Montenegro Airlines hit by poor results

Montenegro Airlines’ true results reveal gloomy outlook

Montenegro Airlines will record losses of over seven million euros and a decline in passenger numbers this year. Following a marathon nine hour session of the newly formed Board of Directors, the Montenegrin carrier has decided to lease some of its aircraft to the Kosova Reisen tour operator to sure up capital. The aicraft will be used on the busy Pristina - Zurich service. The decision comes after Montenegro Airlines increased its losses from 3.9 million euros last year to over seven million euros in 2014 under the leadership of its newly appointed CEO Daliborka Pejović, who took office last summer. The numbers represent the carrier’s worst financial performance since it began operations. The Board of Directors put the losses down to the spring floods in Serbia, the crisis in Ukraine and its own policies.

Late last year, the airline began a series of cost cutting measures which now seem to have been unsuccessful. It shut down its sales offices in Frankfurt and Zurich this year, while it previously closed its offices in London and Rome. Furthermore, it laid off its Serbian staff which included over twenty pilots, as well as mechanics and engineers. With a shortage of pilots, the carrier is now looking for new ones. At the time, Ms. Pejović said,”I can say with confidence that Montenegro Airlines has a future following the measures undertaken in the second half of 2013. I expect the new management will better handle the commercial sector of the business than was the case up until now”. However, the cost cutting has been selective. Late last year the carrier approved bonuses for various employees, all of which proved to be members of the ruling Democratic Party of Socialists (DPS) or family members of government officials. Furthermore, a significant number of party faithfuls have been employed at the airline over the past year.

Montenegro Airlines recently reported it was performing well in 2014, in face of tough competition, and announced plans for a busy 2015, during which it should launch several new routes. It selectively published passenger results for certain markets during certain timeframes, avoiding showing its figures in full. However, the airline’s former CEO, Zoran Djurišić, who led the carrier for nineteen years until his dismissal last summer, recently warned that Montenegro Airlines had recorded a decline in passenger numbers, revenue and safety standards in 2014, a claim denied by the management. The carrier is expected to handle some 570.000 travellers this year, down from 588.241 last year and 611.000 in 2012. Montenegro Airlines recently announced it was selling two of its Fokker 100 jets. The airline was planning on having seven operational aircraft in 2015 in order to accommodate its growing route network, however, this now seems unlikely with the Board’s decision to lease out jets. Montenegro Airlines has outstanding debt of 68.980.608 euros.