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Adria Airways Shareholders Approve Capital Hike (II)

Brnik, 21 September (STA) - The shareholders of Slovenia's flag carrier Adria Airways unanimously endorsed on Wednesday a capital hike through a conversion of EUR 19.7m in debts into shares and a EUR 50m cash injection by the state, averting a looming bankruptcy.

The decision taken at the shareholders' meeting in Brnik is aligned with the government's decision earlier today and an agreement with creditor banks.

Of the EUR 50m in cash that Adria will get from the state, nearly half will be immediately spend on the repayment of delinquent loans. The rest will be earmarked for restructuring and the coverage of the loss planned for 2011 and 2012. The carrier expects to break even in 2013.

But for the decisions to be implemented, agreement will need to be reached with the trade unions by 30 September, when the shareholder agreement and a new collective bargaining agreement need to be put into place, and the pledged capital transferred onto Adria's accounts.

Negotiations on a new collective bargaining agreement are ongoing. The company's executive director Robert Vuga said the talks had been constructive and he was confident an agreement would be reached.

"It would really be odd if the employees buried the company now that we are so close to a long-term solution for Adria," he said. "The fact is that employees will have to work much harder for the present level of wages."

Klemen Bostjancic, the chief executive officer, welcomed the shareholders' decision, saying it would end the uncertainty. But he pointed out that the carrier's long-term survival hinged on restructuring.

The shareholders also endorsed the proposal by the state-run PDP corporation for the auditing form BDO Revizija to pore over Adria's transactions in the past five years.

The audit will focus on the construction of an office building and a third aircraft hangar, contracts with customers on benefits, stocks policy, consulting services, wage policy, economic viability of aircraft acquisition and decisions on the introduction and scrapping of individual routes.

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