Montenegro Airlines (Podgorica) owner, the Montenegrin government, has put a minority shareholding in the carrier up for sale through an international tender.
EX-YU Aviation News reports the sale, undertaken on behalf of the Ministry for Transport and Maritime Affairs, is aimed at foreign investors though there are concerns about the likelihood of success given that the state-owned company Airports of Montenegro, a viable long-term asset, has not been included in the sale.
Analysts claim that combining the two entities as a package would sweeten any potential deal given Montenegro Airlines' poor state of financial affairs.
The airline has struggled to turn around its fortunes on the back of a regional economic slowdown exacerbated by floods in Serbia and the crisis in Ukraine. With a consequent decline in demand, Montenegro Airlines registered EUR7.1million in losses for its latest financial year, almost double that of 2013. Its overall cumulative debt is estimated to stand at EUR69million (USD85.836million).
As such, privatizing the carrier will be no simple task given that all previous attempts at doing so have failed.
In 2009, Israel's El Al Israel Airlines (LY, Tel Aviv Ben Gurion) partnered the European Bank for Reconstruction and Development to acquire a stake in the carrier only for the bid to collapse when the Montenegrin government rejected El Al's demand to gain control of Podgorica and Tivat airports.
Thereafter, another attempt at privatization in 2011 failed when despite acquiring tender documentation, neither El Al, Arkia Israeli Airlines (IZ, Tel Aviv Ben Gurion), nor Etihad Airways (EY, Abu Dhabi International) submitted any bids. Turkish Airlines (TK, Istanbul Airport) was also reported to be close to making an offer for both the airline and the country’s airports though that too failed to materialize.
Earlier this month, Podgorica admitted that no potential investors have shown any interest in the airline.
