State to decide Montenegro Airlines’ fate by February
The newly elected government in Montenegro will replace the national airline’s management within the next two to three weeks and form a team of experts who will analyse the situation at the indebted and loss making flag carrier and decide its faith. The team will have to come up with ways on how Montenegro Airlines can be saved in respect to European Union regulations, otherwise, the company would be shut down and a new one formed. A deadline has been set until February for the process to be completed. The team will determine weather the carrier can survive without state aid, if alternative revenue streams can be found and to what extent costs can be cut and the workforce reduced.
The analysis will also determine whether it is more profitable to liquidate the existing company and write off its debts, which amount to 98 million euros, while forming a new airline. However, this option has its drawbacks as new permits, licenses and slots would have to be secured. Furthermore, the team will scrutinise the company’s existing financial reports to establish whether correct information has been passed onto the public. The previous two management teams at Montenegro Airlines had claimed financial reports had been falsified in the past. The government is already in talks with potential candidates who could lead the national carrier and replace the existing management. During the week it named the State Secretary in charge of Aviation who had held various posts at Montenegro Airlines over the past eleven years.
Montenegro Airlines registered a loss of 7.9 million euros in 2019, while its debt stands at close to 100 million euros. The carrier’s existing management team has called on the government to provide the company with state aid. Alternatively, it has warned it may be forced to ground its fleet as it is late with wage payments, aircraft lease payments, engine lease payments and is accumulating debt towards suppliers. The carrier was granted 10.4 million euros in July and a further 25 million euros from the state in August in order to maintain liquidity. However, it has not received funds since. The Montenegrin competition watchdog is still studying the legality of a state aid law “for the investment and consolidation of the national carrier” which foresees the allocation of 155 million euros to Montenegro Airlines over a six-year period. The legislation was adopted late last year.
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