'Small fry, but still a lot': Ryanair mulling legal challenge to request for €290m state aid for Air Malta

Malta Air CEO says that the €290 million state aid government wants for Air Malta is ‘small fry’ but might still be enough for Ryanair to seek redress in European courts

David O’Brien
David O’Brien

Ryanair will be examining Malta’s request to the European Commission for permission to pump €290 million into Air Malta, and determining whether to object to the state aid in the European courts, Malta Air CEO David O’Brien said yesterday.

O’Brien was addressing a press conference with tourism minister Clayton Bartolo, during which he announced that Ryanair would be adding five new routes to Malta, bringing the total to 157.

He told BusinessToday that, while Ryanair had indeed sought legal redress in European courts against state aid offered to various airlines by some EU countries, the amount being sought by Malta to bail out Air Malta could be considered ‘small fry’ when compared to the billions granted to Lufthansa, Air France and other major airlines.

“We are much more concerned that Lufthansa has received more than €10 billion and that Air France has received more than €9 billion, despite European law prohibiting state aid,” O’Brien said.

“That said, we will examine Malta’s application and if we think it is appropriate to object to it, we will take our objections to the European courts.”

O’Brien said that it will be up to the Maltese to see how they would be best served.

“On paper, €290 million seem like small fry, but it also sounds like a lot, amounting to around €700 for every person in Malta,” he said. “That is a lot.”

O’Brien praised Malta’s COVID-19 vaccination rollout, with 40% of the population having already received at least one dose.

He said that this put Malta in pole position in being able to tourists once flights to the island resumed on 1 June.

The UK market would definitely be looking at Malta, especially if a bilateral agreement on a vaccine certification system can be reached.

“By the peak of the summer, Ryanair alone will be offering nine UK routes to Malta,” he said. “That will make Malta a very viable choice.”

At the same time, Ryanair would also be serving 18 different routes from Italy to Malta.

Four of those - Brindisi, Cagliari, Genoa and Trapani - are among the five new routes announced yesterday. The fifth route will be serving Chania, in Greece.

With the new routes, Ryanair will be connecting Malta to 57 routes in 19 countries, through 155 weekly flights.

It will have six aircraft based in Malta, with the number planned to rise to 10 by 2022.

O’Brien said that Malta Air would be taking delivery of the first of six B-8200 aircraft in May.

Seats to Malta went on sale on the Ryanair website at €19.99.

Parties and mass events

Tourism minister Clayton Bartolo said the government would soon be releasing further details of its tourist recovery plan, announced at the beginning of April, and which will see Malta reopening its airport to tourists on 1 June.

He said the Covid certificate being currently discussed with the UK would open a safe corridor for tourists who have already received full doses of any of the vaccines recognised by the European Medicines Agency.

“For others, however, PCR testing and the traffic-light system, which grades countries according to the risks they pose, will still apply,” he said.

Bartolo said that any decision as to whether mass events or parties would be allowed this summer would be based on the recommendations of the health authorities.

“As we get closer to the day we reopen our airport to tourists, we must all remain vigilant and obey the directives issued by the health authorities,” he said. “This is definitely not the time to try and find a way around those directives. We must remain focused and be responsible.”

‘Breaking down’ Air Malta

Air Malta has had its brand name ‘sold’ to the Maltese government for €21 million, in a capital injection from taxpayers’ money.

The “Air Malta” brand was hived off and acquired by the government-owned company IP Holding for a €21 million, a consideration valued by RSM Malta.

IP Holding, whose directors are Air Malta chairman Charles Mangion and Ronald Mizzi, was created in 2019 for the specific licensing of intellectual property.

In February 2020, IP Holding’s share capital was increased to €21 million, held in the name of the Government of Malta, to reflect the acquisition of the Air Malta brand.

The move forms part of a series of actions designed to ‘break down’ Air Malta’s assets to be sold back to government for a much-needed injection.

In 2019, Air Malta hived off its landing and take-off slots at the Heathrow and Gatwick airports to Malta Air Travel Limited (MATL), a government company which leases the slots back to the national airline, paying it €33 million in cash for its summer slots alone in 2018. The next year, Air Malta was expected to be paid €22.8 million for the winter slots.

The government has proposed a five-year financing plan to turn Air Malta into a sustainable, profit-making, enterprise.

In February, Finance Minister Clyde Caruana confirmed that he was working on “an honest and credible” plan to allow the country to help the national airline as it was making losses of over €170,000 daily just to operate its aircraft.

EU governments are forbidden to give state aid if this does not ensure a level playing field among all economic players.

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