Montenegro Airlines takeover talks next week


The Montenegrin government will hold talks with a "serious European carrier" over the takeover of Montenegro Airlines during the first week of October, Prime Minister Duško Marković has said. Speaking at the Miločer Development Forum this week, Mr Marković noted, "We will do everything in order for the national airline to survive. During the first week of October, I will talk with partners who are interested in buying our national airline. It is a serious European airline. If the offer is good, we will work towards an agreement". The statement comes just weeks after the Montenegrin Minister for Transportation and Maritime Affairs said that a "major international company" plans to purchase a stake in Montenegro Airlines and will soon submit its letter of intent to the government.

The Prime Minister did not specify which European airline has expressed interest in its Montenegrin counterpart. Over the past few months both LOT Polish Airlines and the owners of Slovenia's Adria Airways, 4K Invest, have been linked with Croatia Airlines' privatisation process. In June, LOT said, "After establishing a partnership with Nordica in Estonia, we are interested in further consolidation of the aviation market in Central and East Europe". Asked earlier this year whether Adria sees opportunities in cooperating more closely with other airlines from the former Yugoslavia, the Slovenian carrier said, "We strongly believe in synergies among partners and thus we continuously seek for opportunities. We are always open for closer cooperation, new markets, greater efficiency and faster growth – without jeopardizing sustainability. The success of such cooperation depends on more complex factors, so our decisions and future directions are and will be cautious".

Previous attempts to privatise Montenegro Airlines have all failed. Interest has ranged from El Al Israel Airlines to Turkish Airlines and Etihad Airways. In its 2018 progress report on Montenegro, the European Commission noted, "The national airline company Montenegro Airlines is facing major sustainability issues, having accumulated significant financial debts". It urged the government to sell its shares in the airline. A company from inside the European Union could take a majority stake in Montenegro Airlines. Under the union's rules, those from outside the block can only purchase up to a 49% share in a company originating from an EU member state or from those aspiring to join the EU, such as Montenegro.

Comments

  1. Well that escalated quickly.

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  2. Who could it be?

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    1. Well it could quite possibly be LOT. They have experience with Nordica now.

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    2. Air Serbia :D

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    3. Could be maybe Qatar Airways thorough Air Italy.

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    4. It could also be some LCC. I don't know if Wizz or Ryan were ever interested in buying another airline.

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    5. Yes, both were interested in Alitalia.

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    6. Who else was interested in Alitaia? It might show us who is interested in YM.

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    7. easyjet was interested.

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    8. Probably one of the Russian airlines. Since MNE is outside EU they can now still purchase 100% of YM.

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    9. Not exactly as YM is benefiting open skies regime.

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    10. @10.32 they can't because Montenegro has candidacy status so no non-EU company can take over 49%.

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    11. @12:05: actually they can, as has been demonstrated few time in the very recent past in Austria; ever wondered why there were so many airlines incorporated recently in and around Vienna?
      Some entity from just about any part of this world sets up a Privatstiftung in Austria, this "foundation" will hold about 51% of an airline and because it is registered in Austria it ensures the majority EU ownership and it does not really matter who the "minority" owner of the airline is and how she controls the "foundation" (because it is a "foundation" and not a corporation, it has now owner, just beneficiaries and therefore the foundation counts as the final owner and counts as EU because it is registered in Austria)

      This way Easyjet Europe is a normal EU airline, no matter how the ownership structure of the Easyjet main company changes. The same applies to Anisec (Level Austria) or anybody setting up a airline in Austria.

      If anybody with a non-EU passport is interested in buying an airline that operates under EU laws, she will normally go via Vienna these days.

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    12. Very interesting! However, if it is really possible under Austrian Law you can still not gain any profit from foundation, which means that either you operate a business with no profit by overspending in transactions with connected companies, or you distribute any available profit 51/49 with subsequent aim to use it for non-profit purpose.

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  3. Replies
    1. I would be seriously worried if it is 4k.

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    2. Me too. They would just get the airline so they could get more aircraft for Adria's ACMI business. We all know how Darwin ended up.

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    3. Why? It would be fantastic for YM to become part of Star Alliance and LH group eventually. YM could get guarantees to be a single carrier between Montenegro and all LH group major airports (or at least not have competition from LH group), it would not be threatened by Eurowings, and still keep the major share of Serbian, Russian and growing charter market. It would actually be the best possible solution for YM. Is it best for travellers that is another piece of cake.

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    4. That would be great if it actually turned out that way but the experience with Darwin tells me something different.

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  4. Turkish Airlines possibly.

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    1. They are not really European so they will not be able to get more than 49% of YM.
      It will have to be an EU or EFTA registered airline.

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    2. TK could not take more than 49% of B&H back in the day because they are not considered European.

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  5. I can understand someone buying Croatia Airlines but YM? What would they gain exactly?

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    1. Maybe they are competent enough to make a National Airline of a tiny country of 600k people and nice coast work?

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    2. I honestly think OU has more potential then MGX. If for nothing else then for having a bigger market.

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    3. I think you meant to say that OU HAD more potential... they should've privatised them years ago - even before EY came into JU. Back then, OU was at the top of its game and worth much more than it is today or than it will be going forward.

      Previous and current govt, as well as current mgt, is slowly killing it on the one side, while on the other, increasing competition is also doing its part.

      The longer they wait, the further they get from anyone being interested in OU - even if they were to end up giving it away for EUR1.

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    4. +1 last anon.

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    5. They lost many opportunities but there are still chances for OU to recover.

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    6. If the Croatian government keeps dragging its feet there will be no airline interested in buying others anymore and with all ex-Yu airlines privatized it will become more difficult for OU to compete.

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  6. They will give it to someone for free.

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    1. Considering liabilities are times higher than assets, that would be the only rational thing to do.

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    2. The brand should be worth something. The logo and the name.

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    3. Yeah, they could sell it to the owners of Adria and then lease it back. They seem to have an interest in buying airline brands and logos ...

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    4. Haha good one.

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  7. Turkish? another hazardous move like AirAlbania beyond any logics

    or is it Aeroflot?

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    1. Air Albania is a political project which Erdogan ordered Turkish to invest in.

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    2. Let s just hope we don t see any Russian money in Montenegro Airlines..... I don t like them stepping into the ex Yu market, not politically, not with investments, not at all.

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    3. Wow, totally not Russophobic. Because German capital is much better for example - Fraport is paying ground handling staff with food stamps/grocery gift cards in Greece.

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    4. Russia-Montenegro are not in good relations at the moment so doubt it.

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  8. They should have taken that El Al dea when they had the chance all those years ago. I'm certain they would have been in a much better position than they are now.

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    1. Deal with El Al was quite conditional. They wanted to buy YM only under condition to buy them together with airports as a package. You can agree that wasn't such a good deal after-all

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  9. Lufthansa maybe? But in that case it would probably be through 4K.

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    1. Not again with this theory that LH is behind 4K/Adria.

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    2. All things indicate that this is the case.

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    3. If by 'all' you mean none, then I suppose you have a point.

      I can tell you what's going to happen with Adria, I heard it from very reliable sources who work at FRA airport: it's going to become insolvent (ie go bankrupt), Eurowings is going to take over its Airbus fleet plus the Airbus crews and some of the CRJ crews (EWG has a huge pilot shortage). They are going to take over some of the routes (VIE, MUC), and that's about it.

      So in a sense you are right, it is Lufthansa, just not in the way you folks here imagine.

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    4. If you dont know, then don't assume.

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    5. "their airbus fleet" LOL
      it is not a fleet at all; JP has leased 3 a319!
      I guess LH is spending hundreds of board meetings to plot a strategy on how to get them ;-)

      even if the just signed a ACMI deal for a a319; they do not have a single a319 on order, because it is rather costly to operate, compared to the rest of their fleet

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  10. Imagine if it was someone completely left field like Air France.

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    1. Air France is near bankrupt so I doubt they are interested in shopping for minor airlines.

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    2. Air France - KLM was interested in Alitalia.

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    3. Air France - KLM are already heavily interconnected with Alitalia, not always to the AZ benefit.

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    4. Air France/KLM are interested in Virgin Atlantic Airways no Alitalia.

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  11. Wow who would have thought that Croatia Airlines will be the last one left state owned.

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    1. AirSerbia is still majority state owned and financed (51% shares + 49% shares held by state owned company of another state).

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  12. Other than the Lufthansa group I don't see any airline in Europe stable or strong enough to purchase another carrier.

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    1. If it is nearly for free, it could be anybody.

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    2. why would LH buy a company that operates only 3 E195 and a 737 and has people on payroll with Fokker rating?
      they announced just yesterday, that they will add 14 Embraer to their Italian operations.
      If they were so worried about CG, they would just deploy few of their machines form AirDolomiti and randomly assign a EW, OS, LH or whatever code to it

      it will be either 4K or any other fund that specializes in distressed assets
      There is nothing that LOT could by with YM, that they could not get cheaper elsewhere with less strings attached

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    3. "they announced just yesterday, that they will add 14 Embraer to their Italian operations. " Air Dolomiti growing their fleet?

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  13. What could one do with Montenegro Airlines? They have a pretty ok network and frequencies. I don't see what more they can do with such a limited market.

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    1. It is limited but it is also growing. Season is being extended in Montenegro, plus capacities in small hotels and constantly being added. What they still lack are big summer holiday beach complexes, everything major they have is from 70es and 80es basically.

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  14. According to some reports, this "European airline" wants to take over MGX without any debt and wants 120 employees to be fired before they takeover. That's why last week board of directors made a decision to fire workers.

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    1. How many people are employed by YM?

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    2. They have a bit over 400 employees.

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    3. That's nuts for a company MGX's size.

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    4. So bit over 80 employees per plane. That is not insane actually given the fact that many offices/departments company must have irrespective of its size. Maybe there is room to grow and have 6-8 plane feet with just a bit more personal.

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    5. Adria which now has 21 planes has under 400 staff members.

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    6. And that's why they are hiring 100 pilots/copilots. They don't have enough staff.

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  15. This is exciting. I guess we will find out next week which airline is in question.

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  16. Of course there is no economic sense - however, if the CG gov't is willing to throw in, say, some valuable real estate on the coast line into the mix then maybe it works.

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    1. I really doubt a European airline is going after real estate in Montenegro. Your theory would make sense only if it was some Middle Eastern airline wanting to buy YM.

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  17. Well done Montenegro. They seem to have decided to do this quickly and quietly.

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    1. Pretty much the same happened with Etihad-Jat. No one saw it coming and it happened all within a week (EY takeover was announced, EY announced they were launching BEG etc). I remember how many people here wrote how it will never happen and that it is made up.

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  18. Budget has to be filled ASAP. That's why they are urgently selling the airports and airline.

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    1. This is not a budget filling but rather budget empting operation.

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    2. They have to get rid of YM. EU has already said they can no longer give money to YM (and this year government didn't listen to them and gave money again to YM). With accession talks moving they have to get rid of the airline and will give it to pretty much anyone.

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    3. There are various ways to work around state aid rules and help national company. Given the geographical position and dire transport situation Montenegro is in, it makes sense to subsidize YM during winter season.

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  19. Maybe Eurowings.

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  20. It is Ryanair, they are starting to buy smaller companies to dominate more markets. See Lauda and Air Malta collaboration.
    Crna gora is a the new alternative for those who have been to Croatia and the country has much to offer.
    I love the Boeing btw, so legacy.

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    1. The B737 in Montenegro livery is beautiful :)))

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    2. It does look very nice :)

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    3. Hahahahahaha yes, Ryanair. MGX can offer only debts and Montenegrin AOC for them.

      OE was different story, as it provides an establish AOC with A320 operation, which can increase their rate of expansion (i.e. you can get both A320s and B737s of production line at the same time), as well as a more recognised brand in the large Austrian-German market.

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  21. YM is doing a great job. It has young and extremely skilled staff, good plan and it is definitely an airline to be taken seriously. It is steadily expanding both in the region and in Europe and it shouldn't be dismissed easily.

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    1. There is nothing to make them feel proud of their plan! Without government support that they would be nothing.

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  22. Polski LOT je najokompatibilniji partner za Montenegro irlines posto ima veliko iskustvo sa avionima tipa Embraer190, Boeing737-500 i Fokker100,dok Nordica Airlines vec dugo godina leti za CRJ900 avionima(imaju 9 novijih aviona i jedan na makedonskim registarskim oznakama)

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    1. Nordica? Plane with Macedonian registration?

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    2. Drugi ikad proizveden avion CRJ900 jos je na makedonskim registerskim oznakama-prvi tog tipa aviona u Europi. Prvo je letio iz Aerodroma Ohrid pa zatim su ga prodali u Skopje a sad je aktivan za Nordica Airlines.

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    3. CRJ900 with registration number 15001 was in the Macedonian register 2006-2009 as Z3-AAG, but was sometime after 2011 scrapped.

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  23. I agree that LOT seems the most plausible.

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  24. What about Aegean? There were rumors they were interested in Croatia Airlines a few years ago? They are expanding a lot in the region. This could be a good opportunity to really establish themselves.

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    1. But what would Aeagean gain from it? Two old Fokkers and a couple of newish Embrares? The market isn't too big.

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    2. By that logic there is no sense for anyone in Europe to take over YM.

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    3. Well I personally don't see any sense. But we will find out soon who it is.

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    4. When does the financial lease for those Montenegro Embraers expire?

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  25. Love these takeover guessing game :D I hope we won't be disappointed when they announce the name.

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    1. Well they said it was a major and serious airline Whatever that means.

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  26. I wish the best of luck to Montenegro Airlines and who knows maybe an exciting future is ahead of them.

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  27. Do people remember that this year Lufthansa representatives came to Podgorica several times this year? It was reportrd here as news. Most saw this as LH group considering more flights to Montenegro but they might have been screening YM instead.

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  28. So many possibilities. If MGX somehow pulls it off and gets a strategic partner, well done to them.

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  29. I wonder if any of exyu airlines hedged jet fuel cost. Average oil price is up 30% compared to last year.

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    1. Lol, I wonder if anyone who runs an airline in the region knows what you mean.

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