Montenegro’s new flag carrier, Air Montenegro, has made a loss of €1.6 million so far this year, according to the company’s preliminary accounting data.
This is not a great result considering that it includes the most profitable summer months, so the loss will only grow at an accelerating rate for the remainder of the year.
It is also not a great result in the context of how limited the airline’s operations are: Air Montenegro has only two aircraft in its fleet, and it handled less than 300,000 passengers in the first nine months of 2022. Thus, the €1.6 million loss is substantial when viewed on a per-aircraft basis, a per-employee basis, and even on a per-passenger basis.
Furthermore, Air Montenegro actually faces strong headwinds from Montenegro Airlines. Despite one being a replacement for the other, and despite the fact that both are fully owned by the state, Montenegro Airlines launched court cases against Air Montenegro for using a part of the Montenegro Airlines logo (the eagle) in the new Air Montenegro corporate branding and for using Montenegro Airlines’ old uniforms.
The airline has faced numerous other challenges since its founding. For a start, the size of its home market is very small. Montenegro is one of Europe’s smallest countries, with just 620,000 inhabitants. It is also one of the poorest countries in Europe.
Air Montenegro’s Board of Directors described the €1.6 million loss as a solid financial performance in the context of Air Montenegro’s circumstances, pointing out the company’s loss was 62% higher at the end of September last year. “The negative factors that we could not have an influence on are a consequence of the war in Ukraine. There are two such consequences. The first is the rising cost of airline fuel, which makes up 30% of our total cost base. The second, which perhaps had an even greater effect on the company, is the loss of our key markets, Ukraine and Russia.” - the airline said.
The Board also touched on the ongoing issues surrounding the (lack of) transition between Air Montenegro and Montenegro Airlines: “The process of transition entailed hastened decision making, which had the consequence of a significant loss of resources: first and foremost, the loss of two aircraft, then memberships in international airline organizations, access to global suppliers, almost all of the key systems that were developed by our predecessor, and, ultimately, our position in the airline market. All of these have acted as a break on the development of the company and prevented us from making more use of the potential that we have.”
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