Cabinet proposes investment of EUR 155 million in consolidation, development and modernisation of Montenegro Airlines

Podgorica, Montenegro (9 December 2019) -- At its 147th session, chaired by Prime Minister Duško Marković, Montenegrin Cabinet passed the Draft Law on investing in consolidation and development of the Podgorica – based air transport company "Montenegro Airlines", which creates a basic preconditions for market operations of the Montenegrin national air carrier and therefore the numerous positive effects on our entire economy.

The proposed Law that the Cabinet submitted to the parliamentary procedure trough a shorted procedure, foresees recapitalisation of the national airline by investing EUR 155 million over the next six years, in order to cover the Montenegro Airlines due liabilities to creditors and investment in development. This amount also includes the allocation of up to EUR 50 million net for the purchase of new Montenegrin crafts.

In order to provide liquidity, sustainability and stability of the national air carrier business as a company of special significance to the State, this Law regulates conditions, manner and the procedure of obligations settlement that Montenegro Airlines has towards the state of Montenegro and third parties, source and method of providing funds for these purposes and other issues of significance for the development of the national airline, which business effects the economic development on the economic development of Montenegro as a whole.

The discussion emphasised that the Montenegrin national airline has an annual revenue of about EUR 70 million and it carried more than 660, 000 passengers this year, which beside the direct revenue makes a great positive impact on our entire economy, which with tourism revenues is estimated at more than EUR 185 million this year. Therefore, the eventually bankruptcy or liquidation would lead to a series of cumulative negative effects across the entire national economy and numerous direct negative consequences including the loss of EUR 33, 7 million in repayments for aircrafts and slots at foreign airports.

Considering the alternative scenario of bankruptcy of liquidation of the Montenegro Airlines, the Montenegrin Cabinet noted that such a scenario would be extremely unfavourable not only for the national airline but for the entire Montenegrin economy, especially bearing in mind tourism as a strategic branch of development.

The Cabinet also considered the comparative positive experiences of several EU countries that in a similar way consolidated their airlines over the past years and the cases of countries who decided not to approach to the consolidation, which led to the significant negative consequences on their national economies.

 

PUBLIC RELATIONS SERVICE OF THE GOVERNMENT OF MONTENEGRO