Malta’s national air carrier, Air Malta, is back in the red a year after it announced its first profit in two decades, according to a global source of aviation industry news and analysis.
The Centre for Aviation, CAPA, last year awarded Malta’s national airline its ‘Turnaround of the Year award’ after the 2018 financial results saw a slim operating profit of €1.2 million.
In its latest report, however, CAPA says Air Malta has “swung back into the red in financial year 2019 (ending March 2019) after recording its first profit in nearly 20 years in FY 2018”.
Although it did not give any figures, CAPA said this was a result of the expansion into new routes “which had a negative financial impact” on the airline.
To minimise the losses and turn back into profitability, Malta’s national airline was now expected to stop its expansion to consolidate its profitable routes by “increasing frequencies rather than investing in more new destinations”, CAPA said.
Official results for year ending March 2019 still being reviewed
On its website, CAPA is described as one of the world’s most trusted sources of market intelligence for the aviation and travel industry, saying it has an unrivalled reputation for independence and integrity.
CAPA will hold its annual general meeting in Malta later this year, sponsored by the Tourism Ministry.
Its prediction of a loss for 2019 is in line with that made by Air Malta’s own board of directors in its 2018 report: “Air Malta will most likely register operating losses from continued operations during the 2019 financial year,” the board had stated.
“The losses will be due to start-up investment in new routes, operational disruptions emanating from industrial relations issues, market volatility in respect of fuel prices, developments in the outcome of the fleet renewal and long outstanding technology upgrades.”
However, the company on Wednesday insisted it was expecting a reasonable profit for the financial year ending March 2019.
Asked for a reaction to the latest international report, a spokesman for Air Malta dismissed the news outright.
“It is not practice for a company to disclose financial results prior to an audit process. However, Air Malta is expected to register a reasonable profit for the second consecutive year,” the spokesman said.
The official results for year ending March 2019 are still being reviewed by the external auditors, PricewaterhouseCoopers.
Even last year, aviation analysts had raised some doubts about the results, especially as ‘one-time’ items were entered into the airline’s accounts. One of them was €33.9 million from the sale of landing slots in London, sold to another newly established government airline.
Another €22.8 million in proceeds from the London slots are expected to be inserted this year.
Minster Mizzi insists that Air Malta is on the path to sustainable profits.