Last week’s story in the Times of Malta that Air Malta’s worker to plane ratio is twice as high as a number of comparable airlines highlights the fact that tough decisions still lie ahead for the national airline in order to meet its March 2016 restructuring deadline.
Air Malta is a huge asset to the country and plays a crucial role in the country’s economic and social development. It is important for our tourism industry, for business travelling and it also serves as a key link to many European and other destinations for the Maltese people who can only leave the island by air or sea.
Unfortunately, ever since it was set up in 1973, the airline has been used by successive governments (of both political parties) to employ people in return for votes at election time. This took its toll on the company’s bottom line, together with other factors such as increased competition and the financial crisis of 2007-2008. The company has, in fact, been making losses for several years now.
The European Commission authorised rescue aid to Air Malta in 2010 and, in 2011, the government notified Brussels of a five-year restructuring plan aimed at restoring the airline’s viability by implementing several cost and revenue initiatives by March 2016.
Some cost-cutting measures have taken place at the national carrier and in a recent interview with The Sunday Times of Malta Tourism Minister Edward Zammit Lewis made it clear that the company’s business model “has to change”.
There is little doubt Air Malta has too many employees – the result of over-employment throughout the past 40 years – and that a level of downsizing would seem to be inevitable.
The government might be confident that it can save Air Malta by resorting to other measures rather than having to cut jobs and, of course, such an option, if found to be viable, is always preferable.
The airline has announced, for example, that it will be reducing its fleet from 10 aircraft to seven during the winter and eight during summer, which will save €8 million per year.
Such a decision, however, has been rubbished by Air Malta staff unions, which are insisting that the fleet reduction plan announced by the airline will not work. They have called on the company’s management to explain how the same routes could be operated and the same number of passengers carried with fewer aircraft.
An explanation by Air Malta would certainly be in order. The Sunday Times of Malta, furthermore, has revealed that a European Commission restructuring report on Air Malta made it clear that any fleet reduction below 10 would have negative consequences for the airline.
The most realistic option to rescue Air Malta, therefore, is to find a strategic partner. The government has made it clear that this is a priority for the company and has confirmed that it has had discussions with both Turkish Airlines and Hainan Airlines.
The prospect of Air Malta teaming up with a major airline is, without doubt, the best way forward for the company and it is to be hoped that the government would think in terms of Malta’s long-term interest.
The government, however, must make it clear that it will retain a majority share in our national airline – which is too strategic an asset over which to relinquish control.
One thing is for certain: time is running out and the government must have something concrete in place before the March 2016 deadline.