Air Malta is being given some leeway by the European Commission as it departs from its plan to return to profit by next March.

While Brussels is closely monitoring the progress achieved by the national airline under its restructuring programme, it will not insist the programme is respected to the letter.

“Under the approved restructuring plan and EU state aid rules it is not such a problem that the company is not yet profitable by 2016,” a Commission spokesman told this newspaper yesterday.

Under the restructuring plan agreed with the Commission in return for a State injection of €130 million, the airline had to implement an ambitious five-year overhaul aimed at balancing its books by 2014 and registering a profit by the end of March 2016.

For the first two years the company managed to stay within the parameters of the programme but it veered significantly from its projections from 2013 onwards, posting €16.4 million in losses by the end of March 2015. Announcing its latest annual results last month, Air Malta projected a smaller loss of €4 million by the end of this financial year – March 2016 – and breaking even by 2017.

‘Air Malta does not need any more subsidies’

Air Malta chairwoman Maria Micallef said that although the company would not hit its original targets, the airline would not need any further State subsidies and could stand on its own two feet from March.

According to EU rules, the only cash injection the airline will be allowed from then on will be from private sources.

Discussions are under way on the possible partial privatisation of the company through a strategic partner.

Asked to comment on the latest financial figures announced by Air Malta, the European Commission refrained from passing judgement but said it is “closely monitoring the situation”.

Neither did it comment on the sale of one of the company’s subsidiaries to the government. Selmun Palace Hotel was sold for €10.9 million, giving an important boost to the airline’s finances.

Although this sale has raised some eyebrows in the industry, as some have interpreted it as a form of State aid, Commission sources said “an approval from the Commission is not necessarily re-quired for such a sale if it is conducted on market terms”.

Tourism Minister Edward Zammit Lewis insists that the sale was carried out according to EU rules.