The Montenegrin government has earmarked 133 million euros for its national carrier this year, to help cover the losses caused by the coronavirus pandemic. On July 21, Montenegro Airlines was given a 10.4 million euro cash injection in order to secure the company’s short-term liquidity, while a further 25 million euros was forwarded to the airline on August 25. Late last year, the Montenegrin government committed itself to providing 150 million euros to its national carrier over a six-year period. Initially, 66 million was to be given to Montenegro Airlines this year. However, in its amendments to the state budget in July, the government earmarked a total of 133 million euros for the carrier this year alone due to the coronavirus pandemic.
Montenegro Airlines, which operates a fleet of just four aircraft and relies on the busy summer tourist season to bolster in finances, saw its revenue decline 80% during the first seven months of the year compared to 2019. Whereas the airline saw revenues of thirty million euros during the January – July period in 2019, the figure fell to just six million in 2020. The carrier’s CEO, Vlastimir Ristić, said last week the carrier is facing the biggest crisis since its foundation. “We have lost the most important months of the year, almost the entire summer season. This on its own says a lot about the position we are in. At this point, it is difficult to predict our results for the rest of the year, and it would be demoralising for us to do so”, Mr Ristić said. He added, “We are still waiting for some good news, such as the complete lifting of travel restrictions to Serbia and the reopening of the Russian market. The sooner these two happen, the better it is for us and we will do our utmost to wisely use this opportunity”.
That is a huge sum!
ReplyDeleteWow
ReplyDeleteGood on them
ReplyDelete€133m for a company with 4 aircraft.
ReplyDeleteThey could close this one down, opened a new one, and it would cost less in the end.
+1
DeleteDon't forget that Cyprus which is a lot richer doesn't have an airline.
DeleteThis financing is almost criminal.
DeleteAnd 11 million passengers while being maybe 30% bigger.
Delete4 planes and 133 million EUR?
ReplyDeleteAnd don't forget over 100 million in debt
DeleteI hate to think how much the other two ex-yu national airiness will get.
ReplyDeleteju with 18 aircraft has received billions since 2013, not a big deal...
DeleteNo trillions. And no 5 aircraft.
DeleteIt has and you know it. Just like the sweet subsidies for 5 years in Nis. Or that doesn't count?
DeleteThat's 5 million euros. Not billions!
DeleteIt's interesting those flights are an issue for you but not 10 million received by another airline each year for domestic flights.
DeleteAt least Air Serbia is doing something with the money which shows certain progress, YM is not.
Delete@anon 09:18
DeleteVery good, I would say very, very good!
This is totally apsurd. They are going to recive 133 million while 3 larger OU will recive 91 million. And this is even more then a revenue they made in 2019. which was about 80 million.
DeleteHow did we get to JU, INI and Serbia from a topic on YM and MNE?
DeleteCroatia ask for 93 million EUR.
DeleteDinosaur
ReplyDeleteGood to hear. The amount is reasonable and should help them survive during the winter. Those aircraft must be used for charters. They will undoubtedly boost their financial situation. They should also consider resuming flights to INI.
ReplyDeleteReasonable? Seriously?
DeleteWell, open the table in the reference and check the amounts received by other carriers and then compare them with YM. The amount is reasonable. This is a long-term aid.
DeleteLong term? You want to bet they won't need anything more in the next 5 years?
DeleteYes, exactly. The aid is large because it will serve for a longer period.
DeleteHaha, I'll believe it when I see it.
Deletelol what longer period? A few months ago we read how they got 155 million for five years and now they get 133 million just because of corona, which excludes the first three months of the year when they operated normally.
DeleteWith that money you can build an airline size of Air Baltic. Air Baltic got about 250 million in investment from the goverment and private investor to build an airline of 5 mil. passangers. And Montenegro got 288 million so now you compare what you can make with that amount.
DeleteThis is excessive
ReplyDeleteI'm more surprisd to hear that they would have gotten 66 million without corona.
ReplyDeleteI actually really appreciate that the government has recognised the importance of their national airline.
ReplyDeleteA country with just 5.7 billion dollars GDP nominal giving to an airline in one year 133 millions euros with 4 airplanes is crazy!
ReplyDeleteBudget revenue is just 1.7 billion euro. Absolutely crazy. 8% of the budget revenue.
DeleteThat's 18 euros a month that every Montenegrin pays to YM. Given that not the whole population of Montenegro pays tax (children etc.), the number is even higher per tax payer.
DeleteLet's see if they actually get the money now that a new government will be formed.
ReplyDeleteYes. They could have a very different stance on YM
DeleteLetting YM go bankrupt would not be a good look. Trust me.
DeleteIt would if they tie it to DPS and Milo as his legacy which it, anyway, is.
DeleteIt's too much.
ReplyDeleteLove the table. Look at the amount all the foreign airlines received. Don't see any outraged taxpayers there.
ReplyDeleteCraaazy how rich Singapore is as a state! And seeing them resuming flying with 737s after nearly 50 years is even crazier.
DeleteCountries like Singapore wouldn't have provided any state aid to their national carriers if it weren't for Corona- which diferentiates them from the ex-yu ones, which have been providing state aid without Corona for years.
Delete^ There's Corona help and there's inability survive without the government's funds even when aviation cycle is in the boom part.
DeleteSIA received billions and billions in the past, that is until they create the brand they have today. You can't have a cash cow business without first investing in it. I guess that's why ex-YU is poor, we don't understand how capitalism works.
DeleteJust until last year people here used to insist how this was an amazingly successful company
ReplyDeleteGood, better than them going bankrupt.
ReplyDeleteI agree but this huge amount of money should be given under certain conditions.
DeleteFor 133 million they could pay Ryanair to base 10 aircraft in the country.
ReplyDeleteThese situations have really shown how good it is to rely on a foreign LCC airline...
Deleteok pump money into them. till u enter EU then we will see
DeleteI'm guessing those free economy meals won't be staying for much longer.
ReplyDeleteThey could have done so much more with this money.
ReplyDeleteSo everyone in ex-Yu decided to invest in their own airlines except Slovenia.
ReplyDeleteAnd Macedonia
DeleteWell, not just ex-yu. Italy, France, Germany.
Deleteand Macedonia and Bosnia
DeleteNone of these countries are starting a new airline in 2020, are they?
DeleteAlso, Lufthansa wasn't a financial basket case before this all started, unlike exyu airlines (and Alitalia).
Adria and MAT were 100% privately owned companies.
DeleteLook at Italy and Alitalia, that goes to show what importance it is for Italy to have them around.
DeleteAlitalia isn't even the largest airline in Italy. It's just that no politician wants to take the responsibility for finally pulling the plug and making thousands of people finally unemployed.
Delete+ the money Italy will pump into this loser this time will come from Europe, which of course if making everybody, particularly in Germany very happy.
DeleteThis amount of money for such a small company is ridiculous.
ReplyDeleteThey have to prop it up since the airports are being given in a concession and MGX will have to actually start paying for using them.
ReplyDeleteUmm have you checked what's happening with that concession? It's gone down the toilet.
DeleteWaste
ReplyDeleteProbably pure nepotism - just like overall in the Balkans... ....politicians employ their families there with high salaries and subsidize them for enernity...
ReplyDeleteGo MGX!
ReplyDeleteWaiting for the "keeps winning" guy
DeleteMe too :D
Deletehe is him
DeleteThat's an insane about of money for a plane that operates between 4 and 5 aircraft. I wonder how that works out to state aid per employee, must be over €200k.
ReplyDelete*amount
DeleteDoes it come with any strings attached?
ReplyDeleteIt likely does but no the you probably have in mind (financial performance, # of pax etc.). It's more like # of new ruling party members employed, # of supply contracts to DPS friendly companies etc.
DeleteWhat is that subsidy per capita???
ReplyDelete€ 213
DeleteOkay. This is not thaaaaat much.
DeleteThat's an insane amount. It's 18 euros a month for everyone, including children, that could be spent on something else.
DeleteSecuring basic connectivity for the country (post-Covid) through a PSO scheme would be way cheaper.
Proportionally, this is the aid on the scale of Alitalia.
ReplyDeleteMore.
DeleteIn the long run this 'investment' is not worth it.
ReplyDeleteReally? €133 million for what? They are going down and down. No future in this company.
DeleteHe said not worth it
DeleteHe did indeed. My bad.
DeleteWonder if their future would have been different if EY night then as planned.
ReplyDeleteIf EY took over they would probably be bankrupt by now
DeleteIt could have been worse. Last year it was confirmed 4K Invest was in talks about buying them.
DeleteThey would have canalized MGX to save JP.
DeleteThat amount of money could eradicate poverty in Montenegro forever.
ReplyDeleteLiterally!
Deletemay I remind you that MNE depends fully on tourism and killing it will not eradicate anything else but the relatively high standard of living in MNE for Balkan standards
DeleteThat would be bad but this amount is huge. YM cannot even make so much losses this year.
Deletei dont think YM contributes that much to the tourism industry with their 8 routes
DeleteDoes anyone know if they still have in plan to lease 4th Embraer 195?
ReplyDeleteNot this year anymore. But in the long term yes.
DeleteJust shut it down.
ReplyDeleteNo thanks.
DeleteDon't see what all the bitching and moaning is about. I fully support this move and I wish them all the best in the future.
ReplyDeleteMontenegro Airlines is still the only true legacy airline left in ex-Yu.
ReplyDeleteThey fly 8 routes. Does it really matter?
DeleteLegacy airline in exyu, I love that term.
Delete8 routes, wow. That's 16m EUR per route. Has to be the most expensive PSO in the world.
What does mean "true legacy airline"?
DeleteIt means you get food, drink and 20kg of checked luggage included in the ticket price.
DeleteYou get food and drinks for free on OU flights also.
DeleteThe government is robbing their own citizens
ReplyDeleteIf the purpose of a having a national airline is to connect Montenegro to as many cities as possible, then subsidizing a LCC would have the same effect at much less money, and done much more efficiently.
ReplyDeleteIf the purpose of a having a national airline is prestige, then end of story. The Montenegrin taxpayers will have to continue paying/subsidizing YM for many more years to come.
Now may be the time to think the impossible. Inviting JU to serve Montenegro with minor subsidies at first, then gradually removed. JU could for example fly BEG-FCO via TDG. (similar to OU ZAG-SPU-FCO) Since the stop in TDG would only be for passengers to embark and disembark, no fueling or servicing would be required, this could happen in less than 30 minutes. Other nearby cities such as; TIA, ATH could be similarly added.
JU could also base one or two A319/ATRs in TGD, and one in TIV to cover direct flights and local demand. Daily flights from TGD to BEG could go to 8-10 daily, and from TIV to 6-8 daily in the high season, or even more if necessary.
Of course politics won't allow this to happen. But this would be an opportunity for JU to take over the Montenegrin market, and would cost the Montenegrin gov much less for a similar level of coverage as they have today from TGD.
Or JU could just wait for YM to go bust (which eventually it will) and introduce additional flights to TIV and TGD, getting most of the pie without having to go through complex changes in the business model.
DeleteWith the new government in place by the end of the year, this idea might not be far fetched. Of course, YM has to close shop first (even with these $133M there is a lot of accumulated debt to cover, leftover is not going to last forever) and they would have to issue tender for obvious reasons.
DeleteMy thinking was that YM be turned off in favor of a LCC model at TDG (& TIV) or Air Serbia moving in. If Air Serbia could guarantee that it would offer the same or better coverage than Montenegro Airlines did, then it would be a win for both JU and for Montenegro citizens which would not have to pay hundreds of millions euros for YM.
Deleteju has a shortage in its fleet. It also focuses on higher yield destinations and primary airports.mne is extremely seasonal and relies on western and russian tourism.
DeleteAs things stand now and probably for the next year or so JU will not have a shortage of planes. Some of those Western and Russian tourists can be rerouted via BEG. And some of those routes could be operated as charter flights.
DeleteThis would be an opportunity for JU to increase market share in the region. With some clever route planning JU could make this work.
So instead of Montenegrins paying/subsidizing YM, it will be Serbians paying/subsidizing JU. Good solution from a Montenegrin's perspective
DeleteIt's a question of expanding market share done in such a way that it compliments JUs network, and you create synergy.
DeleteLucky thing is that what the author is referring to as "The Montenegrin government" is currently nonexistent and cannot pursue this insane plan. The new government will simply discard this plan and simply bankrupt the airline, benefiting Montenegrin people and economy. COVID19 affected almost all countries on earth but noone of these is willing to give its national airline an aid package accounting to almost 3% of the nation's total GDP. Germany and France for example would allocate about 0.1% of their GDP towards Lufthansa and Air France, respectively, and since they're the makers of Airbus aircraft and parts, much of it will help recover their industrial sector as well.
ReplyDelete