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Minister Nurkovic: Investing in Montenegro Airlines is not about saving the company but investing in the development of Montenegro

Minister Nurkovic: Investing in Montenegro Airlines is not about saving the company but investing in the development of Montenegro
Published date: 15.12.2019 17:36 | Author: MSP

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"Draft law on investment and consolidation of Montenegro Airlines is not a rescue of Montenegroairlines, but an investment in the development of Montenegro", emphasized Minister of Transport and Maritime Affairs Osman Nurkovic at today's press conference at the Government Press Center, organized to establish the Bill on Investment in Consolidation and the development of the Montenegro Airlines Transport Company for Air Transport of Passengers and Goods in Podgorica AD, which was approved by the Government at its 147th session.

"At a session on Friday, the government adopted a draft law on the investment and consolidation of Montenegro Airlines. Aware of the importance of the company The Government of Montenegro did not allow it to go bankrupt and be extinguished. We have taken this issue seriously and I am sure we have made a good decision. All calculations show that shutting down would have major consequences and that the benefits of investing would be far greater. We have not made this decision either quickly or easily, but based on the analysis of the work of the company over the last three years, I am sure we made a good decision that we will submit to the Assembly for verification. If MPs have a better solution, it is up to them to take responsibility, '' Nurkovic said.

Minister Nurkovic presented only some of the arguments and facts that support this decision: indirect contribution of MA to Montenegrin tourism and other economy, from tourists and travelers he transported, is more than 150 million a year according to the conducted market research, 400 workers were saved places, of which two-thirds of the flight and technical staff, whose education the state has invested heavily in Nurkovic.

In particular, he said that despite criticism, he was pleased that they had retained the company, and that it was a notorious lie of experts who claimed that the state would pay 32 million euros of the national carrier's debt to the Airports and that the money would remain to the concessionaire.

“I want to draw attention to giving space to incompetent persons, supposedly experts, to comment on Government decisions. A drastic example is a comment by an expert that the funds paid by the state to Airports in the name of debt will go to a future concessionaire, and that he will pay the state money to the state. This is notorious fabrication, ignorance or sick falsehood, ”Nurkovic points out.

'' All the analyzes with the number of passengers carried indicate that interest in this type of passengers will grow from year to year globally and in the Montenegrin market. Montenegro has a strategic plan to develop tourism. Indeed, it is not possible to develop tourism with the existing infrastructure that we have, even though we are investing further in road and rail infrastructure. Until we reach the level of development of highways and railways to meet the needs of an increased number of tourists, we will have to use this mode of transport. While we have this need, we have the need to keep this company running and to function. Direct and indirect damage would occur if there was no consolidation of the company. Indeed, we will try to prove to the facts and arguments that it is not an investment in the rescue of this company but an investment in the future development of Montenegro. We have sent a law to the Agency, we have sent it to the EC office in Podgorica and of course we will have interviews in the coming period. You are witnessing that we are getting daily information that in the European countries these companies are unsustainable in their own right, Italy has recently had assistance of around 400 million euros and in a year about one billion and 300 million. The Malta company is also in trouble, you see what happened to the company in Britain, and how much the German Government had to invest to repair that part of the company doing business there. I will also mention Iceland which allowed their airline to shut down. They accounted for a 1.5 percent drop in gross national income as a direct and indirect consequence of shutting down the airline. I heard their Prime Minister say yes, that he knew the consequences of this decision that he would never allow the national airline to shut down. So, we are fully aware of the need for investment and the efforts that the Government has to make and to provide the funds, but we are much more aware of the consequences that would happen if this company were to be shut down, '' Nurkovic said, responding to journalists' opinion questions. EC on this bill And are there any guarantees that the company will operate positively after the envisaged investments.

In the end, Nurkovic concluded that “patches are not the right solution and that the problem must be addressed systematically and enable the company to develop and that the positive effects will come far beyond what they have achieved so far.

Montenegro Airlines CEO Zivko Banjevic pointed out that Montenegro Airlines had carried 1 million and 850 thousand passengers in the past three years.

- We increased the number of passengers from year to year, and I would add that we optimized our business by reducing fixed and direct operating costs and that with fewer planes and flights we achieved greater cabin occupancy and greater effect in terms of the number of passengers carried than that was before. MA transports one-third to one-fourth of the total number of passengers at Montenegrin airports in competition with 55 airlines, including all low-cost airlines flying to Montenegro. Overall, the MA's total contribution to these three years was more than half a billion euros. As for this year, we have carried around 626 thousand passengers to this day, and by the end of the year we will have close to 670 thousand passengers in all three categories of traffic. This means that we have increased the number of passengers carried by about three percent compared to last year, with the company going to generate more than € 70 million. It is important to point out that MA currently owns two fokers, one of which was grounded, which caused us additional costs, Banjevic said.

Montenegro Airlines will operate positively in the beginning, and as he added, with the consolidation plan, the result will be positive immediately.

- As for the plan and the consolidation and development of MA, MA will carry between 700 and 750 thousand passengers on average between 2020 and the next 3 years. Real growth is planned relative to what we are doing this year. The result will be positive immediately. MA will perform positively from the beginning and from the beginning of implementation of the said plan. The question of all questions since the Bill was passed by the Government is whether this plan of consolidation and investment in MA is sustainable. Here I want to say that no decision was made abruptly, no input was put on paper until it was checked. I argue that the plan is sustainable because it rests on realistic assumptions that were tested in the previous three-year period. If MA had previously owned at least a portion of its assets, the story would have been completely different. The plan is sustainable because it rests on realistic assumptions that have already been tested in the previous period and because they rest on sound foundations that ultimately relate to investment and development plans. MA purchased its planes in 2008 and 2010, and leased most of its resources to operating leases. It's been 10 years and it's time to reinvent the company's operational resources, Banjevic said.

As he further stated, this story will not end on the day the investment process is completed.

-The total figure of 155 million does not represent a one-time investment on January 1, 2020. On the contrary. The neutral budgetary impact is greater than 50 million, and the fiscal and budgetary impact that will be invested by 2024 remains. The direct and total indirect contribution of the MA to the economy is more than 180 million euros, and about 34 million euros annually goes into the state budget. The story does not end in 2023 when the investment ends. Depending on how well we do the aircraft procurement process, engine restoration, this story will take much longer. According to us, the period will last for the next 8 to 9 years, he said.