Air Malta’s financial viability has taken another downturn after the airline lost a €500,000-a-year contract with DHL to provide it with ground handling services, the Times of Malta is informed.
Although the airline has not yet announced this setback to its employees, the German global logistics leader has given notice that it will stop using Air Malta services and has given its lucrative contract to Aviaserv – a private ground handling company.
DHL operates a daily cargo flight to Malta. Just a few months ago, Air Malta lost Lufthansa after the German airline decided to ditch its ground handling services.
Sources close to Air Malta told the Times of Malta that with the loss of the Lufthansa contract, the national airline lost an annual turnover of close to a million euros.
“The situation at the airline is becoming very serious and the lack of direction by the government on the airline’s future is not helping,” a senior Air Malta officer told this newspaper.
“The fact that no one knows what is going to happen to Air Malta in a few months’ time after the election is driving business away. The DHL move to drop our services is another blow,” another senior official said.
The Times of Malta is also informed that another major company – Turkish Airlines – is considering dropping Air Malta’s ground handling services.
When asked, Air Malta did not confirm that it had lost the DHL contract. “In the last years, following the arrival of new airlines operating on the Malta route, Air Malta increased significantly its third-party ground handling customers.
“In fact in 2013, Air Malta handled 11,524 flights compared to 13,911 flights in 2016. In the last six months Air Malta has managed to secure five new airline customers: Air Berlin, Czech Airlines, Iberia Express, Fly Niki and Volatea,” a spokesman said.
Asked specifically about the DHL contract, the spokesman would only say: “It is a normal business process that new contracts are won and some are lost. Since Air Malta won other ground handling contracts no financial consequences are envisaged.”
The ongoing ‘crisis’ at the national airline is also taking its toll on employees who are expecting clear answers from the government on their future. Last year, during the now abandoned discussions with Alitalia, ground handling personnel were told that the national airline was going to hive-off their section.
They were also told that all employees were going to be transferred to a new government company which would then offer services to Air Malta.
These plans were not welcomed by the employees who accused their union – the GWU – of striking a deal behind their back. The GWU said later that nothing was finalised. The Times of Malta is also informed that the Air Malta board is currently toying with the idea of privatising its ground handling department in order to cut costs further.
A few weeks ago, the government announced that talks on a strategic partnership with Alitalia had failed and it was seeking a new partner.
However, according to a Plan B revealed by The Sunday Times of Malta, the government will now try to go it alone until the elections, by restricting costs including through job cuts.
Although at first the government denied this, last week Tourism Minister Edward Zammit Lewis admitted the airline would have to shed jobs if it wanted to keep flying.
While this newspaper is informed that there are no real ‘big’ airline players interested in buying into the national airline, the fact that the government decided to reduce the airline’s fleet is now working against Air Malta’s interests.
“The airline has become so small, operating with just eight aircraft and shedding important routes, like Frankfurt, that its attractiveness has decreased drastically,” industry sources said. Air Malta has so far not published its latest accounts even though it usually holds its AGM in October.