Wednesday, February 17, 2016

EC looking into Montenegro Airlines subsidies


The European Commission (EC) has requested information from Montenegrin authorities concerning state aid granted to Montenegro Airlines as part of its restructuring process over the past three years. Since Montenegro is not a European Union member state, the EC has no jurisdiction on state aid granted by local authorities. However, the Commission told EX-YU Aviation News that as part of the accession process, it monitors the Montenegrin State Aid Control Authority, which has approved several million euros worth of state aid for Montenegro Airlines over the past few years. Monitoring is carried out in compliance with Article 73 of the Stabilisation and Association Agreement between the EU and Montenegro. The EC's request for further information was made on January 22, just a day after a proposal for additional subsidies for Montenegro Airlines was pulled off the agenda at a government meeting.

According to the daily "Dan", on January 21, Montenegro Airlines requested an urgent one million euro cash injection as a guarantee to the local fuel supplier and a further 1.2 million euros in order to make a payment to the Brazilian BNDES bank for the financial lease of its Embraer E195 jet. Furthermore, it requested for its restructuring process to be extended into 2016. Montenegro Airlines has received some 3.6 million euros from the state on an annual basis over the past three years and some of its debt, which now stands at 71.5 million euros, has been written off. This year, Montenegro Airlines must make a loan repayment of 3.5 million euros, provide 2.8 million euros for the financial lease of its aircraft and pay a further 11.4 million euros in taxes.

Late last year, Montenegro Airlines' CEO, Daliborka Pejović, said the carrier was recovering and there was no fear of bankruptcy. "We are not even thinking about it [bankruptcy], but we are doing everything to minimise risks, and we have successfully done so. Cost cutting, optimisation, and maintaining a fair business relationship with our partners, while meeting our financial obligations, has boosted trust in our company", the CEO said at the time. Montenegro Airlines recorded a net loss of 6.5 million euros during the first half of 2015. Its net loss for the whole of 2014 amounted to 9.5 million euros, making it the least profitable national carrier in the former Yugoslavia. In 2014 it was found that Montenegro Airlines had falsified financial reports and recorded smaller losses for several years leading up to the summer of 2013. No one has been held accountable, nor questioned in relation to these claims. Ms Pejović says some sixteen million euros in losses were covered up by the previous management. "It is important to note that all our financial reports are now genuine, balanced and objective", the CEO said. An investigation into the cover-up launched last year was swiftly dismissed by the Supreme State Prosecutor's Office.

95 comments:

  1. What's with Etihad interest in Montenegro?

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    1. They are officially "screening" the airline.

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    2. I think we will get some more info on that around April :)

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  2. If they start getting late with payments to Eurocontrol then I would be concerned. That's how MAT's problem started.

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    1. They've already had their plane impounded by Pristina Airport for not paying for services so nothing would surprise me from them.

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    2. I think YM also has to pull out of SKP as well for not paying services.

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    3. Yes they did JATBEGMEL. They also have quite a big outstanding payment for BEG airport.

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    4. and SMATSA too

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  3. I don't understand that an airline so small could have so much debt. 71,5 million EUR is huge and from what I remember it was even bigger a few years ago.

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    1. Montenegro airline debt is 3% of the countrys GDP. Now imagine Lufthansa having a debt of about 140 billion EUR, thats 3% of German GDP an amount enough to order 700 widebody aircraft.

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    2. YM debt is 1,89% GDP.As far LH and Germany...1,89% of 3.73 trillion USD GDP is 63,268,567,545.96 EUR..Enough for cca20,000(!) WB a/c.

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  4. all ex-yu airlines are cash sucking machines. And I mean ALL.

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  5. IS AIR SERBIA WEBSITE OFFLINE?

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    1. Seems so. I've been trying to book for the past 20 mins.

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    2. Works fine now.

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  6. Airline must be doing brilliantly since Daliborka Pejovic has enough time to be state secretary for sustainable development and tourism at the same time. Because being CEO is just not enough.

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    1. Keep Calm and pay your taxes!February 17, 2016 at 10:05 AM

      Three salaries are better than one.

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  7. So EU commission is asking questions for 5-6 million EUR to Montenegro, but in same time don't care about 22 million EUR per year that Air Serbia gets from State?

    Part of 71 million EUR debts was written off, but in Serbia it is not problem that more than 250 million EUR debts were written off???

    So are we talking of double standards or we will have one more huge investigation in Air Serbia in near future?

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    1. EC has just asked for addittional information. It has not launched an investigation. " Since Montenegro is not a European Union member state, the EC has no jurisdiction on state aid granted by local authorities." You can also review EC annual progress reports and see what they say about Serbia and air transport.

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    2. "One more huge investigation". What is the other "huge investigation". Are you referring to additional information EC asked on effective control? Seems like the Americans answered that one:

      US DOT: In particular, we tentatively find that grant of this authority is in the public interest; that the applicant demonstrated, based on the record, that it is financially and operationally qualified to perform the services authorized; and that the applicant is effectively
      controlled by citizens of its claimed homeland.

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    3. sve ex yu kompanije ukljucujuci i one iz EU primaju neku vrstu direktne pomoci od drzave na ovaj ili onaj nacin. YM je jedinstven po tome sto nikome nista ne placa jos od osnivanja.

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    4. The state aid JU recieves is part of its investment into the airline. EY payed cash, Serbia only through various subsidies. 2016 is the last year for these subsidies. The former Jat debts are Jat debts and had to be payed of one way or another by Serbian tax payers.

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    5. Anonymous 10:02 AM

      What exactly DOT approval for ASL's flights to US has to do with EU investigations on state subsidies to airlines?

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    6. It has to do with effective control, which the EC is trying to establish with Air Serbia. The EC has not launched any investigation or even asked additional information from Serbia or Air Serbia for subsidies.

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    7. Anonymous 10:10 AM
      The AMERICAN Department of Transport is NOT related with the EC in ant way shape or form.
      Get inform and then commend.

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    8. I am simply telling you what the Americans concluded on an issue the EC has requested more information. So try and calm down. I am still waiting for you to explain "one more huge investigation in Air Serbia"

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    9. Anonymous 10:24 AM

      Americans were looking on a completely unrelated issue.
      Whether Serbia has effective control over the airline and whether ASL has enough money to fund those flights.
      NOT if said money come from subsidies or not.
      Can you understand the difference?

      BTW I am not the poster who said "one more huge investigation in Air Serbia".

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    10. You are the one that is not understanding as I clearly stated before.

      The only thing the EC is looking into is effective control. They are not investigating or even asked Air Serbia for additional information on subsidies or government aid.

      "The European Commission (EC) says its investigation into Air Serbia’s ownership structure is progressing."
      http://www.exyuaviation.com/2015/08/ec-air-serbia-investigation-ongoing.html

      That's why I used the examples of the Americans findings to conclude that the Europeans will probably come to the same conclusion.

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    11. There is already investigation in Air Serbia isn't it? And more and more money came from State.

      Croatia Airlines is not getting any money from the State exempt for PSO, which is very defined by EU and is ruled by rules of EU. And Croatia Airlines is not only company in Croatia that is getting those PSO funds. Any company from EU by same standards can compete for those funds and it does not have to be Croatia Airlines. As you know several routes are financed by PSO rules to Trade air also.

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    12. Americans were NOT investigating Air Serbia’s ownership structure, they don't care about that.
      Americans were investigating whether the Serbian state and its air transportation watchdog were able to check if ASL operates according to international standards and thus it is safe to fly to and from America.

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    13. No there is no investigation. You just have to read the link. Croatia Airlines got significant aid which before EU entry which is why it had to restructure and could not open any new routes for 4 years.

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    14. Since you have no argument anymore, you are no longer able to even reply properly. I did not say that the Americans were investigating effective control but they concluded that the airline is effectively controlled by the Serbian government, which you would see yourself if you read their report. You obvciously didn't The only thing the EC is looking into is effective control. Since the EC has no jurisdiction it is not even a formal investigation. They simply asked for additional information.

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    15. Anonymous 10:47 AM

      Your comprehension of English is at fault here.
      Americans weren't interested or investigating who owns ASL'S shares.
      They were looking whether Serbia's agencies responsible for safe air transport exercised sufficient oversight on ASL's operations to see if they follow international standards.
      They are interested whether or not ASL is a safe airline to fly to their country and if it follows international practices.
      Simple?

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    16. I would prefer that you read their report, which you haven't. You went from "we will have one more huge investigation in Air Serbia in near future" to what the Americans were investigating as you simply no longer have an argument since you were under the hope that the EC was investigating subsidies when in fact they asked for additional information on ownership structure.

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    17. Congrats guys - you have created one of the top timewasting discussions of all time. All thanks to that hater at the beginning who saw today's news as yet another chance to give meaning to his life by somehow linking ASL to something bad.

      Kmeee, kmeee, why isn't ASL under investigation, kmeeeee... and then you build a huge thread on this sobbing.

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    18. Keep Calm and pay your taxes!February 17, 2016 at 11:02 AM

      DOT when a new airline requests permission to start operations to the US soil check if this country's authorities can and do control if the airline operates properly and follows the international rules and regulations of air transport.
      Anon above is right.
      They don't care how many stocks belong to Serbia, Emirates or the stock market.

      We should all be happy that after a long investigation they found that the airline operates properly and that the state has good oversight on safe operations.
      It wasn't always like that...

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    19. Anonymous 10:57 AM
      Why are you frustrated?
      You were hoping that DOT checking if ASL operates safely and GoS authorities made sure it follows international standards meant in some Bizarre way that it also means something completely unrelated.

      Who pays for the airline is completely different and that is what the EC looks into from time to time.
      Better admit your mistake and move on because now you are just embarrassing yourself.

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    20. As I said, the European Commission has asked Air Serbia and Serbia for additional information regarding ownership structure. Not subsidies as you claimed. No, I am not frustrated. You are the only one that seems to be, judging by your original comment. Good day.

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    21. The Americans were not investigating the ownership structure of ASL.
      They were investigating whether or not Serbia's authorities made sure that ASL followed ICAO standards.
      Those are two unrelated matters.
      Again I am not the original poster and I told you many times that DOT investigation had nothing to do with subsidies or share ownership.

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    22. Neither did I say anywhere they were investigating Air Serbia's ownership structure but made a comment in their final report that Air Serbia is effectively controlled by the government, which I quoted for you since you have not read their findings. So start reading what I actually wrote before you and your buddy start picking fights.

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    23. Anonymous 11:15 AM

      Their final report said the way that Air Serbia operates properly is controlled by the Government and it follows ICAO standards.
      If you want that to mean that ASL is not illegally subsidized and that the EC will say so you are desperate.
      Stop comparing apples and oranges.

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    24. What is difference in financial support of Montenegro and Air Serbia, exempt that Air Serbia's one is much bigger. So, if EU is asking about Montenegro subsidies what will happen with Air Serbia?

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    25. do not forget OU and JP !

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    26. OT:
      Few days ago i was flying from FRA-LJU with JP and we landed in TRS, and someone from other pax told us that pilot cannot land in LJU because he dont have a licence to land in fog, and then we were waiting for replacement pilot crew and we took off to LJU and land in fog normally..

      Is this normal :)?
      I never heard "pilot does not have license to land in fog.." ?

      Regards,
      Mirko

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    27. I think if the airport has CATIII, both the aircraft has to have the technology and the pilot has to have a license for it. So yes it happens :)

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    28. DHL A300 couldn't land at LJU today, too. So nothing special.

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  8. OT:
    Najava El Al iz Tel Aviva:

    LY5181 Tel Aviv-Zagreb (15.3-10.5.2016) utorkom

    LY5081 Tel Aviv-Zagreb (17.5-19.7.2016) utorkom
    LY5181 Tel Aviv-Zagreb (17.5-19.7.2016) utorkom
    LY5183 Tel Aviv-Zagreb (17.5-19.7.2016) utorkom

    LY5181 Tel Aviv-Zagreb (26.7-25.10.2016) utorkom
    LY5183 Tel Aviv-Zagreb (26.7-25.10.2016) utorkom

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    1. why they don't fly 2 or 3 weekly?

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  9. It could've been easier if they merge with ASL or bought by them. Montenegro is so small, still wondering why on earth would they need a flag carrier.

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    1. ASL is loss making as it is and you want to take over another loss making operation?

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    2. At one point Croatia Airlines - a loss making operation - also said it was interested taking over Montenegro Airlines - another loss making operation.

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    3. And it would have been a disaster I am sure.
      So why should ASL get into this situation?

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  10. OT
    Wizz are starting Kutaisi - Sofia from 24 September

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    1. ok and this is called EX-YU aviation news.

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    2. Anonymous February 17, 2016 at 11:11 AM
      You know that ex-yu market is not a closed one but open to the rest of the world and developments in our immediate area have an effect on our airline market.
      W6 and FR are expanding greatly in the Balkan region, this does concern EX-Y.

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    3. W6 official announcement:

      WIZZ AIR ANNOUNCES NEW BASE, SEVEN NEW ROUTES IN KUTAISI

      Wizz Air, the largest low-cost airline in Central and Eastern Europe, today announced it will begin base operations in September at David the Builder Kutaisi International Airport with one A320 aircraft and add seven new routes to Europe.

      Wizz Air will launch new twice-weekly service from Kutaisi to Berlin Schönefeld, Munich Memmingen, Milan Bergamo, Dortmund, Larnaca and Sofia, while flights between Kutaisi and Thessaloniki will be flown three times a week. With these new destinations, Wizz Air’s network from Georgia consists of 11 routes to eight countries. Fares start at EUR 24.99.
      https://wizzair.com/en-GB/about_us/news/wizzen396

      Sofia sure is getting a lot of love lately from airlines.
      It would be nice if W6 connected us and/or Macedonia with Georgia and the Caucasus region.

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    4. Wow... this will be their 10th destination out of Larnaca. I am still hoping that they might open a base there but it won't happen.

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    5. What is the market between Cyprus and Georgia Nemjee?
      And why Kutaisi and not Tbilisi?
      is there a big difference in airport charges or something?
      thank you for any info you have.

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    6. People seem to consider Kutaisi as a lowcost alternative to Tbilisi which I don't understand given that the two airports are 230 km apart. But it seems to be working just fine for W6, so...

      As far as Cyprus goes, there is a considerable Pontio population on the island. Pontio people are the descendants of the (ancient) Greeks who colonized the Black Sea area. They are not particularly loved in either Greece or Cyprus, most of them don't speak the language and they are considered as Russians. However, they are all eligible to get a Greek citizenship. That's why routes to both Thessaloniki and Larnaca make sense.

      That said, nice to see Wizz Air entering the SKG market.

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    7. sucks that Wizz and Ryan are expending everywhere but Serbia. Dont make me laugh by saying Karlsruhe 2 weekly is expansion. Us poor students have to travel to Budapest and such to save money as a result

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    8. plus its getting pathetic that on ex yu news there is zero sh*t going on (other than politically motivated JFK route) so people are going from Greece to Cyprus to Bulgaria to Mars hehe. Honestly, I dont mind and I enjoy learning more about these markets (thanks Nemjee), but from what I can see this means that this is a slow winter season.

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    9. I don't think you will be waiting for much longer. Ryanair is all around ex-Yugoslavia (and Albania). The next logical step would be to enter our market.
      Given that they are after Wizz Air, Belgrade could become their next target. I doubt they will open a base but they could easily launch flights from places such as Hamburg, Nuremberg, Copenhagen, Brussels...

      Wizz Air's lack of expansion at BEG can only indicate how long it is on their list of priorities; probably because they are not in direct confrontation with Ryanair (or any other lowcost). Once this changes, I am sure they will respond accordingly.

      What we have to ask ourselves is how will JU respond to FR's potential entry into the Serbian market.

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    10. Regardless if FR comes or not this year is crucial for JU. I feel like by the end of this year everybody will be able to make some more concrete views on whole situation. I am really curious to how will the situation play out for JU is summer season. Are they planning anything else other than JFK and as rumoured Pristina? this might seem weird, but even if only A330 comes they still can open 1 other destination like Cairo (distance wise) due to the fact that A330 could be send to AMS or CDG and A319/320 to Cairo. Finance is first of course, but management in JU nowadays has zero creativity. Creativity will not get you money, but it just might get you in the right direction.

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    11. Realistically speaking, there are just a few short-haul routes that could see the A330-200 and in my opinion they are Tivat and Zurich. Both Paris and Amsterdam are well covered with a double daily A320 flights.

      That said, I wonder if it would make commercial sense for JU to use the A332 on charter flights. Several tourist agencies have complained that the aircraft currently on offer are too small. Airlines such as Thomas Cook and Monarch already dispatch their A330s on European charter flights so it wouldn't be a revolutionary move.

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    12. @Nemjee 2.29
      "FR is all around ex-Yugoslavia". Not true. FR is in ex-Yugoslavia as well. 2 services out of Montenegro is not much but you cannot speak of FR's presence in Croatia with 18 services (12 out of ZAD, 4 out of PUY, 3 out of RJK and 1 out of OSI) , not to mention ZAD base, as they don't exist

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    13. I partly agree with you. You are right that they are operating out of Croatia and Montenegro but aren't those flights more similar to the ones operated by Thompson and Thomas Cook rather than those that are being announced in Sofia, Bucharest and Athens? Also, aren't they seasonal?

      We can take Ryanair seriously (in ex-YU) when they announce destination that will be served on a year-round basis like BEG-NUE, ZAG-BRU or SKP-CPH.

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    14. ASL bi mogao da salje A330 kad ne leti za JFK za CDG, LHR, SPU,DBV, ZRH, TIV i ponekad za AUH.
      A FR nebi bio i onako konkurencija ASL da otvori linije.
      INN-NS

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    15. A zasto joj ne bi bio kada lete sa skoro istih aerodroma i FR je em bogatija em sposobnija firma.

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    16. ANO 4:23
      It is rumored that FR will start OSI-DUB also.

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    17. "Are they planning anything else other than JFK and as rumoured Pristina?"
      Does anybody have any clue? I know there are insiders here ;)

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    18. @Nemjee 4:28
      I don't agree with you again. You (and majority of other posters here) try to present "big difference" between seasonal and year-raound services. But the facts are that summer season lasts 7, and winter season 5 months. The fact is that people generally travel much much more during summer season compared to winter season, the fact is that LF's are significantly higher during summer compared to winter, the fact is that prices in summer are significantly higher in summer and winter, and that PROFITS, which should be the final result of any business, including cicil aviation, are achieved in it's 90% share (approximation) during summer, not winter. So, once again, following the above written, you cannot speak of FR's presence in ex-Yu as non-existant.

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    19. Yes, I acknowledged that I was wrong so no point in beating a dead horse. There is a minimal presence in ex-YU.

      Also, could you provide us with a source that 90% of the income is made during the summer months?
      Furthermore, when an airline decides to introduce year-round flights it indicates that there is a clear commitment to a certain market. Look at Paphos, it's a city of only 40.000 people but Ryanair still has a base there that is operational throughout the year. They don't add flights here and there depending on when the tourists are arriving. They've invested in the market and they are making it work. That's what's missing in ex-YU.

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    20. I agree with Nemje. Ryanair can only be serious player in ex-yu when they decide to come here to stay. Can we expect them in zag too? what routes would they fly?

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    21. Neki kazu nece doci nista osim A330 neki kazu bice dobrih novosti .
      INN-NS

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    22. DA NE DOLAZI A332 DOSLO BI DOSTA TOGA !

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    23. Is there a legal obstacle for Wizz Air on BEG-Kutaisi?

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  11. There will be reshuffle of the Montenegro Airlines board of directors next month.

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    1. You mean CEO will switch to Chairman and vice versa?

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  12. OT: Tuzla pax numbers for January 19.235, up some 48% compared to last year. Tuzla had more passengers in January than all the Croatian coastal airports together (excluding Split) :D

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    1. Hahahah really? Wow... HR coastal airports are ghost towns when not in season.

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    2. Wow...Great, we have a new hub in the region...

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    3. Pa da Dubrovnik je bio 15.666 a Tivat 18.438

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    4. Now EK to TZL? lol :D

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  13. Kakva mrtva Tuzla? Ne budite smješni ljudi!

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  14. No one seems to have mentioned how much money Montenegro Airlines owes to the airport authority of Montenegro.... it is a shamefully HUGE number

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    1. Yes but it seems they made some deal. This is what I found on exyuaviation from last year

      "Furthermore, the carrier has made an arrangement with its owner, the Montenegrin government, to reprogram its debt to the operator of the country’s two international airports - Podgorica and Tivat - amounting to 6.4 million euros. The debt repayments will start on March 1, 2017 and will be made in installments over 108 months."

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  15. This comment has been removed by the author.

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    1. Odlicne vesti za Bombardier AC je porucila 45 CS 300 i jos 30 opcija obezbedila.
      Kad vec pisem Bombardier-u predstavili su u Singapuru Q400 sa 90 sedista lepa vesT za putnike .
      INN-NS

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    2. Ta narudzba je ocigledno pokusaj spasavanja Bombardiera...

      Delete
  16. Bombardier je danas otpustio 7000 radnika. Nikada gora situacija u kompaniji. Westjet je otkazao poružbinu kao i neke američke kompanije.

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  17. Why can i not book USA dest to Croatia or LJU on OU or JP website? Anyone knows?

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    Replies
    1. Because they don't codeshare with anyone across the pond?
      idk, maybe

      Delete

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