Air Malta has cut its winter losses “substantially” and is on track to becoming profitable by 2014, according to an upbeat CEO Peter Davies.
The accounts are being audited with a view of publishing them next month but Mr Davies says they are already looking “encouraging”.
“We’re moving in the right direction,” he told The Sunday Times of Malta.
Air Malta last year managed to turn a profit in the summer months and is now focusing on increasing turnover from the peak months while reducing the heavy losses traditionally sustained in the shoulder period.
The airline has been carrying out a restructuring process after years grappling with high operational and fuel costs. In May 2011, the European Commission gave the government the go-ahead for a €130 million capital increase to help restructure Air Malta.
The minister is right not to be happy because we’re not happy
The airline registered a €30 million operating loss at the end of its financial year in March 2012, registering an improvement of €4.3 million over 2011.
Since then there has been a change in government, but Mr Davies said the company’s relationship with the Tourism Minister and the Malta Tourism Authority remained as good as ever.
But what about the fact that government MPs used to criticise him from the opposition benches just months ago?
“I think we are all professional and mature people. They are obviously getting to know more about the company that perhaps they were not in a position to know before,” he says, adding they have understood the issues being faced by the airline.
Tourism Minister Karmenu Vella recently said he was unhappy with the situation at Air Malta because Mr Davies and his team were meant to provide solutions but the problems remained.
“I think the minister was right. He was right not to be happy because we’re not happy.
“We are still in a period of transition,” the CEO replied.
He said his team was tasked with making sure the airline did not go bust and did not have the luxury of changing all the “broken processes and procedures” beforehand.
“The critical focus was to make sure we had a financial situation that allowed this company to be sustainable. Otherwise it wouldn’t be here,” he said, adding that the airline was getting close to profitability at both operational and net levels.
Describing it as a work in progress, Mr Davies is conscious of the fact that the incoming Government is keen to make sure all the structures, processes and systems of accountability are in place.
One of the biggest problems of the airline is the limited depth of management talent, he said.
“If you compare us to a football team, we have a very good team but very few reserves. So we have to prioritise,” he said.
Mr Davies has already passed the halfway mark of his well-publicised three-year contract but refused to comment about whether he is expecting to stay on any longer than that.
“I won’t speculate. I’m here to do a job and I feel comfortable and confident,” he said.
Mr Vella recently said he was not anticipating any major management shake-ups.
“He’s a man of his word, so I’m assuming that there will be no management shake-ups. I feel comfortable that by the end of my three-year tenure, the job I set out to do would have been completed.”
Mr Davies said he is also working well with the reconstructed Air Malta board, which he is pleased to note is made up of business people.
“They understand the issues Air Malta as indeed the previous board did,” he said, without passing judgement about whether the minister chose the right people.
Mr Davies admitted that he has not yet managed to revise some problematic contracts, such as the food-supply agreement with Sky Gourmet.
“Some contracts are taking longer than expected. This is the nature of negotiations. There are legalities and things cannot be resolved in two seconds.
“Everyone needs to understand what we are trying to achieve. In such negotiations, both parties must have the right sense of perspective. Those contracts were written at a very different time for the airline.”
Mr Davies is very confident about the impact of the airline’s revamped brand, adding he was approached with many positive remarks by other airline CEOs during a recent conference in Cape Town.
“It’s unusual for these people to come up to you and say: great brand, I love it. But they’re doing that,” he said, stressing that the company was also saving money on advertising through its focus on social media and viral videos.
But is all this translating into increased revenue?
“Our revenue is up substantially. If you look at May’s figures, the number of airport passengers increased by 10 per cent, of which Air Malta represented around 15,000 passengers,” he said.
Mr Davies was particularly pleased by the two-plane formation which cost the airline some €40,000 but earned more than that in terms of footage and coverage worldwide, he says.
I’m Welsh. But even I got emotional watching it
“It was always my vision to have two aircraft in the new livery flying over Valletta. It was stunning. I’m not Maltese. I’m Welsh. But even I got emotional watching it,” he said.
Asked about the inquiry into a flight delay last August, Mr Davies stressed that the truth will come out.
“Sometimes inquiries take a long time. What is important is that the truth finally comes out. That has to happen and it will happen,” he said, referring to the incident involving the pilots’ union chief Domenic Azzopardi.
By comparison, a similar incident involving Mr Davies’ wife was resolved within days.
“Yes, because the electronic evidence said she was checked in one and a half hours before,” he says.