Air Malta reform plan proposes 10 planes, more than 600 job losses

Air Malta is likely to shed more than the projected 600 employees and operate with 10 aircraft, according to a restructuring plan the government will submit to the European Commission, The Times has learnt.

The government has kept the restructuring exercise under wraps and unions have only been shown the plans without being given a copy.

However, sources said the job losses were likely to be higher than the figure of about 600 mentioned by Finance Minister Tonio Fenech last month. The airline employs about 1,200 people and various options will be considered to relocate redundant workers to jobs in the civil service or offer them early retirement schemes.

According to the sources, the plan proposes cutting the number of aircraft in operation by one to 10, which is a far cry from the initial proposals to have eight planes flying. Air Malta owns 12 planes but one of them is on long lease to a third party.

Another proposal is to hive off the ground handling operation and privatise it to cut costs. However, the sources said the plan highlights the risks associated with such a move, which would put the airline at the mercy of third parties for its ground handling operations.

The plan is unclear on a number of issues and, according to the sources, is intended to sound out the Commission before a final decision is taken on the best way forward.

The government has until the end of May to submit a final proposal to restructure the airline in a way that is acceptable to Brussels. The airline survived bankruptcy last year after the government injected €52 million. The Commission had given its go-ahead for the cash injection on condition Air Malta is restructured to become a viable company.

The airline’s new chief executive officer, Peter Davies, on Thursday sounded upbeat about the airline’s prospects but warned there were no quick fix solutions and no time to spare.

“In the next few days, we will be presenting our turnaround plan to the European Commission and this plan will become the new foundation of Air Malta and its revisited business model for the foreseeable future,” Mr Davies said.

In his first public speech at the Amitex travel fair, Mr Davies said Air Malta did not adapt quickly enough to the challenges it faced but insisted there was light at the end of the tunnel.

On the same occasion, the Finance Minister said the airline’s suppliers would be expected to shoulder part of the restructuring burden as all service contracts were under scrutiny.