The government needed to absorb Air Malta’s accumulated losses and allow a new airline to be formed which would not be encumbered with old working practices and collective agreements, the outgoing president of the Chamber of Commerce, Enterprise and Industry, Anton Borg, said.

In an exclusive interview in the last weeks of his position, he also said that the only way for the airline to survive would be to have equal shareholding between the government, a strategic partner airline, and investment through publicly-listed shares.

The formula being proposed by Mr Borg goes against the current government approach, which was for the State to retain majority shareholding of 51 per cent and to sell the rest to another airline. It also brings in the possibility of private investment – although not as a majority shareholding but rather through shares listed on the Malta Stock Exchange.

The model he suggested bears similarities to the approach taken when the Malta Shipyards was awarded to Palumbo, with the government absorbing the accumulated losses of the Drydocks, reducing the workforce through voluntary retirement, and allowing new employment agreements to be negotiated.

Mr Borg believes Air Malta is saddled with a history of mistakes: “Let us not forget how Air Malta got to this stage. There were a lot of mistakes made in the past; some were admitted but others are still there and cannot be rectified unless drastic action is taken.

“The operating costs of the airline are too high and need to be completely reviewed. No matter what the pilots’ association, the cabin crew association and the workers say, Air Malta will not survive unless practices are changed – and they know it.”

Although he did not mention Alitalia’s failed deal, he said he was completely against the idea of a strategic partner with a dominant position which would be able to dictate routes at the cost of Malta’s tourism sector.

The strategic partner we require cannot have more than a third of the company

“The strategic partner we require cannot have more than a third of the company,” he said.

He acknowledged that finding an investor willing to take only a third would not be easy, particularly for an airline with just eight aircraft, old working practices, and which has accumulated losses of €60 million.

“Not even the private sector would do that. So when you hear about the private sector taking over Air Malta, it is only because they are asking – maybe not publicly – for the government to take over those €60 million losses. This is the only way to solve it,” he said.

“The government is going to have to do this, whether today or tomorrow. There is no other way.”

He pointed out that in commercial law, the owners would not be able to declare a dividend before those losses were recovered.

“Would you be willing – as a private individual – to put up money for shares listed on the Stock Exchange in a company that must first recover €60 million before paying out a dividend?

“The only solution would be to start a new company, with a clean sheet, with new collective agreements with everybody.”

When asked what was to stop investors and another airline from setting up a new airline, he reacted immediately: “It would not be called Air Malta. It would not be the national airline. Do we want to give up our national airline? You have to look at the issue holistically. You can’t forget the tourism sector.

“You cannot rely on low-cost airlines. What if they decide to move out? If they did drop a destination, Air Malta would be able to step in… Put Air Malta’s losses in the perspective of the whole tourism sector. When we say that we do not want to rely on a foreign airline, it is not because of nostalgia!”

Mr Borg also pointed out that the government has floated other companies to the public, and had not always retained a majority shar holding. “Many of them are still successful, and if the government needs assistance in the national interest, they can still get it from that company. That is the model that we should adopt: it is the private sector that makes it work.”

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