Air Malta’s four-year restructuring plan was sent to Brussels late on Monday in line with the six-month deadline but both the government and the European Commission are refusing to divulge any details.
“We can confirm the government sent the plan on Monday. However, its contents may still be subject to negotiations with the Commission so we are not giving any details until the discussions are over,” a government spokesman said.
The plan focuses on keeping the national airline flying following a €52 million loan from the EU.
In a video conference from Brussels, Finance Minister Tonio Fenech would only say that the ball was in the Commission’s court and the government would wait to see if there were any questions or any clarifications needed. He added that the package was more or less in line with the parameters set out by the EU for such restructuring plans.
The spokesman’s office of Competition Commissioner Joaquín Almunia, who will be examining the plan, refused to give any details apart from confirming it had arrived in Brussels. The office also refused to say when the Commission was expected to come out with a decision, adding that no deadline had been set.
However, sources close to the Commission told The Times that the Maltese government was expected to start implementing the plan before the Commission gave its final green light.
“The Commission will only say whether the plan is according to EU state aid rules. In the meantime certain aspects of the plan, such as the downsizing of the workforce and the operations of the company, can still start being implemented,” the sources said.
According to EU rules, if Brussels is not satisfied with the plan it will ask the government to make amendments. If the plan is not given the EU’s seal of approval, the company will have to return its €52 million loan, meaning it will have to fold. On the other hand, an approval may include a recapitalisation of the company to put it on sounder footing.
One of the most delicate aspects of the plan is the downsizing, with hundreds of workers expected to lose their jobs.
Unlike similar restructuring programmes implemented overseas, the government has already said that any Air Malta employees made redundant would be offered early retirement schemes or be absorbed within the civil service.
The Commission last December said the company has been in the red since at least 2003 but the situation became worse from 2009 due to rising fuel costs and the loss of market share to low-cost airlines.
The company employs 1,512 workers and its collapse may affect another 2,672 workers employed with various Air Malta suppliers, according to the Commission’s analysis.
“While the Maltese authorities have indicated that at this point in time (last November), Air Malta is not subject to any collective insolvency proceedings, in the absence of rescue aid it is likely that it will become subject to such proceedings,” the Commission stated.