Editorial | Good intention, bad plan and a silver lining

How the airline will find the millions required to finance the new retirement and redundancy schemes remains questionable


When government announced plans to reform Air Malta back in January, this leader praised the bold move.

Finance Minister Clyde Caruana and Air Malta executive chairman David Curmi clearly outlined the financial challenges despite this being an election year with all the political consequences such a reform could have.

The plan included various cost-cutting measures with the most significant move being the halving of the workforce. By the time applications closed in February, 571 Air Malta employees had applied for the voluntary employment transfer scheme. The number was more than what government had planned for.

Unfortunately, the original deadline to complete this process – 12 August – has been scrapped and it remains unclear how many employees have actually been transferred out of the airline. It appears only a handful have been transferred to other government entities.

When Caruana was asked whether the airline would be offering an early retirement scheme or a voluntary redundancy scheme, he had been categorical back in January that no such schemes would be announced.

Government would take on board the extra Air Malta employees and save the airline €15 million per year in wages.

At the time, this leader had joined various business lobby groups that argued against the transfer of Air Malta employees onto the government books and instead offer secondment with the private sector to fill gaps in the labour market.

However, the latest news emerging from the national airline points towards a shift in thinking. It appears the employment transfer scheme cannot be implemented as envisaged.

It is an open secret that government was finding it difficult to transfer well-paid Air Malta employees into the public service without disrupting the civil service scales and stirring a hornet’s nest.

But it also transpires that government’s decision to absorb the extra employees could fall foul of the EU’s state aid rules since it is indirectly relieving the airline from a financial burden.

To avoid these two major problems, government has now opted for financial compensation schemes, offering early retirement to those aged over 50 and a voluntary redundancy scheme with generous pay-outs for the rest. This money will have to come out of Air Malta’s coffers and it remains unclear whether the airline can foot the bill.

Irrespective of the good intentions behind the reform process, the plan laid out by Caruana back in January to achieve the desired results was bad.

A public admission that the employment transfer scheme was a misstep will not be amiss in a context where employees remain in the dark on their future.

However, there may also be a silver lining. When the Air Malta reform was announced, the war in Ukraine had not started. With government stepping in to cushion the impact of rising fuel and energy prices as a result of the war, government finances have been put under strain.

Absorbing almost 600 people into the public sector and bloating the wage bill by more than €15 million a year, would appear reckless at a time when Caruana is seeking budgetary cuts to the tune of €200 million to make up for the fuel and electricity subsidies.

There is no doubt that Air Malta has to halve its permanent workforce and rely more on seasonal workers to fill in demand gaps during the summer.

How the airline will find the millions required to finance the new retirement and redundancy schemes remains questionable.

But if Air Malta is to survive, it has to cut its costs and seek efficiency at all levels. Caruana’s words from January that this is the last chance to save the national airline remain valid, however he needs to be seen out there, speaking clearly on the new road forward.

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