, with limited capacity and routes.
 

An example up north

Back in 2010, the national flag carrier of Estonia, Estonian Air, was on the brink of collapse. To save the airline and outbound flights from the Baltic country, the government agreed to a divestment deal with SAS, which owned 49% of the company. The Scandinavian airline agreed to reduce its stake from 49% to 10% for around $20 million (SEK205 million) – a sum, which the Estonian government was more than willing to provide.

On November 7, 2015, the European Commission (EC) deemed that Estonian Air received over $92 million (€85 million) of illegal aid from the Estonian government between 2010 and 2014. EC’s final ruling was that Estonian Air had to “pay back the state aid already received”.

Unfortunately, the airline did not have the money required. As a result, the Estonian government decided to act quickly. In a very cheeky move, the authorities closed down the flag carrier on November 8, 2015 – the same day a new airline by the name of Nordica commenced operations on the same routes with former Estonian Air aircraft.

The Slovenian government also could exercise such option, but its situation is even more complicated. 4K Invest owns 100% of the company. If the Slovenian government were to establish a new airline, it would have to come up with a fair share of capital to invest into acquiring (possibly wet leasing) aircraft and crucial slots, which are still possessed by Adria.

Reaching out to other airlines and replacing Adria Airways flights is also an alternative. Počivalšek noted that the government is in talks with Lufthansa and Fraport, the company which owns and manages numerous airports throughout the world, including Frankfurt (FRA) and Ljubljana (LJU), to replace “seven out of the 15 connections” from the Slovenian Capital.

Whether a new Slovenian airline will take off could be announced “as early as this week,” according to 24ur.com.

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Adria Airways had to temporarily suspend its flights, as the carrier tries to come up with emergency funds to continue flights beyond September 25:
 

UPDATE 30-09-2019, 17:42 (UTC +3) Adria Airways have ended their week-long struggle and have announced that the airline is filing for bankruptcy. All flights have been canceled.