Even if Air Malta does return to profit by March next year, the target date set for its recovery, it would make sense if the company takes a long-term view and negotiates a strategic alliance with another airline if it feels it will be difficult in the long-run to operate alone. This is one route other small air carriers have taken when they found themselves in difficulty.
It is as yet unclear if Air Malta will manage to break even by the target date, even though in Parliament, on Monday, Tourism Minister Edward Zammit Lewis said the management was committed to achieving commercial viability by next year.
Although neither the Prime Minister nor the Tourism Minister has confirmed a report in this newspaper that the airline is in talks with Turkish Airlines over the possibility of entering into a strategic alliance, the move makes sense because it is long-term financial viability that has to be taken into account, not just the next one or two financial years.
The point was also well made in Parliament by the minister when he said that one could not just focus on the conclusion of the restructuring plan but on a long-term plan as well.
A strategic alliance will be a better proposition than a takeover. With Malta being isolated from mainland Europe, it would be wise for the country to keep a controlling interest in the national airline. Joseph Muscat has confirmed that the government does not intend giving up its majority shareholding in the airline.
In a fast-changing and highly-competitive environment, as the civil aviation industry faces, Air Malta needs to work out a sound strategy. With the emergence of strong competition from the no-frills carriers, the Maltese national airline can no longer operate as it did before and has to streamline operations to stay in business.
The airline has received massive State aid for restructuring but time is now running out. It will not be allowed further State aid after next March.
The drop in the price of jet fuel is helpful and, concurrently with news that the airline is looking for a strategic alliance with Turkish Airlines, it has also been reported that Air Malta is expected to reduce its aircraft fleet, doing away with two aircraft.
The airline has already implemented a number of cost-cutting measures, including the replacement of onboard meals with a baguette and a half-litre of water for economy class passengers, a move which, according to the minister, means a saving for the airline of €9 million.
The airline has also saved €1 million on the renewal of its IT contract and is revising the working conditions of part-time workers as part of “sacrifices” workers are being asked to make for the sake of saving the company.
Like other companies in the airline business, Air Malta may have its shortcomings however there is no doubt that, over the years, it has served the country well. Many still prefer flying with the airline, not just for sentimental reasons but mainly because they feel comfortable and safe doing so.
If, as the situation is unfolding today, the carrier still finds it difficult to operate on its own and would need to go into an alliance with another, bigger airline, as other companies have done, in order to keep flying under the Air Malta banner, so be it. It is better to do this than having to close down, as Cyprus Airways has done.