No foreign interest in Montenegro Airlines

Montenegro Airlines has been removed from the list of state-owned companies slated for privatisation this year due to low interest. The carrier has struggled with financial problems and mounting debt over the past year. "Despite the fact that no privatisation is planned, we can include it to the list when there is sufficient interest. There are a number of sale models possible with Montenegro Airlines. It does not necessarily have to be privatised through the sale of shares but also through recapitalisation or a strategic partnership, depending on what would be of interest to the investor", Branko Vujović, a member of the Privatisation and Capital Investment Council of the Government of Montenegro, said.

According to the Council, the liquidation of Montenegro Airlines would be a last resort and would negatively impact on the country's tourism industry. "A solution is possible if a partner was to be found. We need an airline that will offer direct flights to several major European cities. This is in the country's interest and should be the strategy for any future talks going forward. Interest shown towards Montenegro Airlines over the past few years was such that it didn't warrant the launch of tender procedures for its sale", Mr Vujović noted. Montenegro's Prime Minister, Duško Marković, recently said, "The government holds a 99.9% stake in Montenegro Airlines and can offer 50% minus one share to a foreign partner. In the coming period, the government will work on stabilising and improving the company and consider privatising it. A minority stake would be offered through an eventual tender".

Previous attempts to privatise Montenegro Airlines have all failed. In 2009, Israel’s national carrier, El Al, teamed up with the European Bank for Reconstruction and Development in order to purchase a stake in Montenegro Airlines. El Al was interested in the carrier only if it gained control over Podgorica and Tivat airports as well, which the government deemed “unacceptable” at the time. In 2011, the Montenegrin government offered a 30% stake in its national airline. Arkia Israeli Airlines, El Al and Etihad Airways all purchased tender documentation but never made a takeover bid. Later that year, the government announced that Turkish Airlines was close to taking over both the carrier and the country’s airports but added it would not sell its national airline at any cost. Plans to privatise the carrier in 2014 did not materialise either. Montenegro Airlines is dealing with debt of over sixty million euros and in 2015 recorded an annual net loss of over ten million euros. As of last year, the European Commission has barred the state from providing further financial aid to the company.