National airline Air Malta would "never" become a feeder airline and a strategic partnership with Alitalia would not go ahead unless it benefited Malta, Tourism Minister Edward Zammit Lewis today.

“Everyone can rest assured, Air Malta will never become a feeder airline,” Dr Zammit Lewis said, indirectly referencing a Times of Malta story published last week. The story cited top airline executives as saying they were concerned that the airline could end up being a feeder airline for the Italian carrier.

A feeder airline brings passengers to hub airports from which they can catch onward flights to their final destination. The Tourism Minister used the example of a local passenger having to fly to Sicily to catch a connecting flight to Paris to explain the concept.

Dr Zammit Lewis tabled a copy of the MOU in parliament this evening. But although he was categorical about feeder airline concerns, he skirted around questions about the potential make-up of the airline's management team. The Sunday Times of Malta yesterday reported that government has agreed in principle to concede control of the management of Air Malta to Alitalia.

The airline's routes and its workers are of paramount importance to the government.- Edward Zammit Lewis

The minister limited himself to saying that there was "no doubt" that Air Malta’s management would include foreign recruits, "as has been the case in the past." 

Alitalia, which is 49 per cent owned by Etihad, signed a Memorandum of Understanding with the government last month to assume a 49 per cent stake in Air Malta. The deal is contingent on a due diligence process being first conducted
and a business plan being agreed upon between the two parties.

Alitalia president Luca Cordero di Montezemolo told Italian reporters today that he expected the due diligence process to take approximately two months. 

Dr Zammit Lewis said that while MOU was just the “first step in a long road ahead,” the government had a number of prerequisites it would insist upon before cutting any deal with Alitalia.

“Air Malta must grow, there must be a plan for its [aircraft] fleet to grow. Employees must have an opportunity to further their careers. Consumers must be part of Etihad’s frequent flyer programme. They must benefit from lower prices. And Air Malta will no longer just be a point-to-point airline,” the Tourism Minister said.

Dr Zammit Lewis said he would not be drawn into making “sweeping statements” about the fate of Air Malta’s workforce, saying that the MOU made mention of a workforce that was the ‘right shape, right size’ but that any such decisions would be based on an eventual business plan outlining the airline’s routes.

“But the government’s plan is to grow the airline,” the minister added. "The airline's routes and its workers are of paramount importance to the government." 

What was certain was that “the status quo is not a solution,” he said, adding that the government could not afford to "kick the ball further down the path".

"Even if we manage to break even, there is no scope for the airline to grow any further under its current business model," the minister said.

He argued that having Alitalia as part of Air Malta’s ownership structure would allow the national airline to benefit from economies of scale it could never hope to achieve on its own.

“We know how valuable Air Malta is, because we founded it more than 40 years ago. Unless our interests are protected, this partnership won’t happen,” Dr Zammit Lewis told his parliamentary colleagues.

Dr Zammit Lewis fielded questions from several MPs about specific concerns about the deal, from guarantees about workers’ conditions and job security, the eventual composition of its management, changes to its routes and the amount of investment Alitalia was committed to.

He said that route development strategies were commercially sensitive, but that “of course we want to get something out of this” and that work would continue to
expand the airline’s network.

Work on valuing Air Malta’s equity was ongoing, but the minister said MPs had to keep in mind that the airline had an accumulated losses “hole” of €70 million euro.

The European Commission was satisfied with much of the airline’s progress in following its restructuring programme, Dr Zammit Lewis said. “I think both sides of the House should celebrate this,” he said.

It was “evident” that the majority shareholder would maintain control of the airline’s board, the minister added.

“And if there are no evident advantages [from this partnership], we’ve got a plan B,” Dr Zammit Lewis mysteriously told MPs.

Attached files

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