Updated - Adds comments by CEO - Air Malta said today that it halved its losses during the financial year which ended at the end of March 2014 and it expects to maintain its position for the year ending March 2015, despite several setbacks such as the closure of the Libyan routes and increased competition in the peak summer months.
Audited figures announced during today’s Air Malta Annual General Meeting showed that the airline posted a loss of €16 million for the year, compared to €31 million in the previous year.
"The numbers show that Air Malta is moving in the right direction according to its Restructuring Plan, although it did not manage to reach the more ambitious annual targets of a €15 million loss in 2013 and a profit in 2014," the airline said.
Chairwoman Maria Micallef said the closure of the Libyan routes had cost the airline around €1 million per month - including the loss of incremental revenue from transit business - and a 20% increase in seat capacity of other airlines in the peak months.
Ms Micallef highlighted the importance of pkanning the long term strategy of Air Malta, beyond the restructuring plan.
“In the longer term, it is clear that the realities of the industry are such that the airline’s profit margins will always remain wafer thin unless we rethink our business model to truly ensure viability. We need to get out of restructuring mode and start thinking of long-term sustainability beyond 2016. We will need the economies of scale that we can never achieve with our size,” she said.
“If we are to make this work - and I am confident we will - we need everyone’s support. In some cases, this means holding back. That is my message to politicians, both government and opposition," she said without elaborating.
“The reality is that this is Air Malta’s last chance for long term survival. We have 17 months left to get this right,” she concluded.
CEO Philip Micallef said Air Malta was working more closely with the Malta Tourism Authority and other key stakeholders.
“Our approach has been particularly successful with German tour operators, where committed seats have increased by 300% in winter 2014/15. Similar encouraging results are already being achieved on our Amsterdam and Brussels routes. Our code-share with Air France is doing even better, with a ten-fold increase in passenger revenue,” Mr Micallef told the AGM.
“At the end of summer we launched an aggressive promotion with a 25% discount, for travel from November 2014, to get early bookings for winter. In aggregate, early bookings for winter strongly indicate that we could start to mitigate the losses in passengers from Libya and slow-down in Russia through increased sales on other routes,” he said.
Mr Micallef said Air Malta now needed to improve its IT systems to facilitate customer experience and increase revenue by providing a more attractive pricing system for passengers.
“In the face of increased supply on some of our core routes during the peak summer months, we must respond by taking advantage of additional revenue streams. We are starting with generating ancillary revenue pre-flight through product enhancements and the right technology to promote the sale of these products. We are also looking at developing ancillary products while on board,” he said.
During questions from the floor, the chairman was asked about the possibility of the airline suing its former CEO Louis Giordimaina for alleged breach of contract when he abruptly left the airline. Ms Micallef said the board wanted to make sure that the airline recovered what belonged to it.
On former CEO Peter Davies's comment that when he left the airline, the financial performance was on track, Ms Micallef said "numbers are not subjective".
"We were only on target in 2012," she said.