Air Malta retirement schemes to cost €20 million

Air Malta has confirmed it will be footing a €20 million bill to finance the voluntary redundancy and early retirement schemes for its employees.

“It is estimated that the schemes will provisionally cost about €20 million. However, this is subject to the number and mix of voluntary applications,” a spokesman for the airline said when asked about the cost of the three schemes proposed by Air Malta to cut the workforce by at least half.

He confirmed the expense would be shouldered by the airline and not the government.

Details of the plans were reported by The Times yesterday and include voluntary redundancy for employees with seven years or more of service with the company and two early retirement schemes for employees aged 50 and over.

Workers who take up the voluntary redundancy scheme will receive a non-taxable lump sum equivalent to six weeks pay for every year of service including a 12 per cent upgrade.

The rescue package proposed by Air Malta also includes new working conditions for employees who are retained by the airline, including a more flexible working arrangement.

The airline is proposing a one-off taxable bonus of €4,000 spread over two years and a three per cent salary increase backdated to January this year for workers who stay on.

The airline spokesman clarified that the €4,000 bonus would only apply to those employees represented by the General Workers’ Union because they did not benefit from a collective agreement in recent years.

“Employees who stay with the airline will be getting €4,000 each to mitigate the fact that they were not given any salary increases for the last eight years and in recognition of the new enhanced work practices and increases in productivity,” the spokesman said, without quantifying the cost of such a measure.

He added that the voluntary redundancy and early retirement schemes were available to all employees whose “position or grade is covered by a union collective agreement, provided the union and its members have voted to accept their restructuring agreement”.

Employees not covered by a collective agreement, the spokesman said, were also eligible to participate in the company schemes.

On Tuesday, the GWU announced that 92 per cent of its members at Air Malta had approved the company’s restructuring package that includes longer working times in summer and shorter working times in winter.

The Union of Cabin Crew said that 70 per cent of its members had approved the package.

The airline has agreed in principle with two other unions – the Airline Pilots Association and the Union of Airline Engineers – on the rescue package and these are also expected to take the deal to their members.

The government is offering about 200 job placements in departments and public entities as alternative employment to workers who do not qualify for the schemes.

The airline has to reduce more than 500 workers from its present complement of 1,300 to remain viable although employees who spoke to this newspaper on condition of anonymity said that job losses could be as high as 600.

The airline, which was last year bailed out to the tune of €52 million by the government, is still waiting for the European Commission to approve its restructuring plans.

The government has allocated €20 million in next year’s Budget to be pumped in the airline as restructuring aid. This, however, depends on approval from Brussels and is not linked to the redundancy money.

According to a draft restructuring plan published by The Sunday Times earlier this year, the airline has to find its own financial resources apart from government aid.