The government will study whether to reduce the size of Air Malta’s fleet again if negotiations with Alitalia fail, according to a document released earlier last week.

As negotiations on the partial sale of Air Malta to Alitalia continue, the government has signalled an alternative plan in case the talks fail.

“In case the strategic partnership [with Alitalia] will not materialise, a study will be conducted to determine whether Air Malta’s fleet should be reduced to seven aircraft,” says a document on the implementation of the 2016 Budget measures.

The study is already under way. It is not yet clear why the government is looking at a further reduction in the airline’s capacity at the same time as it is trying to find another strategic partner.

Asked whether this is the government’s Plan B in the event of a failure in talks, a spokesman for the Tourism Ministry insisted that the government’s vision remained that of forging a strategic partnership with a bigger airline. This would effectively see Air Malta growing into a stronger airline with more, not less, aircraft. “This is the only way the airline can take advantage of lower procurement costs that a strategic partnership can offer.”

When it was pointed out that this appeared to contradict the downsizing measure mooted in the Budget document, the spokesman said that the study was mentioned from a “different perspective”.

“As current lease agreements [of aircraft] start expiring, government needs to assess whether it should go ahead and enter into new lease agreements or wait till the partnership enters into effect, when Air Malta will be able to lease new aircraft at more advantageous prices thanks to the procurement advantages that the partnership brings with it.”

Currently, Air Malta does not actually own its aircraft but has a long-lease agreement with an international company.

A civil aviation source said that through its latest declaration, the government was sending out confusing messages about the airline’s future.

“The two messages sent out to the industry are that if the Alitalia deal fails, as is most likely, the government’s only alternative is to continue to make Air Malta smaller. This does not make any sense,” the source said.

Last year, before talks with Alitalia started, the airline’s board had already decided to reduce its fleet from 11 to eight planes in a bid to cut recurrent expenditure by some €8 million a year.

However, the decision was harshly criticised by Air Malta unions and the Malta Hotels and Restaurants Association, as it made the airline less available to the tourism industry.

Incidentally, over the past month, Air Malta has had to lease aircraft from Italy on a number of days in order to operate some of its scheduled flights, after one of its own planes was grounded following technical failures.

Meanwhile, this newspaper is informed that discussions with Alitalia on the possible merger are ongoing, although enthusiasm for a deal has deteriorated significantly, particularly within Etihad, Alitalia’s minority shareholder and the driver behind the takeover initiative.

Alitalia is losing some €500,000 a day, and Etihad is now even considering dissolving its partnership with the ailing Italian carrier, it has been reported in Italian media.

Prime Minister Joseph Muscat has already indicated that a deal with Alitalia may not be reached.

ivan.camilleri@timesofmalta.com