Air Malta will be reducing its aircraft from 10 to seven this winter, according to plans unveiled yesterday.
The airline will use eight aircraft the following summer but could increase the size of the fleet according to demand.
Confirming the news revealed by The Sunday Times of Malta last May, the company said it planned to make better use of its fleet to cut operating costs by some €8 million a year.
According to the airline, which is in the last year of a five-year restructuring exercise, this plan has to be implemented without further delay if it is to survive.
“If we do not implement this change as soon as possible, Air Malta will not break even and make the desired turnaround expected so eagerly by the Maltese,” Air Malta said.
If we do not implement this change as soon as possible, Air Malta will not break even and make the desired turnaround
Prior to the start of the restructuring plan, the national carrier operated 12 planes. However, these were reduced to 10 as part of the agreement reached with Brussels.
“Airplane utilisation is a key performance indicator in the industry. Since planes are expensive to lease, the more they are used, the higher the return. It does not make sense to leave such expensive assets idle in winter for more than half the time,” a statement quoting CEO Philip Micallef said.
According to the airline, the plan has the potential to save the company some €8.2 million a year or up to €41 million over five years.
At the same time Mr Micallef pointed out that Air Malta was still expected to carry the “the same number of passengers”.
A company spokesman told the Times of Malta that Air Malta’s aircraft leases would start to run out next year and the airline advised the lessors of its intention not to renew some of these leases. While Air Malta did not say whether these changes will have an impact on jobs, Tourism Minister Edward Zammit Lewis has insisted in recent weeks that there was no intention of reducing the airline’s headcount.
According to Air Malta, while low-cost airlines such as Ryanair and EasyJet are now utilising their aircraft for some 16 hours a day, Air Malta is only flying its aircraft for up to 12 hours a day at most.
The five-year restructuring plan, which was accompanied by a government injection of some €200 million in the airline, stipulated that the company would return to profit by March next year. In the last financial year it registered a loss of €16 million.
The government is also currently looking into the possibility of finding a strategic partner for Air Malta. Talks with Turkish Airlines and Hainan Airlines are ongoing.
In a statement, the Malta Hotels and Restaurants Association, which was yesterday briefed on the fleet reduction plans, welcomed the changes and hoped they would be realised.
“What, however, remains critical, at a strategic level, is a change in the business model in the way Air Malta is owned to ensure that all these efforts will ultimately ensure further sustainable growth and improved competitiveness.”