Montenegro Airlines becomes EX-YU's fastest growing carrier


Montenegro Airlines' CEO Živko Banjević has said the company is "still here, stronger and more stable" as the government mulls its future involvement in the carrier. During the January - October period, the airline handled 576.000 passengers with six aircraft on 6.704 flights. As a result, it added an extra 68.751 travellers, representing an increase of 13.5% compared to the same period in 2017. "By the end of the year we anticipate welcoming a further 50.000 to 60.000 travellers. Therefore, the total number of passengers carried in 2018 should be above 620.000", Mr Banjević told the "Dnevne Novine" daily. He added, "Our 576.000 travellers represent 25.4% of all passengers handled through Montenegro's airports this year, despite competition from 45 other legacy, charter and low cost airlines". The carrier has claimed the post for being the fastest growing in the former Yugoslavia. "Preliminary business results for the first ten months have improved by 1.5 million euros and are the best in the last four years, regardless of some negative factors, which are out of our control, such as the extremely high cost of fuel", Mr Banjević said.

The strong operational and improved financial results come as the Montenegrin government seeks a strategic partner for the airline. Alternatively, the state has said it will continue supporting the carrier, if it is allowed to do so. "At the start of 2017, Montenegro Airlines was in an extremely difficult position in a financial, commercial and operational sense. With support from our owners and the company's management, as well as managerial and staff efforts, the company has been mostly consolidated and optimised, as indicated by our results. An analysis carried out by Deloitte at the end of last year showed that maintaining the business would give better results than the offered alternatives, i.e. a programmed bankruptcy and liquidation", Mr Banjević said. He further noted, "The government of Montenegro, aware of Montenegro Airlines' importance on the country's economy, is now, jointly with the management, looking for an adequate model for financial consolidation, primarily in regards to debt owed towards the Tax Administration, flight control and Airports of Montenegro, as well as the optimal long-term solution for the company's business".


Over the years, Montenegro Airlines has incurred significant debt to various service providers, which the company is now looking to clear. The CEO, who took over the reins at the airline at the start of last year, said, "In addition to outstanding debt owed towards the Tax Administration, flight control and airports, we also had to deal with 16.5 million euros worth of outstanding payments to foreign providers, such as aircraft owners, Eurocontrol and commercial banks, all of which could have grounded the company within a day. We succeeded in negotiating deals with each and every one of them in order to secure Montenegro Airlines' operations. We have restored the trust of our partners and associates".

A European investment fund, largely tipped to be Germany's 4K Invest, has held preliminary talks with Montenegro's Prime Minister, Duško Marković, over a possible stake in the airline. "The interest shown for the acquisition of Montenegro Airlines demonstrates to us that the company has been recognised by potential investors for its significant results and recovery, its importance and the market potential", Mr Banjević noted. "For Montenegro, it is of utmost importance that it has a functioning airline. Over its 24-year history, Montenegro Airlines handled 8.9 million passengers. Only since January of last year, when the Montenegrin government intervened and replaced the company's management, which was later followed up by financial support, we carried more than 1.1 million travellers. That's more than one and a half times the size on Montenegro. Montenegro Airlines is the second largest state-owned company with an annual turnover of seventy million euros, whose indirect effect on tourism revenue range between 150 and 180 million euros per year. The direct effects, through the payment of salaries, airport services and non-tourism related activities, have reached fifteen million euros. Taking this into account, the steps the government took last year in order to rescue the national carrier were economically justified", the CEO concluded.

Comments

  1. Very nice growth from MGX.

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  2. The financial results are quite vague. But I'm happy they are improving.

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    1. We really can't conclude anything from the financial info they offered.

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    2. True. Saying your finances are better by x amount without giving us the base figure doesn't say much.

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    3. Well I think it means their results have improved by 1.5 million euros based on the net result they had last year, which was around 4.6 million minus.

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  3. Who has the bigger seasonality issue. Montenegro airlines or Croatia airlines?

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    1. Montenegro Airlines benefits nicely from the fact that it has strong loads year round on Podgorica, Tivat - Belgrade lines. It generates almost 50% of its annual traffic.

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    2. especially TGD-BEG-TGD which performs equally well in summer and winter.

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  4. Bravo Crna Goro!

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  5. Meh... JU and JP also grew fast at one point until they hit a wall.

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  6. It's good to see they are growing despite the much increased competition in Montenegro this year.

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    1. Agree. Considering the competition they have now from Wizz, easyjet and Ryan, they seem to be doing well.

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    2. Don't forget quite a significant number of respectable full fare airlines that fly to Podgorica as well.

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  7. Bravo Montenegro Airlines! I hope they manage to come on the right track financially.

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  8. In translation, without government support they would be gone a long time ago. I hope they get sold.

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    1. Without government support all ex-Yu airlines would have been long gone.

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  9. I will say it again - time to merge Montenegro Airlines, Croatia Airlines and Adria Airways under control of 4K/Lufthansa.

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    1. Again with this theory that Lufthansa is behind 4K...

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    2. Judging by 4K's strategy, that is exactly what they are planning.

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    3. What would you gain from that? All three airlines are doing extremely badly at the moment. Index is reporting that OU doesn't have enough capital to survive the next few months. JP is collapsing left and right... YM seems to be the most stable from them all.

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    4. Well, if 4K comes up with 10 millions euros to invest in JP until Decembre, then we'll know that at least there's some other big name behind them. If they don't, it's over. Facts are overwhelmingly pointing to the latter - if there was someone 'big' behind 4K, then they wouldn't wait until the very last second to start investing their own money into the airline.

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    5. All ex-Yu airlines 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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  10. They finally discovered the wonder of charter flights and the money it brings. I would strongly recommend Croatia Airlines to do the same.

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    1. +1000
      Aegean is currently flying charters from the coast to Germany for a German travel agency.
      I bet Aegean has more expensive salaries than OU and also pays higher leases for its Airbuses since they are quite young.
      Also they pay for their staff to stay in Croatia or Germany during this, this ain't cheap.
      So how come they can do it profitably and OU can not?
      Or OU didn't even bother to see how to best utilize its fleet outside the peak tourist season?

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    2. My best guess is that they didn't even bother.

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  11. Nothing else than a PR to make the company more attractive to sell, or if they've already struck some obscure deal with e.g. 4k, a way to justify it in front of the public

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    1. +1. But it may not be obscure deal, they are trying to sell for more price to the buyers with better numbers. Good strategy from the government

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  12. idemo dalje i nadamo se boljim zivotom

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  13. Do they plan to open any new routes in 2019?

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    1. They should look at TIV-BNX and TIV-INI. Both could be operated once or twice a week.

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    2. Would be nice if they finally introduced Zagreb and returned to Skopje and Pristina.

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    3. Zagreb didn't work even on OU's Q400, so I doubt that will happen. Also, I don't think there is enough P2P demand to start Skopje and Pristina.

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    4. I remember they were supposed to cooperate with OU in ZAG. Another missed opportunity for OU to fight for a market and to steal a share. I mean if JP can then OU could as well.

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    5. @ 10.23 If I remember correctly that route operated quite well for B&H Airlines one summer (the last one they were around).

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    6. How the ZAG - TGD couldn't work with OU is beyond me. And then, PRN, too.

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    7. It's surprising, especially since there wasn't too much competition from Montenegro at the time (in term of other transfer options).

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  14. Some of the key performance indicators are showing signs of improvement but we can't conclude anything without financials.

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    1. I'm getting the impression that the new management (the post Daliborka one) knows what's it doing. They seem to have made some good decisions.

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  15. 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 was a nice addition this year...

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    1. True. They added a few destinations this year and an extra aircraft.

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  16. 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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  17. They should be making profit by 2020.

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  18. Nice news coming from Montenegro Airlines lately. They could manage around 1 million loss this year.

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    1. With these oil prices, doubt it.

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  19. Anyone know what was their average cabin load factor is?

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    1. Don't know but there is this article from October with their average loads
      https://www.exyuaviation.com/2018/10/montenegro-airlines-registers-strong.html

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    2. I think annual LF last year was around 65%. Low like most ex-Yu airlines. JU is the only one doing better there but even they are low compared to European standards.

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  20. Good marketing. They are making numbers look positive for a good price to sell the airline off

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  21. They managed these results because of state aid.

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    1. At least they have a modern fleet.

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    2. Fokkers are 27 years old!

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  22. They forgot to mention the lease of an extra aircraft, thus the increase in total number of passengers etc.
    Everything is the same as it used to be, if.not even worse :(

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

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  24. other ex yu carriers could learn a lesson.

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