LONDON – Montenegro Airlines (YM), the largest airline in the state of Montenegro, could ground its entire fleet as the state does not know if it can help the company, which has significant losses due to the pandemic.
Due to COVID-19 and restrictions on air transport, YM could experience further financial turmoil. The company, paying for aircraft leases and other costs first, left its staff awaiting their October salary.
Statement from Montenegro
A spokesperson for the company said that the new restrictions and blockages have reduced the revenue. According to its financial results for the year, revenues have dropped by 80% during the first nine months of 2020.
A YM spokesperson said, “Since the start of the winter season, the crisis has accelerated and the little revenue we had has been further reduced. Up until today, we have been unable to pay for October’s wages. We also have outstanding payments for aircraft leases, engines, and debt towards suppliers. We are doing everything we can to decrease expenses, however, the reduction in revenue and expenses are not proportionate to each other.”
“In these circumstances, and without state aid, we are unable to continue operations, even in the short-term. If a company such as Lufthansa has requested and received state aid, then what can be said for us. Since August 31, we have not received any state funding.“
The Crisis before COVID-19
The pandemic was the coup de grâce for the Montenegrin airline, which was not sailing in excellent waters even before COVID-19. Reports show that as early as 2014, the carrier began to have large losses.
In fact, in 2019, the company’s net loss increased to €8m, compared to €2m in 2018, while the aviation debt stood at €97.7m before the pandemic. At the end of that year, the government pledged to help the company by investing €155m over six years, with the aim of recapitalizing YM and helping the airline in its difficulty.
As mentioned in aerotime.aero, in September 2020, the Montenegrin Competition Agency initiated a formal investigation over the compliance of a state aid provided to the air carrier with the European Union framework and the local state aid rules.
Featured image: Montenegro’s Airlines Embraer E190. Photo: wikicommons