Fifty-eight Selmun Palace Hotel workers were yesterday afternoon advised they had been made redundant in the first “difficult decision” taken by Air Malta to keep the airline afloat.
The decision to lay off all employees of the loss-making Air Malta subsidiary hotel was taken during the airline’s first board meeting last week.
In a statement, Air Malta said it had advised union representatives on the developments and outlined a way forward.
Formal consultations will start next week and the airline also discussed the matter with the Director of Employment.
Air Malta said it would be honouring the collective agreement and employees would receive their termination payments accordingly. No retirement schemes are being offered.
The decision is in line with the objectives set by the new restructuring plan to significantly cut costs. The hotel will be sold as part of the ailing airline’s plans to divest itself of its non-core operations as it undergoes restructuring.
Selmun Palace Hotel accumulated losses in excess of €13 million over the years.
The hotel had ceased operations on January 3. However, the airline was still incurring significant expenses related to issues like wage bills, licences and insurance.
Air Malta CEO Peter Davies said terminating jobs was a very tough decision and a last resort. “This is naturally a very difficult day for the Selmun Palace employees and also for Air Malta. It is always extremely hard to terminate jobs but the national airline did not have any option.”
Mr Davies said the airline had tried to sell the hotel as an operating concern to save employees’ jobs but the attempts failed.
“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 the decision to lay off workers at Selmun Palace Hotel did not necessarily mean the same method would apply to cut the airline’s workforce.
“To avoid unnecessary speculation, I have to stress that the board of directors realises there is a difference between Air Malta employees and workers of an independent subsidiary company not operating in the aviation industry.”
He insisted no decision had yet been taken and all options were still being considered as to the method the airline would be adopting to reduce its headcount.
The newly-appointed CEO appealed to all stakeholders to avoid speculation that could cause unnecessary distress among Air Malta employees.
In an interview to appear in The Sunday Times this weekend, Air Malta chairman Louis Farrugia said early retirement schemes were “on the table” for the circa 600 workers who were expected to be shed from the national airline.
Air Malta said all financial creditors’ balances of the Selmun Palace Hotel would be settled in full.
Meanwhile, the airline will be embarking on a local and international process to sell the property and company and even advertise the historic building overseas. The adjacent Selmun Castle, built in 1783, houses some of the hotel suites and serves as a venue for weddings and other functions.
“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 restructuring exercise. Selmun Palace is a strategically located hotel and an excellent asset and Air Malta will be doing its very best to maximise the revenue it can generate from its sale,” Mr Davies said.
Speaking in Parliament last year, Finance Minister Tonio Fenech said the Selmun Palace Hotel would not be sold for anything less than €8.4 million.
Later yesterday, the General Workers’ Union said it was illegal for Air Malta to inform workers they were being made redundant before it spoke to the union.
The union, therefore, informed workers not to attend the meeting called by the airline management for yesterday afternoon.
The GWU said it had been promised by the authorities several times that a tender for the sale of the company would be issued but, despite the interest shown, this was never done. The union said it would continue to insist that Selmun Palace workers be provided with temporary alternative employment with the government until the company was sold.
In another reaction, the Labour Party said the Selmun Palace news came out of the blue, especially after Mr Fenech said in Parliament recently that the hotel employees would be included in the restructuring plan.