The governments of Brazil and Montenegro are now jointly working on a solution for the Embraer E195 aircraft that has been damaged after someone allegedly stole some of its parts in Podgorica Airport.
Montenegro Airlines has still not paid off its debt for purchasing this aircraft, but the airline is now bankrupt. Its successor, Air Montenegro, cannot use the aircraft because its certificates have lapsed. And the Brazilian bank that owns the E195 does not want to repossess it because it would have to pay to make it fit to fly.
Montenegro Airlines’ debt to Embraer
In 2010, Montenegro Airlines purchased an Embraer E195 jet from Embraer with the help of BNDS, a Brazilian state bank. The aircraft is known as Charlie as it was registered as 4O-AOC.
Montenegro Airlines paid $38 million for this E195 through a loan. However, only $33 million had been paid off at the time of its bankruptcy, leaving $5 million still to be paid. Last week, a Brazilian Government delegation arrived in Montenegro to resolve this issue. They were in Podgorica Airport (TGD) to inspect and photograph the E195.
Air Montenegro is the successor of Montenegro Airlines, and it inherited some of its Embraer fleet. Photo: Getty Images
The aircraft is damaged
In December 2020, Montenegro Airlines stopped flying because the newly-elected Montenegrin Government decided to shut it down. In April 2021, the company formally declared bankruptcy, paving the way for BNDS to reclaim the aircraft because of the unpaid $5 million.
However, the aircraft has since been damaged: someone has looted it for its parts. This happened over a year ago, but the culprits have still not been found. The board overseeing the bankruptcy administration of Montenegro Airlines has filed criminal charges against persons unknown.
The country of Montenegro is going through some political turbulence at the moment, so it is thought that the theft is a deliberate act of sabotage. Montenegro Airlines, though under bankruptcy administration, is not on good terms with Air Montenegro, the new flag carrier of Montenegro that the newly-elected government set up in 2021 after it shut down Montenegro Airlines in 2020.
When Montenegro Airlines declared bankruptcy, not all of its assets were handed over to Air Montenegro. Instead, the bankruptcy administrator wanted to resurrect Montenegro Airlines first, even suggesting that it could fly again despite the country’s government already setting up a new flag carrier, Air Montenegro. Montenegro Airlines even launched two court cases against Air Montenegro.
Air Montenegro started flying a year ago. Photo: Air Montenegro
The aircraft has many issues
There are lots of problems with the aircraft that extend beyond just the missing parts. The aircraft’s last flight was on 26 December 2020, and now most of its technical certification is out of date.
To get it flying again, its new owner will need to ascertain what parts are missing and then purchase and install them. They would also need to run the E195 through a full technical check and a complete certification of all its parts.
The missing parts, the political turbulence in the country, and the outstanding debt for the aircraft all mean that the Brazilian bank does not actually want to repossess the aircraft. A solution that is being worked on involves the Government of Montenegro buying the debt from BNDS, thus leaving the bank with at least some funds recovered.