Absorbing ‘extra’ Air Malta staff might not be possible

Employing “extra” Air Malta staff in the public service may be forbidden because the EU could interpret this as a form of state aid, The Sunday Times has learnt.

Asked whether the government can directly absorb all jobs shed by the airline as part of the restructuring exercise, Commission officials warned this is not“a straightforward and forgone conclusion”.

“The Maltese government is not allowed to give any sort of aid to the airline since competition rules have to be observed. This is not Malta Shipyards, which closed down. Air Malta still continues to exist and compete,” the sources said.

Around 600 of the airline’s 1,500 staff are expected to go if the Air Malta is to survive. However, the number may change significantly depending on how many workers opt for early and voluntary retirement schemes, which the airline is expected to offer.

Talks are to start in the coming days between EU and Maltese officials to fine-tune plans to lead toAir Malta’s commercial turnaround in five years’ time.

Brussels has indicated to the government that its preliminary analysis of the restructuring plan is almost concluded.

Commission sources told The Sunday Times the plan appears to be in line with the overall principles of the EU’s state aid rules but some fine-tuning will be necessary.

“We will now start direct discussions with the airline and its shareholders on the way forward. It is normal in every state aid discussion that the Commission asks for clarifications and maybe some changes,” the sources said.

The Commission is not expected to take long to decide whether the national airline can keep using the €52 million state aid, approved by Brussels last November to enable the airline to could continue flying. This state aid, allowed only once, was tied to the condition that the airline had to present a restructuring plan within six months.

The Commission’s thumbs up to the plan will give the airline one last chance to survive.

However, if Air Malta andBrussels fail to reach agreement, the airline would need to return the state aid to the government, which would effectively mean it would have to fold. Commission officials remained tight-lipped over the contents of the plan, though they admitted negotiations would be tough.

The airline’s collapse may also affect another 2,672 workers employed with various Air Malta suppliers, according to theCommission’s analysis.

Air Malta has been in thered since 2003 but the situation took a turn for the worse in 2009 because of rising fuel costs andthe loss of market share due to low-cost airlines.