Montenegro Airlines registered its worst financial performance on record, generating an 11.4 million euro net loss in 2016. It cemented its position as the least profitable and most indebted national carrier in the former Yugoslavia. The figure eclipsed its previous worst performance recorded in 2015 when its net loss amounted to 10.4 million euros. According to the company's financial report, revenue declined 3.4% to 65.4 million euros, while operating costs grew 2.9% to 75.6 million. The carrier's operating loss doubled to 10.2 million euros. Montenegro Airlines owes the state 15.4 million euros in tax and unpaid worker benefits. At the start of this month, the company requested for its debt to be reprogrammed, however, since the carrier was a beneficiary of state aid in the past, legislation forbids it from equally diving its repayments over a period of five years. Furthermore, it owes over sixty million euros to other service providers.
The former head of Montenegro Airlines, Daliborka Pejović, who led the company into two successive years of record financial losses, resigned in December 2016 without citing her reasons. She has since become a member of parliament for the governing Democratic Party of Socialists. In January, the Montenegrin Prime Minister ordered an urgent review into the company's business after half of the carrier's fleet was grounded with technical issues and a number of flights cancelled due to a silent protest staged by its first officers over unpaid wages. Those issues have since been resolved. Last week, Montenegro Airlines put back into service a Fokker 100 aircraft which was grounded at Belgrade Airport since January 1 with an engine problem. It is believed the aircraft took four months to be returned to operations due to the company's inability to secure finances for spare parts.
During 2016, Montenegro Airlines handled 581.519 passengers, up 0.6%. The number of operated flights fell 8.7% to 8.607. The carrier expects for its passenger numbers to decline this year as it attempts to consolidate its operations and optimise its network. "Plans for 2017 are based on the reduction of costs and the maximum utilisation of all available capacity, as well as business optimisation at all levels. As a result, and keeping in mind the state of the existing fleet, the company anticipates a decrease in the number of passengers, with an improved average cabin load factor. This summer season, instead of six, only five aircraft will be in operation", the airline said in a statement. Last year, the carrier returned its sole Embraer E190 jet to its owner, noting that the move resulted in savings of up to three million euros over the winter. The carrier says it could lease an additional aircraft during the peak summer months, if the need arises.
So they managed to increase their losses by 1 million euros. Well done to Daliborka and the team. Only natural in the Balkans she gets promoted to a representative of the people - an MP.
ReplyDeleteIn ex-Yu you usually get promoted for bad results. Look at how the old Jat was run and then their CEO gets awarded by being CEO of Belgrade Airport.
DeleteMind you, he is doing a far better job managing the airport, than he did managing the airline. But, with the airport concession about to be issued by the end of this year, his time at the airport is also coming to an end.
DeleteHe should have shown his "skills" at the time when he was CEO of JAT, but how that story finished we all know.
DeleteManaging BEG (for a long time the only airport in the country with population of 7 million people) was actually not demanding task as long as he was doing everything the all mighty ordered to be done.
One of real results would have been bringing back AF, BA, OK, SK or KL to Belgrade
Terrible results.
ReplyDelete€11,4 million loss for a company with 6 planes. That's crazy!
ReplyDelete5, actually. lol
DeleteRIP
ReplyDeleteWow. This is bad. This is really bad. Even worse than JP
ReplyDeleteSorry but I think this is beyond repair. Those losses and debt are staggering and it's not just that. All of their operational results are terrible.
ReplyDeleteIs there any way to save this company?
ReplyDeleteI think the best way is to liquidate it and start fresh with a professional management team and without all the debt.
DeleteBut someone is going to have to pay for that debt wheather the company exists or not. Also so many party members are employed at MGX (and I mean family of party members and so on). If they profesionalised the management they would all loose their jobs. Not gonna happen.
DeleteWow a rate of return of -17,4% that is what I call a dead end. Moreover it should be considered an unlawful interference in the Market, as the Government still injects a lot of taxpayers money into this dead company.
ReplyDeleteAgree that the situation is dire but I don't think the government is injecting any money in Montenegro Airlines anymore. They can't because the EU warned them about it.
DeleteThe government can pump money until they officially become an EU member.
DeleteThe EU can warn them but they have no mechanism to punish them like they could in case of OU or JP.
They can, but the EU can ban or limit them from flying into the EU, the same as with other third party countries.
DeleteEU can ban them only if they do not follow safety regulations and not because MNE Government pumps money in it (as long as they are not EU member).
DeleteMaybe Bosnia, Montenegro and Macedonia could jointly open up a new company that would be competitive to Croatia Airlines and Air Serbia in the region.
ReplyDeleteYes that would work out because all three have done a marvelous job with their national airlines.
DeleteThey don't need national airlines. All those markets are perfect for LCCs that can base planes there. Just look at Skopje. Sarajevo could be exactly the same if the airport management got its act together.
DeleteAnon 9.18 AM - Classic!
DeleteThis airline is dead. Move on in Wizz Air and show em how it's done.
LCCs are building up a nice presence in Podgorica. We have Wizz with Budapest, Memmingen and Milan and Ryanair with Berlin, Charleroi, London and Stockholm. Hopefully more will be added.
DeleteThe issue is that no low cost airline could fly TGD-BEG and TIV-BEG which is a huge market. Over half of Montenegro Airlines' passengers last year flew between Belgrade and Montenegro.
DeleteAnonymous April 25, 2017 at 9:37 AM
DeleteOF course a LC can fly this route. A Serbian or Montenegrin registered LC carrier. Let's get out of the ex-YU mindset that all LC carriers need to be foreign.
Speaking of the MNE-SRB market, last year a total of 284,329 pax flew between just Podgorica and Belgrade back. There were 143.090 flying to Belgrade and 141.239 from Belgrade to Podgorica.
DeleteI believe any potentially newly estalished SRB or MNE LC carrier would have to ask for permission to fly on that route and that permission would not be automatically granted.
DeleteSimilar situation as with airlines flying between Serbia and Russia.
Unprofessional leadership led them here, chosen by the government, without any work experience! RIP Montenegro
ReplyDeleteDaliborka Pejovic was brought in to manage the restructuring of the company. For it she was given state aid which was authorized by the EU. That process ended at the end of 2015. Now we can see the results of her fantastic restructuring.
ReplyDeleteThose funds partialy went into financing the DPS election campaign.
DeleteHow sad. They had every predisposition to succeed. For years they had little competition and LCC to contend with, they had huge government support and a modern fleet.
ReplyDeleteAnd JU have just signed a codeshare/partnership with this airline run by muppets? How embarrassment!
ReplyDeleteI guess Adria, Air France and dear Austrian Airlines should be embarrassed too for having a codeshare with them. Amazing how you can't contain your hate for JU.
DeleteEmbarrassment? Why? Business is business.
DeleteBut those companies signed those code-share years ago wile Montenegro was looking as prospective company.
DeleteAir Serbia did that after scanning, few months ago.
Why not? They get MGX to feed passengers through BEG to 30+ destinations. Only a fool wouldn't agree to make a deal like that. A bigger question is how good that is for MGX.
DeleteNo surprise. Their only profitable route is Podgorica-Tivat - Belgrade.
ReplyDeleteIf YM went under the loss for Montenegrin tourism would be huge since the majority of tourists to Montenegro still come by Montenegro Airlines. That's why I think the government will never let this airline go bankrupt.
ReplyDeleteNo big problem. Tourists will be able to route through DBV airport to get to Montenegro. Another big tick for Croatian airports
DeleteYes I'm sure Montenegro will allow that.
DeleteIf we learned anything from the Croatian case then that's the tourist industry will live on, with or without the country's national carrier.
DeleteLike Montenegro have many options. DBV is just up the road and is a beautiful airport. Insider information has it that QR about to announce year round flights to DBV. Simply fabulous - Another BIG tick for Croatian airports
DeleteMislim da Crna Gora ima potrebu za domacu kompaniju barem u toku ljeta, isto kao i Hrvatska. Mislim da njihova vlada nece dozvoliti da kompanija propadne jer postoji potreba toku ljetne sezone.
DeleteЦрна Гора има 600.000 становника, то ти изађе на два Нова Београда. Мислим да нема потребе за националним авио-превозником. Нискобуџетне и чартер компаније могу фино да опслуже то сезонско тржиште.
DeleteШто се тиче летова ка Београду, најбоље решење би било да се либерализује тржиште и да се допусти осталим ЕУ компанијама да успоставе летове.
Evropske kompanije nemaju nikakvo ogranicenje ako zele da lete TGD-BEG.
DeleteУ праву си, немају ограничење ако занемаримо међудржавни уговор о ваздушном саобраћају које су потписале Србија и Црна Гора. У њему је дефинисано да само авио-компаније које носе YU/4O регистрацију могу да обављају летове између две државе.
DeleteJel moze neki link posto nigde nisam nasao da saobracaj mogu obavljati samo avio kompanije sa YU/4O registracijom.
DeleteCrna Gora se ne može usporediti s Hrvatskom ni po broju turista ni po tome što Hrvatska, pored međunarodnih, ima i domaće linije i više aerodroma!
DeleteTakođe ima i 8x više stanovnika. Šta je poenta?
DeleteSo what happens next? What are MGX's plans?
ReplyDeleteIt says in the text. They will cut capacity and reduce the number of flights.
DeleteAdria has increased its flights from Ljubljana to Podgorica from three weekly to daily this summer. Do they know something we don't?
ReplyDeleteThat there is demand for this route? Slovenians visiting Montenegro during the summer?
DeleteMore like the airline's imminent collapse and the need to accommodate passengers by transferring them through Ljubljana.
DeleteI have been hearing stories of their "imminent collapse" for years.
DeleteAdria has no other option then to fly to Ex-Yu. Montenegro is a nice niche market. They should have gone for 4-5 weekly TGD and 2-3 TIV in the summer season
DeleteI agree that they should have given Tivat a go.
Deletesuch a small airline such a huge loss.
ReplyDeleteI remember a time when Montenegro Airlines was an example of a well managed company with the most modern fleet in ex-yu :(
ReplyDeleteIt's funny. When the US Department of transport issued Montenegro Airlines a permit to codeshare on JU flights to New York 2 weeks ago, they said that they find Montenegro Airlines to be financially stable.
ReplyDeleteA present for joining nato.
DeleteHe he. :) +1000
Deleteleave it alone... it is already dead!
ReplyDeleteOT: ALITALIA goes bust. The airline is about to shut down due the referendum outcome of employees!
ReplyDeleteOMG - AZ is gone - very sad indeed.
Deletekonačni bankrot Alitalie http://www.jutarnji.hr/vijesti/svijet/konacni-kraj-najvece-talijanske-aviokompanije-dnevno-gube-dva-milijuna-eura-bankrot-je-sasvim-izvjestan-a-12500-ljudi-zavrsit-ce-na-ulici/5953901/
DeleteAnother "successful" Etihad investment...
DeleteOuch! Feel sorry for Alitalia!
DeleteIn the last 10 years the italian taxpayers paid nearly 10 billion Euro for Alitalia through more governments.
DeleteThese results are quite bad but I do not think Montenegro Airlines will go bankrupt. The government just won't let it happen. But they need to make some radical changes. They put in a new management team at the start of January. Let's give them some time and see how they do.
ReplyDeleteI don't think the new management, which is also full of party members and party loyals will have any solution. The damage has already been done and the damage is already too deep.
DeleteUskoro ce cela Crna Gora pod led ne samo YM. Ne mozes ziveti samo od dva meseca sezone. Zasto bi inace pokupovali sve po srpskim planinam gde je sezona 6 meseci, i leti i zimi.
DeleteThis is the biogrophy of the CEO
Delete"The 48-year-old has up until now served in numerous local and government appointed jobs, most recently as the General Director of the Directorate-General of the Budget at the Ministry for Finance. Previous posts include the head of the Tourist Centre of Budva, Director of the public enterprise "Museums, galleries and libraries of Budva", the Chief of Staff to the President of the Municipality of Budva and the Assistant to the Minister for Finance of Montenegro, to name a few."
You think he will turn things around?
^ That is not the CEO, that is the President of the board of directors who is the most important in the company.
DeleteThe CEO is under investigation for a deal with a consultancy firm.
Kakav kadar...
DeleteI have read somewhere that Montenegro Airlines plans to phase out the 2 remaining F100s by the end of this year. Then they will be left with 3 embraers. What are they going to do then? Will they get new aircraft to replace the Fokkers?
ReplyDeleteThey won't do anything. They don't have money for new aircraft. They will continue flying with 3 Embraers and will adjust their network accordingly.
DeleteWhat about ASL financial results for 2016 ? It is the end of April.
ReplyDeleteIt's published in May like last year. They already said they were profitable.
DeleteLike Agrocor. There also revision companies made positive review on their financial report. But now...
DeleteAnother issue is the debt which is huge. Who do they owe all this money to?
ReplyDeleteJU desperately needs cheap planes, so buy YM reinstate INI focus eastwards and of course sue Daliborka, she is the biggest one to blame for all this fuss.
ReplyDeleteA criminal government and judiciary wont sue a criminal member of parliament.
Deletewhat cheap planes does YM has? you think small business like YM could get good discounts with lessors?
Deleteif there are owned aircrafts, what would be the price to pay to take all of the staff and costs and debt?
what a suggestion! crazy!
YM is totally insolvent but as long as they can sell off assets they'll continue as usual. Milo will kick in a few mills if needed.
ReplyDelete+1
DeleteLast year bank repossessed some MGX property but it doesn't really matter because the bank itself is owned by Milo's brother.
#keepingitinthefamily
So sad for YM but it's not the end of the world and reading some of the comments here you would think they have already gone bankrupt.
ReplyDeleteOne thing is positive in all of this and that is that Montenegro Airlines is no longer falsifying its financial reports like it used to. Maybe we can thank EU integration process for that.
ReplyDeletelol true
DeleteIt's good they actually managed to increase passenger numbers last year even though operated flights were down sharply.
ReplyDeleteYeah I agree. Would be interesting to see how they managed that. Stronger tourist year in Montenegro?
DeleteThe passenger increase is irrelevant since their revenue decreased.
DeleteSo basically they managed to sell more seats but at noticably lower selling prices in average.
DeleteCost structure is just too high and they can't seem to get those costs (fixed/variables) down.
OT: LOT in Zagreb sent their 737-400 today! Hopefully great loads!
ReplyDeleteSo what's the way forward for Montenegro Airlines? What can they do to get out of thia mess?
ReplyDeleteThe only solution I see is to write off all debt, put in place professional management and beg someone to take it for free.
DeleteAirline privatizations in EX-Yu have shown that you also have to pay the company to take them over (4K Invest, Etihad).
DeleteОТ:
ReplyDeleteИзгледа да је пре једно пола сата могло доћи до удеса на БЕГ-у. Пајпер компаније Принс Авиејшн је био у фази слетања, када је Свисов А320 за Цирих изашао на писту и кренуо са полетањем. Го араунд пајпера наглим скретањем у десно у последњем тренутку. Погледајте на ФР24
What does 'Го араунд' mean in Serbian?
DeleteI think nothing.
As long as Eurocontrol and international providers are paid, Montenegro Airlines will live another day.
ReplyDeleteTrue. That's when MAT started to crumble.
DeleteNice OT:
ReplyDeleteAustrian introduces 3 additional weeklies this summer whole July, August and September on days 1-3-5 between VIE and DBV in a mix of usually Embraer 195s and A319s.
VIE 08:25-9:35 and from DBV 10:20-11:45
I have the impression that with this adjusted and more in-line-with-the-market upped capacity rates come down a little compared to the crazy fares during the last summer which is really good us passengers.
OS also goes daily to Split during these months instead of 5 weekly deps in recent years.
DeleteI would not blame it all on Daliborka (not that she is not guilty) but remember even before Daliborka, MGX had its plane impounded in Pristina because of debt, falsified its reports to show positive results, hired party members and so on. So it seems the foundations were rotten many years ago.
ReplyDelete+1
DeleteI wonder if the leadership team at JU and some Members of the Serbian government are feeling somewhat anxious with this news about AZ. All good things must come to an end.
ReplyDeleteHopefully an opportunity for EY to get out and cuts its losses.