Brussels approves loan of €52m to Air Malta
Tourists carried by Air Malta
The European Commission has authorised a loan facility worth €52 million for Air Malta to prevent the collapse of the national airline.
The approval of state support to Air Malta is only temporary to avoid a “sudden disappearance of the airline” which would lead to serious disturbances in the Maltese economy, said Joaquín Almunia, Commission vice-president in charge of competition policy.
Mr Almunia added yesterday he had also taken into account the very limited impact the measure would have on other member states.
The loan is in line with EU state aid rules, because it is limited in time and scope. The Commission said it approved the measure temporarily, until it could take a position on the restructuring plan to be submitted by Malta within a maximum of six months.
In particular, the aid amount is limited to what is needed to keep the company in business over the next six months. Moreover, the Maltese authorities have committed to submit a restructuring plan guaranteeing the future viability of the services currently provided by Air Malta. In case of failure, Air Malta would have to reimburse the loan or undergo liquidation.
EU rules do not allow member states to provide continued support to ailing companies because such a practice would not only be detrimental to competition within the internal market but would also go against the interests of taxpayers.
Speaking in Parliament yesterday, Maltese Finance Minister Tonio Fenech described Air Malta’s situation as serious.
Meanwhile, Parliament last night unanimously passed through all stages the Government Borrowing and Granting of Loans to Air Malta plc Bill, which authorises and regulates the raising of loans for the purpose of entering into re-lending agreements with Air Malta plc with a view to enabling the rescuing and restructuring of the company.
Introducing the Bill, Finance Minister Fenech said Air Malta was facing a liquidity problem and the cash injection would allow the national airline a six-month respite to pay its suppliers.
The economy relies heavily on tourism and the share of tourists carried by Air Malta exceeds more than half the total passengers.
The government and trade unions have agreed to set up a steering committee to oversee the company’s restructuring. Leading international consultants from Ernst and Young have been engaged to draw up a restructuring plan to ensure the long-term viability of the airline.
The government has not yet divulged its reform plans.
Air Malta suffered losses of €31 million in 2009 and it is expected to go deeper in the red this year.
The government had made several attempts to get the airline back to viability with the latest one in 2004 failing to lift the airline to profitability, in the wake of competition from low-cost airlines and rising fuel costs.
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Lyndon Newton
Oct 4th 2011, 20:50
Having just returned from another great few days in Malta, and this time using Air Malta, I have to say there is NO comparrison between AM and the low cost (Ryan Air) My wife and myself will now continue to use Air Malta.
We visit Malta 3 to 4 times a year, and it will always be Air Malta from now on.
Travel on Ryan Air is dreadful and one is made to feel like a nuisance.
P.Cassar
Nov 16th 2010, 14:17
SO
WE SUBSIDIZE RYAN AIR AND THE OTHER LOW COST AIRLINES
BUT
WE HAVE TO SEEK PERMISSION TO HELP (since it was milked dry by pn govts) AIR MALTA.
NATION OF FOOLS.... RUN BY FOOLS................ OR BOTH.........YOU CHOSE.
l fenech
Nov 16th 2010, 14:13
Ghal-kurzita dan sussidju?
Deo Catania
Nov 16th 2010, 23:13
Brussels approves loan of €52m to Air Malta. Jekk lanqas tasal tifhem sentenza qasira bhal din ghandek problemi kbar siehbi.
H Dempster
Nov 16th 2010, 11:51
How Nice. We are not even allowed to do what we like with our own money. So to give a hefty pay rise to the minister and all the goofs in Brussels its ok , but to help our compatriots, NO.
R Millam
Nov 16th 2010, 12:47
well think of it this way. how about the Irish government subsidizing Ryan Air. so he can sell you a ticket for 1 Euro per flight. keeping it going till Air Malta collapses, then he puts up the price to twice what it is now.
lgalea
Nov 16th 2010, 13:25
That's exactly what the dictatorial eu means.
N. Pace
Nov 16th 2010, 16:21
Well in this case I am not against this. Giving more money to Air Malta is not exactly something I am in agreement with. Especially if it means helping those bunch of layabouts that are called baggage handlers (not to mention other staff)
Joseph Calleja
Nov 16th 2010, 17:34
The problem is it's not your money, it's the Tax Payers's money. Big difference. Who is WE and Whose money?
Deo Catania
Nov 16th 2010, 23:16
N Pace. Pure nonsense. No wonder Malta is in such a mess.
Please choose the reason of your report below: