Sunday, November 19, 2017

Montenegro Airlines not ruling out insolvency


Montenegro Airlines could declare itself insolvent in an attempt to rid itself of debt and losses. In a press release issued this week, the Montenegrin carrier noted there were two scenarios for its future, one which involves wide-ranging restructuring, and the other, less likelier option, insolvency proceedings. "The airline's management is undertaking analysis and calculations with the aim to either seek out a financial model for operational restructuring and long-term stability, or, the less likelier but still viable option of declaring insolvency, taking into account all the negative consequences that brings with it", Montenegro Airlines said. It added that one of the four largest audit firms is currently preparing a detailed report on the way forward, which will soon be submitted to the Montenegrin government.

The Montenegrin national carrier recorded a net loss of 11.4 million euros in 2016. The figure eclipsed its previous worst performance 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 airline also owes debt of over sixty million euros to various providers. If it were to declare itself insolvent, the government would appoint a special administrator to take formal charge and develop a rescue plan within a set period of time. The plan might entail asset sales, reduced operations and job cuts aimed at making the airline viable. Alternatively, the administrator may decide that a turnaround is not possible and order the carrier to be liquidated. However, the Montenegrin government has reaffirmed its commitment to the airline on numerous occasions, noting that the state would “initiate procedures to take responsibility for” and pay off Montenegro Airlines‘ obligations to creditors.

Montenegro Airlines said the company's management is drafting a five-year business plans, which includes a review of the carrier's fleet and finances. "The management of the company is preparing an analysis to find the most effective financial and operational solution for the fleet, and is formulating a detailed income and cost structure for five or more years. This approach involves purchasing aircraft through an operational lease, whereby it is possible to find favourable rates and financial arrangements on the market". Recently, the carrier's CEO, Živko Banjević, said the airline would replace its two Fokker 100 jets in 2019 and 2020 through an operational lease of either Boeing 737 MAX or New-Generation aircraft. In addition, the airline is considering becoming an all-Embraer operator by taking on additional jets from the Brazilian manufacturer.

66 comments:

  1. So through insolvency, the government will just do the same - cover the airline's lossess without raising eyebrows from the EU.

    ReplyDelete
  2. The company is already insovent.

    ReplyDelete
  3. Hope they find a solution. They are generally a good airline with good service and reasonable fares, at least from BEG.

    ReplyDelete
    Replies
    1. Belgrade is the only route which has year-round potential. In October their average loadfactor was 98% which is kind of impressive. Naturally if Air Serbia was a tougher competitor things would have been different.

      Delete
    2. wow that LF is amazing.

      Delete
    3. They offer a better product than JU on flights between Serbia and Montenegro.

      Delete
    4. True. Better planes and better on board service.

      Delete
    5. Of course their service is better when JU serves only water. They have just a drink service.

      Delete
    6. Their service is better on European flights as well in terms of catering. They offer a nicely backed sandwich or pastry.

      Delete
    7. Their services and fares are SOOO good - thats why they are making such huge losses.

      And that is exactly the point - what they are doing is unsustainable. 98% loadfactors are useless when all it does is continue the rot

      Delete
    8. Catering is better: nicely baked sandwich or pastry?
      Revolutionary
      Who cares. Give me a menu with a choice that I can pay for anytime thanks

      Delete
    9. Anon 10.27

      I think you are confusing some things. They are not recording losses because of catering or because of a 98% LF.
      They are in the red because they have too much staff and because they are probably flying half-empty planes to most destinations.

      Belgrade is probably the only thing that works in that airline.

      Ant8,

      You mean like Wizz Air does on their morning flights when they can barely sell you anything since they can't give you back your change?

      Delete
    10. Well from next month passengers will be able to buy food on board JU or preorder during their booking.

      Delete
    11. Stvarno ne razumem ljude koji nesto vise placaju novcanicama.

      Delete
    12. Колико ја знам и картице се држе у новчаницима.

      Delete
    13. Koliko ti znas imamo cesto prilike da vidimo. Kartice se drze u drzacima za iste, momentalno imam 15 takvih, izadjem nekad samo sa LK, zdravstvenom i debitnom, vozacku i kreditne kartice i sl sve ostavim kuci dok zene i dalje nose ogromne novcanike i tasne. Mnogo zaostajes u modnom asesoaru.

      Delete
    14. Nemjee, you can a bit of a d*#k at times. 98% load factor is 'kind of amazing' because its not Air Serbia or wizz air flying to Belgrade or Nis.

      Delete
    15. хахаха наша срећа па имамо алфа мушкарце као што си ти.

      Delete
    16. Anon 10.58

      Nothing about being a dick or not. Just stating a fact.
      If Wizz Air or Ryanair were flying between Serbia and Montenegro their loadfactor would have been much lower. Same thing with Air Serbia. If they had a regional jet the situation would have been much different.

      Delete
    17. Alo druže 10:48 ajde izvadi jednu od tih silnih debitnih kartica pa kupi Wizz kartu do Nemačke da vidiš koliko se ovde koristi keš i koliko ga Nemci vole. Koja si ti klasišna balkančina.

      Delete
    18. Nemjee - you are totally and absoluetly wrong. Those 98% LF's are exactly what is causing their losses to grow. Their RASK is significantly lower than their CASK - since BEG represents almost 60% of their ASKs, this is where they need to maximise their investment.

      They are selling lower than JU on a route where their costs are significantly higher - just dumb and reason why their situation is worsening not improving.

      And just to clarify it, their staffimg levels are insignificant - a roundimg error in terms of what they represent as a total of their costs.

      Delete
    19. Why is AirSerbia not being tougher on them? Duopoly that works well for both sides?

      Delete
    20. I just checked their website and they are selling TGD-BEG for €116 which I suppose is also the lowest fare offered. For a 35 minute flight that's really not that bad especially when you take into consideration they end up selling almost all the seats they put on the market.

      I could understand they were losing money in BEG if they were dumping fares but that doesn't seem to be the case. JU might be making more money because of the Atr but I don't think YM is in the red in Belgrade.

      One has to wonder how their other destinations are performing. Maybe those are the ones where losses are extremely high. After all, BEG alone can't cover all of their expenses. That could be a reason why BEG represents almost 60% of their ASK. There simply aren't that many destinations they could fly profitably to on a year-round basis.

      Delete
    21. Airport taxes represent approx 50% of the fare - leaving approx €50-60 to cover the round trip costs (which is €25-30 per direction), incl overhead, and you think this is ok and enough to cover their costs of doing business ??

      Delete
    22. Nemjee - you are wrong. IST is a year round destination. Why aren't they making a go of that ? If i'm not mistaken, TK has grown to double daily while YM has been sleeping

      Delete
    23. Another thing we need to clarify is if YM includes the YQ charge in the taxes? If they do then the revenue of some 25 to 30 Euros becomes much higher.

      Let's say that they have an average of 105 passengers per flight leaving us with a revenue of roughly €3.150 per segment. How much is petrol? It can't be more than €2.000 for such a short flight.
      For comparison's sake, Aegean's petrol cost for the LCA-ATH segment (01.40) is around €5.500 on the A320.

      Maybe YM is not making a killing on the route but I doubt they are in the red.

      During the summer months, fares are much higher and they are rarely under €200... at least as far as JU goes. I am sure YM charges more or less the same.

      Now if their revenue is this modest on their best performing route then imagine what's the situation like on other routes where the average loadfactor is much lower.

      Delete
    24. As for IST, I guess TK relies on tourists and transfer passengers. The market between MNE and IST is much smaller than the one between MNE and BEG.

      Delete
  4. Replies
    1. They will never do that. The end will come only when Eurocontrol bans them from flying. They already owe them millions.

      Delete
  5. And they were talking sbout new planes just last week...

    ReplyDelete
    Replies
    1. They are still talking about them. Read the whole text.

      Delete
  6. Gotta love those 5 year plans.

    ReplyDelete
    Replies
    1. They should have made a joint one with JU.

      Delete
  7. How are their finances looking so far this year?

    ReplyDelete
    Replies
    1. Disastrous like last year.

      Delete
  8. Does anyone know whatever happened with the YM-JU codeshares? Everything was signed and done and then nothing. Something obviously happened. I think this could have helped YM.

    ReplyDelete
    Replies
    1. Maybe YM came to its senses. It would have been a highly damaging agreement for them. Great for JU though.

      Delete
    2. Highly damaging ?? Are you serious ?? What can be more damaging than what they are currently doing to themselves ??

      Delete
    3. What would be the point of feeding all your passengers to JU? even on routes you fly to yourself.

      Delete
    4. Highly damaging ?? Are you serious ?? What can be more damaging than what they are currently doing to themselves ??

      Delete
    5. Why do you say "and then nothing?"

      JU and YM have code share flights to and from Montenegro and on JU web site it is possible to purchase ticket with comment "operated by Montenegro Airlines"

      Delete
    6. But what about all the other codeshares that were announced? Including BEG-JFK?

      Delete
  9. Someone write here LF for EK flights to Zagreb.

    "OT: 16.11.

    EK129 6-34-328
    EK130 11-29-341

    17.11.
    EK129 4-11-282
    EK130 2-26-268"

    But, for November, we have much realistic numbers.


    "Budući da imam direktan uvid u sustav mogu samo konstatirati da su brojke objavljene za 16. i 17.11. potpuno netočne. LF za 16.11. je bio EK129 0, 14, 196; EK130 2, 13, 259 // 17.11. je bio EK129 0, 14, 181; EK130 0, 5, 138"

    ReplyDelete
    Replies
    1. Those numbers are more in line with what JATBEGMEL wrote on here a few days ago.

      EK 130 with 141 passengers is pretty disastrous.

      Delete
    2. Ceo region ima taj proble ogromne sezaonalnosti.

      Delete
    3. Ja cesto putujem u Dubai, inace radim privremeno u Zenevi. Kao sto znamo Zeneva je finansijski cenar Svajcarske. Za sada sam 9 puta koristio njohov let GVA-DXB I obrnuto. First class EK je skoro uvek oko 4-5 putnika, a ovde ispade da Zagreb ima istu pa cak I bolju popunjenost u first class. St var no smesno i ne znam koja je poenta iznosenja laznih podataka.

      Delete
    4. Treba javnost da se ubedi kako je ZAG finansijski opravdaniji za EK nego GVA
      A ono sve 0 do 0
      LOL

      Delete
    5. To nitko nije rekao, ZAG ima 1 dnevni let sa ponudom prve klase, GVA ih ima dosta više i ne znači ako je ZAG na jednom letu imao bolju popunjenost da je bolji od GVA, kao što to neki zlonamjerno tumače.

      Delete
    6. Sad se odjednom vjeruje novim "direktnim uvidima" u sustav kad su brojke malo lošije iako su još uvijek dobre s obzirom na studeni koji je tradicionalno jako loš. Ali eto, nekome je očito veliko zadovoljstvo da je samo 200-250 putnika na EK letovima iz ZAG (a ne 300).

      Delete
  10. Those numbers at Montenegro Airlines are terrible. Yikes.

    ReplyDelete
    Replies
    1. Can someone crunch those numbers? How big of a loss are they making per passenger?

      Delete
    2. Loss of around EUR15 per each passenger.

      Delete
    3. Those a truly dreadful numbers.

      Delete
  11. Montenegro Airlines is pretty important for the country's tourism industry but with more and more competition, especially from low cost airlines maybe it's time to let this one go.

    ReplyDelete
  12. They have been risking insolvency for years yet they are still here.

    ReplyDelete
  13. Good luck MGX. You will need it.

    ReplyDelete
  14. How much debts do they owe to:
    SMATSA
    BEG
    TGD
    other airports

    ReplyDelete
    Replies
    1. "The national carrier owes 17.8 million euros to Airports of Montenegro, fourteen million euros in state taxes for unpaid wage contributions since 2012, 4.5 million euros to Celestial Aviation Trading, 1.7 million to Embraer, 1.5 million euros to Belgrade Airport, 790.000 to fuel provider Jugopetrol, 702.000 to Eurocontrol and 415.000 euros to the Generali insurance company in Belgrade. During the summer, the Serbia and Montenegro Air Services Agency blocked Montenegro Airlines' account for outstanding debt amounting to 2.3 million euros, however, following an intervention by the Montenegrin government, the account was restored."

      http://www.exyuaviation.com/2017/10/montenegro-airlines-account-blocked.html

      Delete
    2. And what will become of these debts?

      Delete
  15. Zasto je vecina vas zlurada? Valjda je bolje da nasi nesto zarade nego da se trziste prepusti beskrupoloznom vizeru koji odnosi profit u Madjarsku i dalje u SAD...

    ReplyDelete
    Replies
    1. Slažem se! Problem je što YM nije zaradio ni evra otkad postoji. Naprotiv, sipa milione evra u rupu bez dna.

      Delete

EX-YU Aviation News does not tolerate insults, excessive swearing, racist, homophobic or any other chauvinist remarks or provocative posts with the intention of creating further arguments. A full list of comment guidelines can be found here. Thank you for your cooperation.