Montenegro to set up new flag carrier, liquidate Montenegro Airlines

The liquidation procedure would cost about 50 million euro ($61 million) but it is inevitable, as the country's competition authority has ruled that a law for public investments in the flag carrier adopted in December 2019 was illegal, the government said in a statement on Friday.

Following the government decision, Montenegro Airlines said in a Facebook post on Saturday that it is halting operations on December 26.

Montenegro Airlines has already received 43 million euro of the 155 million euro financial aid envisaged in the 2019 law and will need to pay it back, capital investments minister Mladen Bojanic told a news conference on Thursday, as seen in a video file posted on the government's YouTube channel.

The law states that the company owes 25 million euro in unpaid taxes and has a 32 million euro debt to airport operator Aerodromi Crne Gore. The company reported a 8 million euro loss for 2019, compared with a 2 million euro loss in the previous year.

"There is no option to get a loan for Montenegro Airlines because they cannot repay such a loan. We plan to establish a new company with the founding capital of the government," Bojanic said.

The company needs to urgently repay 160,000 euro in debt to Eurocontrol, 1.2 million euro debt to commercial aviation financing and leasing company GECAS by January 1 and 600,000 euro to engine leasing company Beautech by December 28.

The Montenegrin carrier was founded in 1994 and carried out its first flight in 1997.

($ = 0.8183 euro)