26 SEPTEMBER 2001

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No redundancies for Air Malta despite difficulties

By Kurt Sansone

One airline company after another is announcing massive redundancies in the wake of the terrorist attacks on the US, but Air Malta chief Louis Grech is still holding firm to his pledge not to lay off workers.

Speaking to The Malta Financial and Business Times Mr Grech reaffirmed what he told this newspaper last week; that the airline is currently rationalising all of its operations but redundancies are not on the agenda.

Mr Grech said that the situation was very fluid and Air Malta was holding daily discussions with all relevant parties to assess the developments. More discussions are expected in the days to come.

"Insurance costs have gone up more than we expected but we have not yet finalised discussions on the new premiums," Mr Grech said. "We are rationalising routes and trimming costs to minimise the negative impact but at this stage my advice is not to panic."

Mr Grech added that the airline was also trying to exploit new opportunities as they arise including airline maintenance.

The chairman confirmed that Air Malta has increased security measures over and above the normal procedures. Asked whether the airline was considering introducing in flight security personnel Mr Grech said that no decision on the issue has been taken.

"Introducing air marshals is not a simple measure. Air Malta is monitoring international developments to see how the industry in general will react to such a proposal," he said.

The woes plaguing the airline industry date back to before the catastrophic events that occurred on September 11. However, the terror attacks drastically impacted consumer confidence, caused a hike in fuel insurance and security costs and saw share prices drop. As a result airlines suffered immense losses.

The latest airline to announce job cuts was Italian carrier Alitalia, which axed 2,500 jobs in a bid to stave off severe losses in the six-month period from October this year to March next year.

Alitalia also announced that it will be selling some of its aircraft and dropping some of its long-haul routes.

Since the terror attacks that plunged the global aviation industry into deep crisis US and European airlines have announced more than 100,000 job losses.

British Airways, which had already axed 1,800 jobs before the terrorist attacks, announced further job cuts amounting to a total of 7,000. This was followed by job cuts amounting to 1,200 by UK airline Virgin Atlantic.

The drastic rise in insurance premiums seems to be the biggest stumbling block for a recovery as insurance companies are reluctant to provide cover for airlines. The impasse has nudged the US government into bolstering the airline industry with a $15 billion deal. European governments have yet to react to similar requests by ailing airline companies.

The UK chancellor Gordon Brown earlier this week agreed to a partial solution by which British airlines will be ensured continued insurance cover for the next month. The insurance pressure on airlines threatens to ground whole fleets if governments do not intervene to provide war cover in the wake of heightened international tensions.



The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
Tel: (356) 382741-3, 382745-6 | Fax: (356) 385075 | e-mail: editorial@networkpublications.com.mt