Insolvency looms over Adria Tehnika after Spanair collapse

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Slovenian maintenance, repair and overhaul provider Adria Tehnika is facing the possibility of bankruptcy after its main customer, Spanair, ceased operations last month.

The Ljubljana-based company declared liquidity problems on 7 February and is looking for an immediate capital injection either from its shareholders or an external investor, chief executive Robert Vuga told Flightglobal.

Slovenian law allows companies 30 days to secure fresh cash. If this is not possible, Adria Tehnika will become bankrupt.

Spanair signed a five-year airframe heavy maintenance agreement with Adria Tehnika for its Airbus A320 family fleet in 2010. This was the MRO provider's largest single contract, due to provide around 25% of its budgeted revenue for 2012.

Vuga said he took several immediate measures when he heard of Spanair's collapse on 27 January. This included sending home all contracted workers and continuing only with the company's own staff.

Adria Tehnika has a total of around 240 employees plus approximately 60 contractors.

Vuga also stopped all material supplies which are not necessary for aircraft currently in the hangar. There are two Spanair aircraft in Adria Tehnika's hangar and Vuga is negotiating with their owner, International Lease Finance Corporation (ILFC).

Vuga had been working on a restructuring plan for the struggling MRO provider before Spanair's collapse, which he submitted to the two shareholders, state-owned asset management firm PDP (52%) and Ljubljana Airport (48%), just before news of the airline's bankruptcy came through.

This has since been adapted to the new situation.

The company plans to make 15% of its staff redundant after April. This will mainly involve administrative staff rather than mechanics, according to Vuga.

Furthermore, salaries will be cut by 20% across all employees.

Despite the perilous situation, Vuga is confident that fresh capital can be found for the company. "I don't have any fear for Adria Tehnika in the future. I think it's a good investment opportunity. But we have to survive the short term now," he said.

The investment would either have to come from the two owners or an external "strategic partner". Vuga added that this would either be an airline or another MRO company.

In 2005, Adria Tehnika partnered with Air France Industries for A and C checks on A320 family aircraft.

While Spanair's bankruptcy came as a shock, the end of that contract could turn out to be a liberation in the medium term. Vuga said that the deal, which had been agreed under Adria Tehnika's previous management, had "not really been sufficiently profitable" and included some points "which were at least not logical or not fair".

Vuga, who took over the helm from previous chief executive Mirjana Ceh in November 2011, said that he had already started talks with Spanair before its collapse to reopen the contract and renegotiate some of its contents.

Adria Tehnika's main customers, apart from Spanair, are Slovenian flag carrier Adria Airways and France-based Air Méditerranée. Ad-hoc maintenance work is being done for airlines such as Italy's Air One and Air Berlin.