Tuesday, January 17, 2017

Montenegro Airlines in crisis mode


The Montenegrin Civil Aviation Agency is keeping a close watch on Montenegro Airlines as part of the carrier's fleet has been grounded, while the country's Prime Minister has ordered an urgent review into the company's business. Montenegro Airlines has been beset by a number of issues since the start of the year, with three of its aircraft grounded due to technical problems, while the majority of its first officers have gone on a silent protest due to unpaid wages. "Immediately after receiving word that part of the airline's co-pilots have not shown up to work, the Agency took measures to asses passenger safety. Based on preliminary reports, we cannot conclude that the safety and wellbeing of passengers has been compromised. However, our safety inspectors continue to monitor Montenegro Airlines and will use all legal means if necessary to protect travellers. The company is facing serious problems but has managed to maintain operations and adhere to the law for now", the head of the regulator, Mileta Nikolić, said.

Montenegro Airlines has been forced to cancel a number of services over the past week with only two of its aircraft operational. One Fokker 100 jet has been grounded at Belgrade Airport since January 1 with an engine problem, while an Embraer E190 has been parked in Podgorica awaiting spare parts. According to Montenegrin media, the company has been unable to purchase the spare parts immediately due to financial issues, however, the aircraft has been repaired over the last few days. Last Friday afternoon another of the carrier's aircraft was grounded after it was hit by lightning. Montenegro Airlines previously said it would maintain operations with four aircraft this winter season (three E190s and one F100), while an additional F100 jet would be used only if necessary. The carrier is looking into concluding a short-term wet-lease of aircraft and crew from Air Serbia in order to carry out its planned operations in the coming days, reports suggest.

In a statement, the office of the Prime Minister of Montenegro said, "The President of the Government of Montenegro, Duško Marković, has instructed the Minister for Transport and Maritime Affairs, Osman Nurković, under whose portfolio the state-run Montenegro Airlines belongs, to promptly prepare and submit detailed information about the current situation at the national carrier. The Prime Minister has requested an urgent and comprehensive report concerning the recent problems at Montenegro Airlines. Furthermore, Prime Minister Marković has also asked for detailed information on the overall state of the company's finances and human resources, stressing that the current issues need to be resolved as soon as possible". In a recent interview, Mr Marković 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".

A number of high profile resignations have swept Montenegro Airlines over the past six months starting with its Chief Commercial Officer in September 2016, followed by the head of Safety and Security in October, as well as the President of the Board of Directors, Daliborka Pejović, in December last year. As a result, new members of the Board, as well as its head, will be selected on January 27. Montenegro Airlines faced a difficult 2016 during which the government cut its financial support for the carrier. The company was also forced to return one Embraer jet to its owner as it was no longer able to afford the financial lease. In 2015, Montenegro Airlines recorded a loss of 10.4 million euros, while its debt amounted to over sixty million euros. The carrier has reported that its finances improved throughout 2016 but its financial report is yet to be published.

99 comments:

  1. So let's say they go bankrupt, who do you guys think would pick up the pieces? It might not be a big market but it has a good mix of diaspora and leisure travel and is not as seasonal as other leisure markets.

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    Replies
    1. I assume Wizz Air and Ryanair would expand quickly.

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    2. It could give an incentive for Croatia Airlines to come back to Podgorica. Though seeing they are in their own mess I doubt they would act on it.

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    3. Adria could have also used this opportunity, plus hey have a neutral name. Their LJU-TGD-LJU flights are doing really well and they have lots of transfers. Instead of having a CRJ700 based in Lodz, Poland they could have stationed it in Podgorica.

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  2. Why is Air Serbia constantly helping this airline. As far as I remember, last time they gave them a B737 MGX was unable to pay for it...

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    1. Maybe they are paying in advance? Also don't forget that Vucic is married to Milo's cousin, so...

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    2. No sure. Last time they gave them the B737 and crew during the summer the plane was grounded in Podgorica for hours until money was paid.

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    3. that should be *not sure, sorry.

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    4. Last they used an ASL B733 was about 7-10 days ago. If I am not mistaken Anka was used for ASL morning flight to Zagreb or Ljubljana (not sure) and afrer that for 2 MGX flights from Podgorica to Belgrade.

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  3. What I find interesting is that the Montenegrin government doesn't seem to care that much. Whereas the Croatian and Serbian government seem to identify their national carriers as being important to them, the Montenegrin government looks like it doesn't really care.

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    1. If it didn't care the company would have been long gone.

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    2. in what way exactly is a national airline important to Croatia and Serbia?
      Isn't it important only if it makes money? I do not have any in debth info on both companies' finances, but according to news published here, money making is not necessarily whats happening with both.

      But I guess, most importantly, especially in the Balkans-there is a NATIONAL carrier

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    3. "in what way exactly is a national airline important to Croatia and Serbia?"

      In that it provides thousands of jobs and is excellent marketing for the whole country.

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    4. Croatia approx.900 emplyees
      Air Serbia 2450 (why on earth??)
      its not really "thousands" of jobs + there are other cheaper ways to do marketing

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    5. ^^^

      Airlines don't need to make money to be of importance. Its when the minus out weighs the pluses that it no longer becomes worth keeping.

      As an example, Air Serbia has a lot of state money go through it the past couple of years, however we need to look at the following:

      * More locals (Serbs) employed, who in turn pay taxes to Serbia, and spend local currency (Dinar).
      * Catering is largely sourced by domestic suppliers ie Wines, Meat, Cheese, Water etc. This in turns supports local business, while the supplier keeps workers. Wines as an example served onboard are advertised internationally, where this could further attract more business.
      * BEG has opened more outlets since Air Serbia. This forces more employment. Foreign travelers spend foreign currency in Serbia purchasing these items, which is good for our economy.
      * Accessibility - Serbia has become more accessible thanks to JU and its increased network. This helps attract foreign investment as Serbia becomes more accessible. Without JU, how many carriers realistically will fill this void. BEY, JFK, SKG, TIA, SJJ, SKP, OHD, SOF, LED, HAM, DUS, STR, CDG, LHR, MXP, LJU, ZAG, SPU...and the list continues.
      * Competition - While JU has a monopoly on many routes, they also provide competition on many as well. Look at the difference in fares in BEG compared to the region. LH and its group in particular.
      * With the growth of BEG as a mini regional hub, more visitors visit Serbia. I personally see JU pax on longer stop overs go to the city to spend time. Many of these people would not have Serbia high on their list of places to visit, realistically Serbia is weak in its tourism. But they will take with them a story they will share with friends and family. Advertisement through word of mouth. These pax at least purchase a bottle of water, cup of coffee, maybe a fridge magnet and more, which again is a purchase in Dinars and supports another business.

      This above is the beginning of a larger picture we need to look at. Compare it to countries like Macedonia and BiH without a national airline, or Montenegro that has a national airline, and lets go with what works and what doesn't. What is the plus and what is minus.

      Sure, its great when the company is in the positive figures, but at the end of the day, taking into consideration of all aspects, is the minus worth it.

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    6. What do you mean: "BEG has opened more outlets since Air Serbia"

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    7. @ Charlie

      Food and retail.

      Victoria Secret, Hugo Boss, Hleb i kifle, Lilly, Kafeterija, and this is still not enough.

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    8. I think Victoria was before ASL.

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    9. No, it opened at the start of 2014 :D
      http://marketingitd.com/2014/victorias-secret-najzad-u-beogradu-ali-samo-na-aerodromu/

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  4. They will be fine. They always survive. The moment you hear they haven't paid Eurocontrol for its services, that's when you know they will go belly up.

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  5. Daliborka left the sinking ship on time?

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    1. The way things are going I wouldn't be surprised they bring the former management back. The one that got replaced by Daliborka & co.

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  6. What a mess of an airline. What possessed JU to get in bed with them is beyond me.

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    1. Actually, Montenegro Airlines has been providing quite good feed for Air Serbia on a lot of routes since the codeshares came into effect. I wouldn't call a wide ranging codeshare "getting in bed with them". It's not like they own a stake in the airline.

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  7. Love the PM's optimism in selling the airline. Montenegro Airlines would be a liability to any company buying it. Who on earth would risk such an "investment"?

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    1. Etihad, of course. They are the only one with a fetish for failed airlines.

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    2. @ first 9:20 AM: I don't think so. Were they interested they would have acted by now.

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    3. @ second 9:20 AN I think they have learned their lesson.

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    4. Maybe just waiting for the best deal, the value drops the worse it gets in YM

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    5. Well no one in their dreams thought Etihad would buy Jat Airways but it happened so anything is possible.

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    6. You can't seriously be comparing Jat and Montenegro Airlines? Whatever mess Jat was in it had quite a few assets. For starters 9 weekly slots at Heathrow, worldwide offices and property, much bigger destination network and most importantly a much bigger market.

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    7. Don't forget Hogan was sacked so who knows what would have happened if he stayed.

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    8. I don't think Hogan has been sacked. He still works at Etihad. They just 'demoted' him from Etihad CEO to Etihad Group CEO.

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    9. His future is still very much uncertain.

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    10. @9:51 AM it is not a demotion, on the contrary...

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    11. Of course it's a demotion... it's widely known that he messed up and that he is facing the risk of being kicked out fo teh company. Why would they promote someone like him?

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  8. I feel sorry for all the hard working Montenegro Airlines employees.. this is another slap in the face

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  9. This is a video from Podgorica Airport yesterday. Note the woman's reaction at the start when she is told her flight is cancelled. I feel sorry for her but just found it funny.

    https://www.youtube.com/watch?v=KErcImvS_ng

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  10. This was a natural progression. Last year Montenegro Airlines had its headquarters repossessed, it accounts blocked, has been forced to return 1 Embraer because it has no money to pay for it, has been constantly late on wages, has been named one of the most indebted companies in Montenegro...

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  11. Seems like their operations have normalized today after 40-AOA was returned to service after waiting for spare parts for days.

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    1. 40-AOA has not flown today. Only AOC and AOP as far as I can see.

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    2. Yeah you are right. They are just operating one flight from Tivat today (Belgrade) and operated Belgrade and Paris from Podgorica this morning. 2 planes is enough.

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  12. Corruption destroys all.

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  13. If Montenegro Airlines shuts down, will Air Serbia try to take over that market?

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    Replies
    1. No, they will probably prefer one of their competitors to take it.

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    2. I think LCCs would be quicker to expand from Montenegro then Air Serbia which doesn't have enough aircraft to base in Montenegro.

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    3. Had Jat stayed, sure. Now its Air Serbia, and the focus is on expanding their BEG hub.

      I think LCC would jump in and we would finally see LCC competition between BEG and Montenegro.

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    4. I don't think JU would be basing anything, just increasing frequencies to BEG and TIV (a move I would support).

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    5. Would Adria be an option.... could they step in?

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  14. Alen Šćuric PurgerJanuary 17, 2017 at 10:05 AM

    Did Air Serbia put some bigger planes on the route (A320, A330)?

    It is very good opportunity to use A330 which has no enough flights during winter but still JU has to pay same (rather big) amount of money for leasing.

    Montenegro should put planes they still have on other routes and cancel all BEG flights and use Air Serbia instead who should use bigger planes (A320, A330).

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    1. I think they are using B737 instead of ATR. I also noticed they used A319 to Podgorica yesterday.

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    2. TGD had 3 Atrs but the A319 operates today and tomorrow, one of the three flights.

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    3. Alen Šćuric PurgerJanuary 17, 2017 at 10:14 AM

      Was that enough for all passengers on route (Montenegro and Air Serbia one)?

      For sure Air Serbia will have huge benefit on Montenegro problems. Not just they short rent plane to Montenegro, they get Montenegro passengers (and money for them), but also they get free propaganda, much more passengers to use them instead of Montenegro in near future.

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    4. Those benefits will be wiped out once Montenegro becomes an LCC haven after the demise of YM. Air Serbia can then basically forget about the market, just like Skopje after their national carrier went bankrupt and Wizz came in.

      For JU, they get the most benefit if Montenegro, Croatia, and Adria continue to exist but are weak.

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    5. The funny thing is both JU and other airlines like Adria had a chance in Macedonia. It took 2 years since MAT went bankrupt for Wizz Air to come to Skopje. Jat even tried. They set up Aeromak and wanted to start flights but I think the political will was strong to obstruct any sort of development on that front.

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    6. Samo dva leta do Skopja i leti na Ohrid i zdravo. Slicno sa Montenegrinima leti ce ionako da lete LCC zimi neka se muci OU sa njima nek prsedaju na novom aerodromu.

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    7. OU je ukinula liniju za Podgoricu jos pre par godina.

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    8. Re-routing YM passengers onto JU costs which is why we can't expect many to be moved onto Air Serbia flights. They would rather delay their flights under they are able to operate the flights themselves.

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    9. Alen Šćuric PurgerJanuary 17, 2017 at 12:45 PM

      That is insane, isn't it. That will, for sure, totally destroy confidence in Montenegro by potential passenger. Frustration when you are reroute is enough to make you think twice next time, not to reroute you will make potential passenger not to even think twice.

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    10. Well they can't afford to re-route the passengers so they are stuck.

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    11. Prema redovnom planu letenja, ATR leti jutrarnji i vecernji let, dok a319 leti popodnevni let za TGD.
      Istina cesto se desava da se ubaci b737, npr ja sam pre par dana leteo sa b737 promenjeno dan pred let, ali je vecernji let bio otkazan pa su ih sve (njih 15-tak) prebacili na jutarnji.
      U subotu vece na ATR-u za BEG iz TGD nije bilo vise od 30 putnika, tako da A330 tesko moze da se puni

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    12. Prema redovnom iliti ustaljenom redu letenja do kraja zime Air Serbia ima 18 letova nedeljno za Podgoricu, od toga svega 3 na kojima lete 319, na ostalima je ATR. Tačno je da se prema potrebama, a koje mogu biti kako komercijalne kao i tehničke prirode, na ovoj liniji dešava da se uvede 733 ili još poneki put 319. Tokom letnjeg reda letenja Air Serbia koristi ATR za jutarnji i večernji let, a 319 za popodnevni, imajući uvek tri leta dnevno.

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    13. E moj Šćuriću, A330 za TGT.. svaka čast...

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  15. If EY wasn't in such a terrible mess, they could've bought the airline and open a tiny base in TGD or to increase the flights to BEG.

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    1. The original plan was for Alitalia to buy Air Malta and Air Serbia to buy Montenegro Airlines. Of course all of those plans have been cancelled now.

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    2. You´re right, but I guess it´s too late now. Luckily JU is not underperforming compared to AB and AZ.
      I heard that they will sell Bellair too and further cuts from Tegel and Fiumicino.

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    3. AZ is presenting a new model of development by the end of the month. They will concentrate on long haul. City liner will fly medium and short.

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    4. Sounds like something more similar to what i was proposing back-then.

      Aэrologic April 14, 2014 at 8:34 PM
      I'll repeat what i wrote some time ago:
      -
      The only way i could see Etihad-Alitalia partnership working and Alitalia becoming profitable is:

      - Alitalia introducing all-widebody fleet
      - Cutting and cancelling most of short-haul routes that can't be served with a wide-body on a daily basis
      - Turning Rome into a hub for flights to Western Africa, South, North and Central America, equal or superior to Madrid and Iberia
      - Opening lines or increasing frequencies to central Asia, far East, South East Asia
      - Massive lay-offs (as a consequence) and disbanding the power of unions
      - Opening ASAP: Mexico, Bogota, Santiago de Chile, Montevideo, Abidjan, Nouakchott and other cities in West Africa

      (...)

      Bonus: The purchase of Alitalia and proposed initiatives leaves us with an unavoidable question: who's gonna feed their short-haul flights and compete with the low-cost onslaught?

      -> Creating a feeder airline from another European country with a significantly lower cost-base

      - Could that be Etihad regional? Could we see Darwin getting a large number of turboprops for European operations, feeding Etihad's partners hubs?

      - Who is gonna finance a 50+ widebody order/fleet renewal for Alitalia?

      - Having that in mind, Iberia or TAP would be a much more logical investment, without conflict in interest with their current shareholding companies, unless they make them work concurrently in a complimentary manner.
      -
      If this deal realizes i don't see Air Serbia launching any new routes in Western Europe besides going double daily to Rome/Milan.

      http://www.exyuaviation.com/2014/04/etihad-shrugs-off-commission-concerns.html

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    5. AZ already did some of the things you are mentioning, namely expansion in the Americas.

      But I think it's a very problematic airline but ultimately too big to be left to go bust.

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    6. Thank you.

      Important is not to have things half-way done as in the case of Air Serbia. Hope they'll go with their plan all the way.

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    7. Good work Aerologic, as 2:58 wrote the government won't let AZ go bust, it's a strategic brand for Italy. They will change something and they will continue to be around. The unions in the meantime are threatening with massive strikes against the cuts (someone is saying 4000). They will cut non profitable long haul routs too (Rio and Seul) and introduce new more profitable ones. Ciao from Rome :)

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    8. You should write an article for T6, your approach is more sober and realistic when compared to some day-dreamers on here.

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    9. T6 is bellow my standards.

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    10. This comment has been removed by the author.

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    11. Aэrologic
      Koju bi vi Flotu preporucili ASL i jel bi uveli jos wide body aviona .
      Hvala unapred :)
      INN-NS

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    12. As written earlier, JU needs one more A333 (ideally both should be -300 variant), 4-5 new jets of different configuration and double the regional fleet.

      Back to Alitalia, using wide-body jet aircraft on regional routes in the Asian way is the only way to compete with LCC.

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    13. Da upravi ste da su uzeli samo A330-300 i A330-900 Neo u kombinaciji sa 772 bi im donela odbranu od LCC u zemlji .
      A mislim da bi ASL u kombinaciji A320 , A321 i A330 imala takodje veci uspeh ali izvan Granica EX YU sto se barem za sada ignorise sto je steta.
      INN-NS

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    14. Sometimes I wonder did you people only once walked near airline finance departments???

      The amount of unsubstantiated theories flying around here is just crazy. Another a330 besides this one that is hemoraging money would ran JU straight to bankruptcy in fast forward mode.
      Not to mentione Purger's "analysis" on T6 with each containing more holes than a tone of swiss cheese.

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    15. Nobody said that it should happen overnight but progressively over time as figures grow. A regional expansion is urgent and flying empty planes without decent regional feed costs. Half of the ATR fleet is obsolete, 4 B737 are due to leave the fleet anytime soon that is why the same or a bit larger number of jets is required with extra capacity during the summer. A330 is additional cost but also capacity that you need to use wisely, the current situation and the underutilization isn't a perfect example.

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    16. Aerologic, is it true that you worked for Air Serbia, and what was the reason that you don't work there any more?

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    17. @Aerologic

      I'm curious, why do you think A333 would be better for JU than A332?

      MM

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    18. Aerologic - i like how you deal out wise wisdom so easily.... as they say, advice is worth what you pay for it.... you should put your "money where your mouth is' )so to speak) and ask AZ, AB, JU or EY to have you as their CEO... you make it sound so easy and your arrogance in the tone and manner in what and how you write, suggests that you were terminated from some airline that you once worked for (was it JU) and remain bitter to this day...

      Let it go, it can't do any good...

      Write and post comments with more good grace, less arrogance and don't patronise... you might get some closure in doing so

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    19. Aerologic might be a current or former airline CEO. How do you know he isn't ? He and others are free to write or say whatever they want, as long as it is in line with the rules set by Admin.

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  16. How this airline is still flying is beyond me.

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  17. At the end of the day all of this will blow over and Montenegro Airlines will live another day... until the next crisis in a few months and then again and again. It's been like that for years.

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  18. These guys just can't seem to catch a break.

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  19. Bilo bi odlicno da se oporavi YM pre nego sto mozda to iskoriste druge LCC kompanije sto bi im odnelo jos vise putnika.
    INN-NS

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    1. Tebi je najvise stalo do toga da LCC u Crnoj Gori ne preuzmu deo kolaca ASL.

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    2. Svakom normalnom Srbinu je stalo do toga.

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    3. For once I agree with INN, a pitty for this region to become LCC central

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    4. A zasto? Zasto se odmah nacionalnost mora izjednacavati sa kompanijom? Mene uopce ne briga za OU, ali za nacionalisticke pojmove nisam normalan :D Po tvojoj logici onaj Srbin koji ne voli ASL nije normalan?

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    5. Svaki Srbin treba da se ponosi na useph svojih firmi. Ne vidim zasto bi se iko normalan radovao gubitku firme koja pozitivno doprinosi njegovoj drzavi.

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    6. ko se airsrbijom ne ponosio od ruke mu nista ne rodilo!

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    7. Anon 10.22

      Slazem se u potpunosti sa tobom.

      Delete

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