Air Malta to slash overseas posts

Air Malta will have to drastically reduce the number of employees stationed abroad from the current complement of 58 to a mere 17, according to the airline’s draft restructuring plan.

The plan, drawn up by government consultants Ernst and Young, targets a cost saving of about €2 million from this decision, with the company retaining only “key sales people” in its outstations.

The Times today reveals more details of the confidential restructuring plan, which was first leaked by The Sunday Times.

Air Malta has said the leaked report refers to an earlier draft of the plan and is not the finalised version sent to the European Commission. However, the airline refrained from saying what changes the final report contained and did not deny the published figures.

The plan says Air Malta will retain seven employees in Libya from the current 13, in a bid to avoid repercussions on business in that country.

The reduction of staff numbers at the airline’s outstations is part of the reorganisation of the company’s commercial and administrative set-up.

Ernst and Young identify the reduction of labour costs abroad, downsizing the airline’s commercial and administrative units and simplifying the structure to address lack of communication between departments as “critical areas that need management focus and action”.

The report says that the number of workers in the company’s administration should go down to 103 from 198, while the commercial division will have to see the headcount drop to 60 from 114.

Giving a breakdown of the company’s different sections, the report says that ground handling operations will not be hived off but the service will have to be drastically restructured to reduce the cost per flight to €750 from the current €1,200.

Ernst and Young say that outsourcing the ground handling operation would give the airline a cost saving of €9 million but it would also mean that Air Malta loses some €5 million in revenue from handling third parties.

Around 80 per cent of the work done by the ground handling operation involves servicing Air Malta’s own planes.

“The strategy for ground handling services is to restructure the business internally in order to make it competitive and achieve market rates,” the report says.

This means that the number of people employed with the airline’s ground handling operation will have to be reduced by 190 for a staff complement of 250.

Ernst and Young are targeting savings in the range of €4 million with this decision.

With a fleet of 10 aircraft, the report says that the number of pilots and cabin crew employed by the airline should be reduced.

Giving a breakdown of the targeted reductions, Ernst and Young say that the number of flying pilots should go down to 88 from 143, while the number of management pilots should go down to four from the curent six.

The report says that the full-time pilots will be complemented with temporary pilots during the peak periods.

The potential savings from this decision are in the region of between €2.5 million and €3 million.

Ernst and Young also target a reduction in the number of cabin crew to reflect the smaller fleet and a reduction in the average number of cabin crew per flight to 3.6 from four.

This means that the number of cabin crew will go down to 162 from the current complement of 215. The report adds that the three management cabin crew will be retained. This reduction in staff numbers will give the company a potential saving of between €1.5 million and €2 million.

The restructuring process will also impact Air Malta’s engineering section although the report argues that the company could “explore the option of operating the engineering function as a standalone profit centre”.

Even so the number of employees in engineering will have to go down to 114 from 135 and “the cost of procuring the service in-house has to match competitive market rates and industry benchmarks”.

This decision is bound to save the company around €1 million per year.

Job cuts

Note: * office-based workers.