Editorial | Saving Air Malta… again

Finance Minister Clyde Caruana delivered a very blunt assessment of Air Malta and the changes that have to take place to make the airline viable again.

He spared no punches during a sober analysis delivered last week, even implying that his immediate predecessors politically responsible for the airline had done a bad job.

The financial analysis presented by Air Malta’s executive chairman, David Curmi, paints a very poor picture of an airline that has failed to return a profit since 2005.

The only profits registered in 2018 and 2019, Curmi said, were the result of one-off asset sales that saw Air Malta transfer its key airport slots to a government company and sell the rights to its name to another government company.

The analysis came in the wake of government’s discussions with the European Commission to get permission to pump state aid into the airline.

Caruana said Brussels has not yet laid out the size of the financial aid it is prepared to allow and a final decision is expected in the coming weeks.

Nonetheless, he said government’s restructuring plan was independent from the aid package the commission would green-light.

The restructuring plan foresees a halving of Air Malta’s workforce, dumping previous plans for long-haul flights that required renegotiating a contract with Airbus for two long-haul aircraft to be replaced with three planes more adapted to the airline’s needs, a change in livery to cut costs, the need to negotiate new collective agreements that include greater flexibility, and a commitment to operate only those routes that are profitable.

Caruana and Curmi said the plan will give the airline a new lease of life.

The minister’s bold statements are welcome, especially coming on the eve of a general election. Any politician would have opted to wait after an election to announce such a potentially damaging reform.

Caruana was forthright about this: “I wanted to be honest with workers. We owe them this much.”

This leader only hopes that the minister’s blunt approach does not go down the same road as past attempts to restructure the airline. Similar tough talk was mouthed in 2004 and 2012 when the airline underwent restructuring.

This time around there is no second chance in the offing. This is, in Caruana’s words, the last chance for the airline to survive.

Air Malta remains crucial to Malta’s connectivity with key airports throughout Europe and the neighbourhood. Saving the airline is not only an act of national pride but of strategic importance.

However, by choosing financial survival, the country will have to do without routes Air Malta tapped into for tourism’s sake.

This means that entities such as the Malta Tourism Authority must be more active in attracting other airlines to operate to and from Malta. Relying on Air Malta’s benevolence works no more and the MTA has to pull up its socks.

One other aspect of the reform is the alternative employment scheme government has put in place so that redundant Air Malta employees do not end up without a job.

The scheme promises alternative employment with government on similar conditions.

This leader joins the chorus of business lobby groups that have asked for these employees to be seconded with the private sector rather than burden public administration with €15 million more in wages.

Government should consider this suggestion because it not only reduces the pressure on public funds but also helps plug some of the labour shortages certain sectors are facing.