Selmun Palace Hotel's 58 workers have been made redundant.

The redundancies have not been accepted by the General Workers' Union, which represents the workers and which this evening said that all workers had obeyed its directives not to attend a meeting which had been called for them.

The loss-making hotel, which closed its doors to guests last January, is a subsidiary of Air Malta.

Air Malta said this afternoon it informed the unions representing the employees of the decision, taken during the first meeting of the new board of directors, chaired by Louis Farrugia.

Air Malta also outlined a way forward and formal consultations will commence next week.

The airline discussed the issue with the Employment Director and informed him that it will be honouring the collective agreement and the law and the employees will receive their termination payments accordingly.

The decision to terminate jobs was in line with the objectives set by the new restructuring plan to significantly cut cost and for the airline to focus on its core areas of business.

Over the years, Selmun Palace Hotel has accumulated losses of over €13 million.

Since it ceased operations, the hotel was still incurring significant expenses related to wage bills, licences, insurance and other expenses.

Air Malta CEO Peter Davies said that terminating jobs of employees was a very tough decision and a last resort:

"It is always extremely hard to terminate jobs but the national airline did not have any option. I have to stress that the airline had tried to sell the hotel as an operating concern, in order to save the jobs of employees, but such attempts were not successful. This is one of the first important decisions being taken by the board of directors to save the airline and hundreds of jobs at Air Malta. It is very important for the national airline to take challenging decisions now in a bid to significantly cut costs and also to raise its revenue from core business."

Mr Davies said that the decision to terminate the jobs of employees at the hotel did not necessarily mean this was the method the national carrier would be adopting to reduce the airline's workforce:

"It has already been announced that as part of the restructuring process Air Malta will be reducing its workforce. In order to avoid unnecessary speculation, I have to stress that the board of directors realises that there is a difference that has to be made between Air Malta employees and employees of an independent subsidiary company not operating in the aviation industry. At the same time, no decision has yet been made and all options are still being considered as to the method that the airline will be adopting to reduce its headcount. I would like to sincerely make an appeal to all stakeholders involved to avoid speculation that can cause unnecessary distress amongst Air Malta employees."

Air Malta stated that all Selmun Palace Hotel creditors' balances will be settled in full.

Meanwhile the airline will be embarking on a local and international process to sell the property and/or company. It will be engaging local estate agents to advertise the property through their international network so as to maximise the value and proceeds of the sale.

Mr Davies said that a decision has been taken to advertise the property in Malta and abroad:

"Selling the Selmun Palace Hotel is also critically important for the airline as the revenue generated from the sale will offset the accumulated losses and will also assist Air Malta in its current restructuring exercise. Selmun Palace Hotel is a strategically located hotel and an excellent asset and Air Malta will be doing it's very best to maximise the revenue it can generate from its sale."

Speaking in Parliament last year, Finance Minister Tonio Fenech said the Selmun Palace Hotel will not be sold for anything less than €8.4 million.

In a statement this evening, the GWU said it was not accepting any redundancies from Air Malta or its subsidiaries.

The union said the airline knew it could not make workers redundant before first discussing the issue with it.

It said that, in the past months, it had several meeting with Air Malta during which it was always informed that the airline's intention was to sell the company so that workers would not lose their job.

The union had been promised that a tender for the sale of the company was to be reissued. During this time, several local and foreign investors were willing to buy the company and keep the workers but the tender was never reissued.

The union said it would not accept arbitrary decisions to be taken without it being consulted and said the workers should be given alternative employment with a government company temporarily until the company is sold.

It said that no worker had yet been informed of any redundancy, as alleged by Air Malta.

Even the Employment director had informed Air Malta it could not sack workers before informing the union.

In another statement, Opposition tourism spokesman Gavin Gulia said that this week, the Finance Minister had replied to parliamentary questions about the workers and said their company was to be included in Air Malta's restructuring plan.

The minister said that as these plans were in a delicate stage, he could not comment.

Dr Gulia said that while new senior positions were being created in Air Malta's management non-transparently and without accountability, workers were starting to lose their jobs.

Was the decision taken by the newly appointed board of directors or by its new administration? Were the terminations part of the restructuring process? Was it true that workers were not being offered alternative employment or early retirement, he asked

If this was the case, what was the government to do about the future of these workers who all at once ended up without any income, Dr Gulia asked.