Recession hits Slovenia

Adria Airways CRJ900 cabin empty as recession hits Slovenia

On Tuesday, the Slovenian government officially announced that the country was in a recession due to the global financial crisis, following the trend of nearby countries. The recession in the first quarter saw gross domestic product (GDP) had dropped 8.5% year-on-year in the first quarter, following a 0.8% fall in the last quarter of 2008. "These figures are worse than expected, this is a catastrophe", said Peter Stanovnik of the Economic Research Institute in Ljubljana. The importance of these results in terms of aviation is the impact it might have on the national carrier Adria Airways, which is still recovering from the high fuel prices which hit the aviation world early last year. The difficult economic situation has seen Slovenians abandoning air travel, with a 9% drop in passengers in the first quarter of this year recorded by Adria Airways. The airline is hoping it will see more passengers in the near future however the carrier goes from one economic difficulty to another. Adria has, like most European carriers, just felt the impact of last year’s high fuel prices. While the impact of the current global financial crisis is felt immediately in passenger terms, it will be a few months until it will hit the carrier financially. Adria’s management previously calculated a drop in revenue of 5% by the end of the year, although this is now set to increase. The Slovenian carrier has cancelled its plans to begin flights to Niš although there has been no official word about the fate of the airline’s fleet renewal. While the arrival of the NextGen CRJ1000 is certain (to enter the fleet early next year), an agreement with Airbus for the purchase of 3 Airbus A319s is not concrete. A letter of intent for the purchase of the 3 Airbus aircraft was signed earlier this year, to replace the airline’s ageing fleet of Airbus A320s. Adria will not pursue the purchase of Montenegro Airlines. Despite the airline exploring the possibility to purchase 30% of Montenegro Airlines’ shares, the current financial situation has forced the carrier’s management to concentrate on their own airline.

Slovenia has been the most successful economy in the European Union, since it entered in 2004. The government believes that the sharp GDP decline will come to a stop within the following months as signs of recovery are seen across the world.