The news, revealed by the Times of Malta, that the government has wrapped up negotiations on the future of Air Malta, and will be selling a substantial stake of the national airline to the UAE’s Etihad Airways, sounds good in principle, but one will have to wait for the full details of the deal to emerge before passing judgement.
The story, which was well-sourced, has so far not been confirmed by the Maltese government and has been denied by Etihad. It spoke of a memorandum of understanding that is expected to be signed shortly, following which talks will begin with the unions over the future of Air Malta’s workforce. It is expected that a formal agreement will be signed once the unions representing all the airline’s employees give their consent to the deal.
Since Air Malta is a crucial player in Malta’s economic and social development, as well as vital for our tourism industry, it is in everybody’s interest for the airline to become sustainable, to prosper and to have a bright future. Everyone’s hope is for the company to be put back on the right track.
The national airline has been registering a financial loss for a number of years now, mainly due to a combination of factors: over-employment of personnel by successive governments as a form of political patronage, increased competition and the financial crisis of 2007-2008. The European Commission authorised rescue aid to Air Malta in 2010, and in 2011 the Maltese 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 Air Malta but the airline still made a huge €16.4 million loss in March 2015 and is projecting a loss of €4 million for the financial year ending March 2016 – when according to the plan presented to the European Union the airline should have broken even in 2014 and registered a profit by March 2016.
Brussels has proved to be flexible over the past few years, perhaps understanding the importance of the national airline for the country’s economy, but there is no doubt that the only way forward for Air Malta is to team up with a strategic partner that can inject new life into the company.
Hopefully, the choice of Etihad is the right one and the government has sought professional advice about its option. It is not yet clear how large the stake to be acquired will be, nor has it been established whether the Abu Dhabi-based company will buy directly into Air Malta or through another airline it has a shareholding in. According to EU rules it can buy up to a maximum of 49.9 per cent of the national airline’s equity – the threshold required for it to remain an EU flag carrier. Similar arrangements with other European airlines are already in place – Etihad has purchased a 49 per cent shareholding in both Air Serbia and Alitalia.
It is probable that should this deal go through, Etihad, which would take over the day-to-day management of Air Malta, will insist on a radical overhaul of working practices of the company, as well as a possible downsizing of the workforce.
While it is the unions’ duty is to protect the jobs of their members, they should also adopt an open-minded and flexible approach when negotiating and keep the broader picture in mind, namely that Air Malta plays a vital role in the expansion of Malta’s economy and that its survival is in the country’s interest.