Air Malta plans to halve the €29.8 million operating loss and break even by 2014 as the beleaguered airline yesterday unveiled its much-anticipated figures.
Although great strides had been made so far, including cutting losses by €4.3 million, more had to be done to achieve the desired turnaround, airline chairman Louis Farrugia said.
“The survival of the company is intrinsically linked to its ability to rapidly and successfully execute a range of cost and revenue initiatives as laid out in the restructuring plan approved by the EU... Air Malta does not have a second chance at this,” he said.
Last month, the European Commission approved the government’s five-year restructuring plan that will see a €130 million boost in state aid being injected into the troubled carrier.
Finance Minister Tonio Fenech praised the company’s management for the “very good news” of cutting losses, adding that this was “no mean feat”. He said the government believed it had found the right people to run the company and steer it in the right direction and maintained that the state would not interfere in the way the airline was run.
Air Malta’s performance was adversely affected by a hefty €17 million increase in fuel costs and a capacity reduction imposed by the European Commission as one of the conditions for the approval of the plan. This translated into an estimated reduction in profitability of €4 million.
Had it not been for the two factors, the company would have registered an improvement in operating performance of over €20 million, he said.
The airline’s chief financial officer, Nick Xuereb, said the company had hedged 79 per cent of its fuel for the current financial year, which was not expected to be impacted by the cost of fuel.
The airline hedged its fuel at a rate of three per cent cheaper than its competitors.
Mr Xuereb said the company planned to halve its operating loss to €15 million by March 2013 by increasing revenue by €10 million and improving on filling up more seats.
This was one of the main revenue generators, contributing to the airline’s €7 million increase in revenue to €214 million for the financial year ended March 31.
Chief executive Peter Davies said the airline would not further reduce capacity since it had achieved the targets set by the European Commission.
Asked whether the airline was planning on introducing new routes, Mr Davies said that until Air Malta became profitable it could not fly to any new destinations within the EU.
Chief commercial officer Peter Sounders explained that a new pricing would replace the one adopted in the 1960s, giving customers more choice and better flexibility. The new policy would eliminate seasonality, thus creating more coherent pricing.
He explained that the company was in the process of introducing a charge for the second luggage as a way of increasing revenue. Moreover, the airline would introduce new on-board services but he refused to give more details for the time being.
Mr Davies said the company planned to increase its income on cargo handling by €2 million and was in the process of installing chillers in warehouses close to the airport to be able to cater for the export of pharmaceuticals and fish.
Mr Farrugia said a number of companies had expressed interest in the purchase of Selmun Palace Hotel and the airline hoped to conclude the deal by the end of the year.