Montenegro Airlines posts smallest loss in five years


Montenegro Airlines has posted a net loss of 4.6 million euros for 2017, the smallest amount in five years. The result also marks an improvement on 2016 when losses totalled 11.5 million. During last year, revenue at the airline increased by 3% to 67.5 million euros, while expenditure fell 5% to 71.7 million. The company also has undistributed profits amounting to 327.297 euros, while its short-term liabilities and provisions total 75.1 million euros. Its long term-liabilities equate to 13.9 million euros. The airline still has significant debt, however, most of it is towards local suppliers which are also state owned. At the end of 2017, Montenegro Airlines had 397 employees and handled 568.591 passengers.

The improved results come following the implementation of a range of consolidation measures in 2017 involving the reduction of the company's headcount, cutting back costs, drafting a long-term business and commercial strategy and acquiring modern software solutions for sales and revenue control. Last year, Montenegro Airlines' CEO, Živko Banjević, noted, "Soon we will see a revitalised and healthier Montenegro Airlines, with a new business and commercial strategy, which will enable the company to secure its place on the market, increase passenger numbers and give it a chance to launch operations to new and far-away markets, which is especially important for the tourism industry. It will also become much more aggressive in its commercial policy towards its competitors on existing markets".

Earlier this month, the Montenegrin government injected a further two million euros into the company in order for it to settle outstanding debt towards some of its suppliers. It has similarly done so last year too. In its recent progress report on Montenegro, the European Commission stated, "The national air carrier Montenegro Airlines is facing large sustainability issues. accumulating significant financial debt. The restructuring plan from 2012 for the airline has only been partially implemented but further state support was granted to keep the airline operational. Awareness of the state aid rules among aid grantors is weak and advocacy must be stepped up considerably".

Comments

  1. 'Only' 4,6 million.

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    1. Well it is much better than almost 12 million.

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    2. A loss is a loss, no matter how big or small, especially after accumulating that much loss the previous years.

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    3. exactly. Ageee with frishki.

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  2. In the end I doubt they will make it. That said, I am happy that thanks to them we have a B735 visiting Belgrade at least twice a day now.

    I noticed JU upped capacity to Montenegro. Good to see JU responding to competition.

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    1. That B735 looks great in MGX livery.

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    2. f 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.

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  3. I'm very happy with YM results. The only carrier in ex-YU growing and not shrinking in size or selling slots to survive. The Boeing classic addition is a nice detail...

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    1. They seems to be the best run airline in ex-YU and that says a lot.

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    2. Are you guys serious?

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    3. Yes, of course. Point another airline that's doing great then...

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    4. All other airlines had smaller loss in 2017. We will see for 2018.

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    5. Adria is doing well. Expanding fleet, network and decreasing losses.

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    6. All of the airlines are a mess, more or less.

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    7. Most of them have very similar problems. I don't know if some sort of joint consolidation among them could work to create one strong airline.

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  4. I'm glad they managed to decrease losses but in my opinion an airline of that size should not have such big losses let alone debt.

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    1. What is their debt at the moment?

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    2. Over 70 million EUR.

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    3. How much does it owe SMATSA ?

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  5. So how much state aid did they get in 2017?

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    1. Whatever they got it is better to give them state aid now when they are still not in the EU and are more or less allowed to do it than for the entire airline to collapse the second they enter the EU.

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    2. Well, if that’s your theory, than JU is doing pretty well themselves.

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    3. I personally think both countries should have a national airline and I doubt see a problem with the state helping them out as long as it is in line with the law.

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  6. I'm getting the impression that the new management knows what's it doing. They seem to have made some good decisions and if they managed to get the government to give them money then so be it.

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    1. +100000
      They should be making profit by 2020. I won't be surprised if they decide to buy the new Embraer E2 jet.

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    2. I highly doubt they will have the money for E2.

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  7. Next year should be very interesting to see what they choose to do with their fleet. They promised this year they would lease a second hand 120+ seater and they did so I tend to believe they will make good on their promise to remove the Fokkers in 2019 and 2020.

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    1. It would make more sense for them to become an all Embraer operator in my opinion. It would reduce costs.

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  8. Nice news coming from Montenegro Airlines lately. Yes it is a loss but a good improvement. They could manage around 1 million loss this year. Also I notice that they have managed to decrease the number of employees which is good.

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  9. Anyone know what was their average cabin load factor in 2017?

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  10. Great but all of this should have been done 5 years ago. They are facing a lot of competition now. Wizz Air is constantly growing, Adria is going after them on the Ljubljana route by increasing frequencies significantly, TUI is taking part of the cake from France and the UK, Pobeda will launch low cost flights to Podgorica...

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    1. I think this is the reason the government got its act together and realized that they need to drastically change something at YM in order for it to survive.

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  11. Nice to see recovery on the horizon for MGX.

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  12. They managed these results because of state aid.

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    1. At least Montenegro have a modern fleet!

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    2. Any airline could have a modern fleet with such debt.

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    3. Fokkers are only 27 years old, brand new!

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  13. I hope their consolidation works out. Seems to be on the right track.

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  14. Waste of taxpayer's money.

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  15. Could MGX once again become an example of a well managed company with the most modern fleet in ex-yu?

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    1. It was once an example of that?

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  16. So now we are waiting for financial results of Air Serbia and Adria for 2017.

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    1. Adria will post quite a huge profit, due to the money that went missing in Darwin.

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  17. Montenegro Airlines should have set TIV-BNX charter flights in July and August. B&H had around 40 passengers per flight on this route in ATR.

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    1. MGX's smallest plane has 100 seats. I doubt they could make a profit with 40% LF.

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  18. definition of an national airline in every part of the world:
    Lack of profitability...

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    1. Not necessarily. There are some quite profitable flag carriers.

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    2. But majority of those are private-owned or at least run as a proper company, not as political projects for voters' point-scoring.

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  19. Question for those commenting PROFITABILITY of Montenegro Airlines : What do you think, does Montenegro pay to Podgorica and Tivat airports for their services? Thank you!

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    1. I think it does now. It didn't used to. They have debt towards the airports but I think last year they worked out some sort of payback deal.

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  20. What's going to save this airline?

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  21. Basically, YM survived the hardest test and is giving the other ex yu carriers a lesson to be learnt.

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  22. Montenegro Airlines debt is 2% of the country's GDP, which might be the highest debt of a state-owned airline to its respective country's wealth.

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    1. True, thanks Miro. God bless you and hopefully YM up to the skies

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    2. Wow that is bizarre, countries usually spend 2% of GDP on entire defence spending!

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