Turkish Airlines to Take Over Montenegro Airlines?

The Government of Montenegro is doing all necessary preparations for the privatization of “Montenegro Airlines”, the Montenegrin national carrier. The privatization process actually began a year ago, but eventually fell through because there weren’t any offers. However, Montenegrin officials are sure that this time it will be different because they will prepare the whole thing much better.

There are several interested parties. The necessary documentation was bought by “Turkish Airlines” (Turkey), “El Al” (Israel) and “Etihad” (United Arab Emirates). However, strongest interest was shown by “Turkish Airlines”, the Turkish national carrier, who is looking to expand their business in the Balkans region (they already own 49% of BH Airlines, the Bosnian national carrier). Their strategy is very straightforward — they use these local companies to transport passengers to their hubs, and that consequently increases the number of passengers that they have on transatlantic and other long-haul flights. Their representatives have already visited the Montenegrin government and talked about the deal, especially in the last couple of months. They already fly with their own airplanes to Montenegro, and apart from the usual non-stop route to Istanbul, they have many discounts to various destinations in the world in order to show themselves in good light.

Originally, the Turkish company intended to buy JAT, the Serbian national carrier, but after the deal didn’t happen, they turned to the Montenegrin company. “Turkish Airlines” is a company that made a net profit of 191 million euros in the last year and transported close to 30 million passengers.

Another company that showed significant interest is “El Al”, an Israeli company. Many say that the recent visit of the main Rabi of Israel Jon Metzger has something to do with this deal. That may be true, especially because the Jewish community in Montenegro is very small.

The Montenegrin government officials said that they intend to prepare the company before they start the privatization process — they will restructure it internally and increase the profits as much as they can. They even wrote off a 3,2 million euro debt in order to stabilize the company’s finances.

The company’s representatives say that they aren’t really satisfied with how the Government has been treating them — they would like more subsidies. They say that they can’t compete with foreign carriers and their prices, especially because the cost of fuel has skyrocketed in the last couple of years.

“Montenegro Airlines” has been granted a loan of almost 10 million euros (with a grace period of 2 years). The money will be used to expand their fleet and to repair their existent airplanes. A part of the money will be used to “buy” new routes.

After the government announces the privatization process, interested parties will have 3 months to send their offers. The partner will be chosen and announced after 2 months. The deal will probably be based on a model where the interested party will be able to buy 30% of the company and will be in charge of “Montenegro Airlines” for 2 years. After that period expires, they will have a chance to buy off the remaining shares.

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