Montenegro Airlines on sale

Government approves Montenegro Airlines privatisation

The Montenegrin government decided yesterday that Montenegro Airlines will be privatised during 2012. It follows a difficult year for the national carrier in 2011. Montenegrin Prime Minister Igor Lukšić said that the airline will be offered to investors through a public tender. Montenegro Airlines has become a costly business to keep running after the government agreed to provide 400.000 Euros to the carrier each month to cover operational costs and write off the airline’s debt to Podgorica and Tivat airports. In order to cover the debt owed to the Serbia and Montenegro Air Services Agency the government has offered them ownership of the Park Hotel in Bijela on the Montenegrin coast. Earlier in 2011, the government wrote off a further 3.2 million Euros in debt and ordered the country’s two international airports to lower its fees to the national carrier. Recently, there has been discontent amongst pilots unhappy with late wages. Unlike its regional rivals, the global economic gloom did not have an effect on Montenegro Airlines in either 2008 or 2009.

The Montenegrin carrier has faced sliding passenger numbers, handling under 600.000 passengers last year, although is reported to have had strong growth in January 2012. This summer the national airline will introduce flights to London from both Podgorica and Tivat and has announced plans to purchase another Embraer jet.

It will be the second time the government has attempted to privatise Montenegro Airlines. In 2010, it unsuccessfully tried to sell a 30% share in the airline. Although El Al Israel Airlines, Etihad Airways and Arkia Israel Airlines all purchased the tender documentation, none of them made an offer. The CEO of the airline, Zoran Djurišić, is firmly against the sale. Late last year he told the media, “The government knows my stance regarding the privatisation which is why I have been completely excluded from the process”. He added that privatising the airline will have long term negative effects on the country. Instead, Djurišić says the government should cover the airline’s losses and pressure Montenegro’s largest petroleum company, Jugopetrol, to reduce its unreasonably high costs.