Montenegro Airlines to file for bankruptcy and cease operations
Montenegro Airlines will be shut down and cease operations “within a day or two”, the Montenegrin government has announced. A new carrier will be formed in its place within the next six to nine months. “With the best possible intentions, we spent the last fifteen days seeking a solution for Montenegro Airlines. We looked at all the possibilities, made calls, held talks with the management, the Agency for the Protection of Competition regarding state aid, contacted airlines in the region, consultants from Germany and Austria, and the conclusion was that we can’t make a single decision that would save Montenegro Airlines and be in line with the law. We are fully aware of the consequences of Montenegro Airlines ceasing operations in a day or two”, the Montenegrin Minister for Capital Investment, Mladen Bojanić, said. He explained the government began looking for a solution for the airline even before it was sworn into office at the start of the month but concluded there is “absolutely no way out”. He added, “Our hands were tied by the decisions made by Agency for the Protection of Competition, and Montenegro Airlines’ Board of Directors whose President told me today he could not address the media because of a toothache”.
The Montenegrin Agency for the Protection of Competition recently ruled that a law adopted in December of last year, for the provision of state aid to Montenegro Airlines amounting to 155 million euros, was in fact unlawful. Based on the law, the carrier had already received 43 million euros. “It took them over nine months to conclude that a law adopted by the former government and parliament was unlawful. We are yet to see if Montenegro Airlines will have to return those 43 million euros it had already pocketed. It is impossible to get a loan for Montenegro Airlines from banks or any other subject because the company is in no position to return such a loan”, Mr Bojanić said.
The government plans to set up a new national carrier. “We plan to establish a completely new airline, with a different structure and business model. We are aware what that means for the upcoming tourism season because it will take us some six to nine months to establish a new carrier. We will do everything we can for the new company to become operative by the start of the next tourism season. We will start work on the new airline immediately”, the Minister said. He conceded the establishment of the new airline will be a difficult process as it will start from scratch, without slots or international agreements and will have to acquire necessary permits.
The Minister estimates Montenegro Airlines bankruptcy will cost the country’s taxpayers at least fifty million euros. The company has been facing financial problems for the better part of its existence. In recent years, it was determined the carrier's former management teams had falsified financial reports to show a profit. Furthermore, no benefits have been paid to its employees since 2016, while wages have been late since this September. At the same time, it has been found the airline had received much more state aid over the past few years than initially reported or accounted. Montenegro Airlines has debt amounting to 100 million euros and is expected to file for bankruptcy within days as it will no longer have sufficient funds for fuel and its aircraft may be repossessed due to debt owed to the likes of Frankfurt and Vienna airports.
The Montenegrin carrier was founded in 1994. It operated its first flight on May 7, 1997 between Podgorica and Bari. As of this morning, the airline is still running services, but it may be its last day of operations. Its schedule today consists of two flights from Podgorica to Belgrade, and one from Tivat to the Serbian capital.
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