Business

Montenegro Airlines ends operations

Montenegro’s flag carrier Montenegro Airlines has become the latest airline to stop flying as a result of the downturn in travel caused by the Covid-19 pandemic.

An Embraer 195 carrying passengers from Belgrade to Podgorica on December 25 marked the end of the troubled, 26-year history of Montenegro Airlines.

In a statement, the airline said, “The Montenegrin government’s decision to shut down our company will have a negative impact on the entire aviation sector in the country. We would like to inform the public that starting tomorrow, December 26, 2020, we are completely suspending all operations”.

The decision to cease operations will see more than 350 people made redundant.

New airline

While the new Montenegrin government has said that it plans to create a new national airline, it could be several months before planes are back in the air.

“With the best possible intentions, we spent the last 15 days seeking a solution for Montenegro Airlines,” said Mladen Bojanić, Montenegro’s minister for capital investment. “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.”

“Our hands were tied by the decisions made by Agency for the Protection of Competition,” he added.

In December 2019, the former Montenegrin government announced that it would invest 155 million euros in Montenegro Airlines over the next six years, warning that bankruptcy or closure of the airline would have a major impact on the economy given its reliance on tourism.

 

But earlier this year, following objections from low-cost carrier Ryan Air, the European Commission expressed concern over the government finance, saying that the case of Montenegro Airlines would be an important test of Montenegro’s state aid control system.

Montenegro’s Agency for the Protection of Competition also ruled that the aid – of which 43 million euros has already reportedly been paid – was unlawful.

‘Pure populism’

While Montenegro’s opposition, as well as the country’s president, Milo Đukanović, criticised the decision, calling it “pure populism”, the airline had been in trouble for some time and its closure comes as little surprise.

Wages had been unpaid for up to three months, and the airline was behind with leasing fees for aircraft and landing charges.

The company operated a small fleet of Embraer 195s and Fokker 100s and flew to several European capitals. It is estimated to have accumulated over 150 million of euros in debt which grew further with the collapse of the summer tourist season because of the coronavirus pandemic.

In a sentimental farewell gesture, the pilots on the company’s last flight were given permission by air controllers to take a heart-shaped route over the Montenegrin mountains on their approach to Podgorica.

“It was pure emotion triggered by the tears and huge love for our company by the crew and all its employees,” the flight’s captain, Nikola Pavicevic, wrote on Facebook.

Ryan Air, Wizz Air, Austrian, and Turkish Airlines continue to serve Podgorica Airport.

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