Dispute over Air Malta reforms set to escalate

The dispute between Air Malta and the unions over the reforms aimed at safeguarding the airline's future is set to escalate in the coming days unless workers' representatives accept the government's "change or die" policy.

The General Workers' Union yesterday set the tone by taking a tough stance in its daily newspaper against the measures. Sources said the government wanted the discussions to be non-confrontational, adding however that the early signs did not bode well for agreement on the reforms to be reached by Government Investments Minister Austin Gatt's Easter deadline.

The government has been the driving force behind the restructuring of the airline which, it maintains, is essential if the airline is to still be operational in two years' time. However, it is not involved in the negotiations with the unions, which are being led by Air Malta chief executive Ernst Funk who devised the regeneration plan.

The plan has two facets; making the airline more profitable together with a cost cutting exercise and elimination of inefficient work practices.

Air Malta made an operational loss of Lm5.5 million between last August and this January and the government believes such cuts will save Lm3-5 million a year.

The sources said that reducing the cost of human resources should mean that there would not be any need for redundancies at the airline. "However, a collective effort is required to achieve this and some proposals are negotiable."

The average salary at Air Malta is currently about Lm12,500 a year including overtime and other allowances, which is viewed as excessive. Sources said that although there would be a cut in current take-home pay, employees' basic pay would not be reduced.

"The safety pact for the airline will not just affect one group of employees but everyone will play a part to ensure the airline can become viable. This includes the senior management.

"For example, there are currently 24 group heads at the airline. They will be replaced by eight chief managers who will be employed on performance related contracts."

The sources admitted that mistakes had been made at Air Malta in the past - such as the purchase of AVRO RJ aircraft and AzzurAir - but stressed that these in no way played a part in the airline's current operational losses.

They said: "They are separate issues. The important thing is that the airline returns from its core business to its black bottom line."

Air Malta's management is currently in its second round of discussions with the unions. The first set were described as a listening exercise on behalf of the unions, while talks are now getting down to details of the proposals.

However, what some view as workers' achievements, others see as an unnecessary erosion of company profits. The system of overtime, day allowances and non-flexible shifts are high on the agenda for change.

"When these things were originally negotiated, the operations of the airline were not at issue - it was simply about workers' pay. If this mentality doesn't change, the airline will not have enough capital and reserves to operate in two years' time."

The sources also said that although the airline's highly paid CEO "was not allowed to function" when he was appointed in 2002, the government was satisfied with his level of output and would judge him at the end of his three-year contract.