Air Malta close to selling RJ-70 aircraft

Air Malta is close to signing an agreement to sell one of its five RJ-70s aircraft, sources close to the airline said yesterday.

The carrier is carrying out an intensive marketing exercise to sell its fleet of five RJ- 70s (82 seaters) and two RJ- 85s (92 seaters). The RJs had been leased to AZZURRAair but had been repossessed by Air Malta after AZZURRAair had defaulted on the relevant lease agreements, Air Malta said.

The seven RJs are currently leased to Air Malta for the next four years and are parked at Exeter airport in England.

When contacted, Air Malta chairman Lawrence Zammit said that although the planes are leased to the national carrier, the company decided to buy one of them to sell and, additionally, make a saving on the lease fee.

Air Malta said on Tuesday AZZURRAair was declared bankrupt on Wednesday last week by a court in Busto Arsizio, near Milan.

Air Malta said it was one of the founder members of AZZURRAair and had held a minority shareholding in the Italy-based company. The shareholding stood at 49 per cent.

The airline explained that since last September, in line with its declared strategy, Air Malta substantially scaled down its involvement in AZZURRAair.

Last year, the majority shareholders had a vision for AZZURRAair that was not shared by the Maltese national carrier. Moreover, the majority shareholder had undertaken a number of commitments, including the recapitalisation of the company, it did not honour and which primarily contributed to the court ruling, Air Malta said.

As a result, the directors appointed by Air Malta resigned last December 10 and since then the national carrier did not participate in the management of AZZURRAair.

Asked what the shares Air Malta held in AZZURRAair were worth, Mr Zammit said these had long lost their value.

The case was now in the hands of the Italian court where bankruptcy procedures will be followed according to the law of limited liability, he added.

Earlier this month while announcing the financial report for the national airline, Mr Zammit pointed out that the Air Malta Group had registered a loss of Lm25.8 million in the financial year ending July 31, 2003, including losses of Lm8.86 million from its core business of passenger and cargo operations.

He had explained that results registered for the period up to July 2003 were hit by losses of Lm14.2 million (2002: Lm7.2 million) from AZZURRAair.

In addition, a provision on onerous contracts of Lm7 million has been made to reflect the shortfall in income and the additional costs which were expected to arise on the Avro RJ aircraft previously subleased to AZZURRAair.

AZZURRAair started commercial operations in December 1996.