Air Malta restructuring gets first nod from Brussels
‘Nothing should be taken for granted’
Air Malta’s rescue plan has received its first nod from Brussels and will now be scrutinised by competitors and interested parties in the coming weeks.
European Commission sources said yesterday it had completed the preliminary assessment of the plan submitted last May.
“The Commission is satisfied with the plan and will now publish its preliminary decision to receive objections, if there are any,” the sources said.
The process, starting today and technically known as a formal investigation, will spell out the Commission’s opinion on the plan. It will invite all interested parties to submit their objections in writing, saying why Brussels should not allow the Maltese authorities to provide the ailing airline with state aid. This stage usually takes over a month and the Commission will then analyse the legality of any objections made and invite the Maltese authorities to make their final submissions.
It will only be when the process is concluded, expected at the end of April, that the Commission can make a final decision on whether to approve the state aid.
“Malta has made a lot of progress in trying to solve the Air Malta issue and we have had many technical meetings with the Maltese authorities over the past months,” a Commission official said.
“We have now reached the final stages and we are on schedule. However, the point when we would decide on whether to give the final go-ahead or not will only be reached at the end of this complicated process. Nothing should be taken for granted at this stage,” the official added.
According to the plan presented by the government, Maltese tax-payers will be forking out a substantial sum of money to save Air Malta, which has been in the red for the past few years, particularly due to rising fuel costs, lack of restructuring, mismanagement and increased competition.
Apart from the €52 million which have already been given to the company in November 2010 as rescue aid, a loan that will be converted into share capital, the government is also planning to inject about €78 million in fresh funds into the airline’s share capital.
The company will be selling almost all its property to the government, raising another €66 million.
If approved, the five-year restructuring plan aims at turning the company around to start making a profit by 2015. If this does not happen, the company will have to be closed down or sold. According to EU rules, state aid can only be given once.
The restructuring plan involves massive cuts in the operating costs of the company including the shedding of about 500 workers.