11 Aug 15
Montenegro Airlines Cuts Costs to Tackle Debt
Montenegro’s national carrier is implementing new cost-cutting measures having discovered that the company had run more debt than was previously believed.
Montenegro’s state-owned national carrier, Montenegro Airlines, on Monday admitted a net loss of 74 million euro, blaming the economic crisis and the previous management for its poor financial position.
The debts of Montenegro Airlines currently amount to 74 million euro and are lower since the arrival of the new management, said the head of the Board of Directors, Daliborka Pejovic, adding that the company has no fear of bankruptcy.
Pejovic said the company’s debts amounted to 82 million euro when the new management was appointed in July 2013. According to the new management’s audits, the company had 16 million euro of “hidden losses”.
She explained that the company had come up with two measures to “fight the fires” – renting the planes of the fleet and reprogramming the loans for which the government had provided bank guarantees.
“Those measures are already at the final decision stage and will need the approval of the government and some good business arrangement,” Pejovic told a press conference.
She said that in the last two years, the company had paid off 5 millon euro in loans and 5.9 million euro owed to customs.
The number of employees had been cut from 454 to 398 since July 2013. Pejovic announced that after the summer season, the company would sack another 23 workers to meet the requirements of the government’s programme on restructuring the company.
The airline’s 2014 financial report showed that Montenegro Airlines has become the least profitable airline in the former Yugoslavia after recording the 9 million euro debt last year.
Continuing the practice of covering the debts of troubled state companies, Montenegro’s government took over 3.7 million euro of the airline’s debts last December.
Opposition parties and civil society group criticized the decision, saying covering the costly debts of state-owned loss-makers was an abuse of tax payers’ money.
In January, the Council for Privatisation, chaired by Prime Minister Milo Djukanovic, announced new plans to sell off the national air carrier.
But the government admitted there was not much interest on the part of purchasers in Montenegro Airlines. Previous attempts to privatise Montenegro Airlines in 2009 and 2011 all failed.
Source: Balkan Insight (Montenegro)