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Air Malta will have to cut jobs, minister says

'Hard decisions' have to be taken

The government has for the first time confirmed that Air Malta needs to cut jobs, a matter it says will be looked into once a strategic partner for the airline has been found.

Tourism Minister Edward Zammit Lewis yesterday told The Sunday Times of Malta that the government was long past the stage where it could simply throw money at the Air Malta problem.

He said it was now willing to take “hard decisions”.

Questioned if these decisions would involve redundancies and early retirement schemes, he confirmed that this was the case.

He appealed to all the unions involved to work with the government and categorically dismissed any possibility of pay increases.

In January, this newspaper reported that the airline was planning cost-cutting measures to the tune of €6 million, which might include job cuts and a wage freeze, after talks with Alitalia for the purchase of a stake in Air Malta had fallen through. Sources indicated at the time that the airline would try to “go it alone”.

Asked yesterday if some kind of state aid was on the table, Dr Zammit Lewis said an “interface” was open with the European Commission but he did not elaborate. Early retirement schemes are considered to be a form of state aid by the Commission.

Now willing to take hard decisions

The issue of state aid is a very sensitive one for Air Malta. Its reliance on it was halted by the Commission after a last injection of restructuring aid in 2012. This meant the airline had to return to viability and stand on its own two feet. But despite its restructuring plan, the last published financial statements, up to March 2015, showed the airline was still struggling with losses.

Although Air Malta normally holds its annual general meeting every October to discuss its financial results, no meeting was held last year and the accounts for the year ending March 2016 have yet to be published.

Dr Zammit Lewis said the audited accounts were expected to be completed in the coming days and the AGM would be held once investors in the airline were found.

Sources told this paper that Air Malta was struggling to renew the leases on its planes due to the lack of audited accounts for the last financial year.

Dr Zammit Lewis confirmed the existence of these difficulties but said they would be overcome once the airline was able to present its audited accounts.

Asked if auditing firm PwC had deemed Air Malta able to carry on as a going concern, Dr Zammit said this was the case.

The airline has dropped a number of unprofitable routes in a bid to cut costs.

Sources told this newspaper that Air Malta was surviving with relatively good revenues and this was enabling it to keep operations going, but there was no money for new investment.

The talks with Alitalia, which was supposed to buy a 49 per cent stake in Air Malta, collapsed last year.

Dr Zammit Lewis said the government was open to the idea of a public listing of Air Malta shares but doing so now would not be possible given the airline’s financial situation.

He added that local investors alone would not be enough to save the airline, as a strategic partner was needed to open up new possibilities for Air Malta.

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