Editorial

All is far from well with the national airline. A lot of red ink seems to be flying around Air Malta's balance sheet, with a report in The Times last week putting the figure unofficially at as much as Lm20 million for the financial year ending July 31. Half of that loss was made in the airline's core business, with the balance by its subsidiaries.

Before focusing on the national airline more closely, it is important to stress that a combination of factors, from the global economic slowdown to September 11, 2001, and the severe acute respiratory syndrome (SARS) breakout to the war in Iraq, have caused airline traffic worldwide to plummet, leading many much larger airlines than Air Malta to go under or, in the United States, seek bankruptcy protection.

Yet only last week the International Civil Aviation Organisation forecast that world airline passenger traffic would grow by 4.4 per cent next year, followed by growth of 6.3 per cent in 2005. This would bring to an end the worst financial crisis to be suffered by the global airline industry with record losses of more than €31 billion (Lm13.3 billion) in the three years from 2001.

The situation is still bleak with the International Air Transport Association forecasting net losses of up to €5.7 billion (Lm2.5 billion) on international scheduled services this year, following huge losses in the past two years. And although the outlook is positive, there is the renewed threat of international terrorist attacks on aviation targets and a potential repeat of SARS next winter to contend with.

Back to Air Malta, given that there is a new chairman, Lawrence Zammit, it may be more important to look ahead than to dwell on the bleak reality of the present. That change is expected and new ideas introduced is a given. A reader's comment yesterday may prove interesting - passengers are packed like sardines, meals are heavy when they should be light and we need younger, less grumpy or gruff stewards and stewardesses.

What should be even more worrying is that in the scheduled market, where Air Malta is in competition with other airlines, it is steadily losing market share. Price may not even be a factor. Its customers, in effect, are voting with their feet - when they have a choice, with other airlines gaining at Air Malta's expense.

Although it may be premature, the business plan that Mr Zammit said last month was "on the drawing board" needs to be rolled out before the summer is out. The new strategy, he said, has to take Air Malta into the future when after May 1, 2004, it will be operating in an EU membership scenario. That has significant advantages in that Air Malta will be able to operate, in competition with other European airlines, between any two European airports - like from London to Paris or Rome to Warsaw - if it makes economic sense.

Mr Zammit appears to have the courage to apply the medicine in the required dose when he spoke of "restructuring". This should lead to an organisation that is more responsive to the customer and has a leaner decision-making structure that will be accountable both up and down the line to ensure it takes the right marketing decisions in terms of the routes it will operate and pricing. He also makes the point that security costs have changed the economics of operating an airline in the post September 11 era.

Change is also expected when Air Malta loses its monopoly of ramp handling at Malta International Airport, with a Swiss competitor being brought in. Mr Zammit is all too familiar with this situation during his time as chairman of MIA. That this could lead to job losses should not be excluded.

With an airline the size of Air Malta, and with its current workforce slimmed down to be more representative of its needs, we have no doubt that there can be bright prospects. One need not take the extremes of Ryanair to eke out every drop of profitability, but certainly ensuring the synergies that can be developed with Malta Freeport, MIA and other key players in the economy are pursued, and ensuring the best is made of Air Malta's resources and the opportunities that tourism, economic development and the cargo sector can bring, should turn that red ink into black before too long.