Unions and Air Malta’s management are expected to meet on Thursday to discuss retirement and redundancy schemes aiming to shed 511 employees as part of the airline’s survival plan.
Air Malta’s management has forwarded proposals to the unions, which have made counter proposals, according to Finance Minister Tonio Fenech, who was reluctant to divulge any details.
But when contacted yesterday, General Workers’ Union general secretary Tony Zarb said the two sides were still some way from reaching agreement.
“They want to offer workers the same schemes presented six years ago... this is unacceptable,” Mr Zarb told The Sunday Times.
He added that even if an agreement on the schemes was reached during Thursday’s meeting, the unions would still have to revert to the workers for approval.
Early retirement schemes are expected to be offered to workers aged 55 and over, while voluntary redundancy schemes will be available for others. A timeframe will be connected to the retirement schemes.
Management will have a right to reject the applications of those workers it believes should remain with the company.
During a protest in Valletta last Friday, Mr Zarb spelt out the union’s conditions for agreement on the airline’s future: improving proposed retirement schemes and a guarantee of alternative employment for those not opting for the early retirement schemes and who were to be made redundant.
Apart from the airline pilots’ association, most unions have now agreed on the number of workers that need to be laid off to enable the airline to remain in business.
Mr Fenech said the government was keeping the European Commission updated with all developments related to the airline.
“There is a social cost that the Commission has acknowledged. Now it all depends on whether the Commission will see the schemes as state aid or not, and whether they are reasonable in the circumstances,” Mr Fenech said.
Commission officials have told the government that it is not permitted to grant any sort of aid to the airline since competition rules had to be observed.
Employing “extra” Air Malta staff in the public service may be forbidden because the EU could interpret this as a form of state aid since, unlike the former Malta Shipyards, the airline would remain in operation.
EU state aid rules are complex and do not only consist of direct cash injections into a company.
According to EU procedures, after publishing its preliminary decision on Air Malta in theEU’s official journal, the European Commission will also need to give ample time to hear complaints from any objectors, particularly other member states and companies who may feel that government aid to Air Malta would undermine their competitiveness. Among those expected to lodge a complaint are low-cost airlines.
EU officials also told The Sunday Times the European Commission had requested clarifications on certain aspects of the restructuring plan.
“We have analysed the preliminary plan, and although it respects in principle the main aspects of our rules, we still want to make sure the numbers presented by the government, particularly on state aid, tally,” the officials said.
The Commission is also asking for clarifications on the way the company will deal with the redundancies and how Air Malta was helped by the government with a €57 million capital injection prior to EU accession in 2004, the sources said.
“We have sent a detailed response to the government on all the aspects we need clarification about and we are expecting a reply by August 3,” the sources said.
Though no fixed deadlines have been established, a final decision is earmarked for the end of the year, possibly by the beginning of December.
Air Malta could start with its restructuring before the plan – presented last May – is approved.
“Restructuring is a must with or without our green light. In the state it is in, the company cannot survive for long. Our approval of the plan will give the company the necessary tools to turn around a very difficult situation over a five-year period.
“However, changes are necessary with or without our consent if the company is to keep its planes in the air,” the sources said.
According to its first decision to grant a €52 million temporary rescue aid to Air Malta last November, the EU found that Malta’s national airline has been in the red at least since 2003. The situation became worse from 2009 onwards due to rising fuel costs and the loss of market share due to low-cost airlines.