Air Malta may have to wait longer than originally envisaged to gain approval from Brussels for its do-or-die restructuring plan.
The government had been hoping that the European Commission would complete its analysis of the plan by the end of the year but the procedure is now likely to be longer because the EU executive is set to invite comments on its preliminary conclusions before reaching a final decision.
According to EU rules, the Commission has two options when deciding on a state aid case similar to Air Malta’s. It can either take the short route by issuing its decision first and opening up the possibility of an appeal by objecting parties. Or it can launch a “State Aid Investigation”, which includes the publication of its preliminary conclusions and an invitation to interested parties, including potential objectors such as low-cost airlines, to submit their comments. The Commission would then only reach its decision on whether to approve the state aid after another analysis.
The Commission will be going for the second option, sources have told The Times.
On Monday, Finance Minister Tonio Fenech and Competition Commissioner Juaquin Almunia held a closed-doors meeting in Brussels to review the progress being made on the Air Malta dossier.
Neither side was keen to divulge what they had discussed but Mr Fenech confirmed the Commission would now proceed to issue a preliminary decision and invite submissions – a process that might take beyond the end of the year to conclude.
“Progress has been made and although there are still some issues and hurdles, the process is moving in the right direction,” he said.
“We are still planning for a final decision by the end of this year but with a lengthier procedure, the process might enter into next year before being concluded.”
The restructuring programme would now enter a delicate phase when the company would start shedding extra workers by offering them various retirement schemes.
“We are still negotiating the terms of the schemes with the unions but this is now a matter of days,” Mr Fenech said.
According to unpublished plans, the airline needs to shed some 500 workers to become financially viable. Air Malta presented its plan to the Commission last May, six months after being granted a €52 million life line by the government in order to avoid bankruptcy.
The plan’s approval is a condition set by the Commission to authorise the rescue aid. A negative decision would constrain the airline to return the rescue aid and force it to fold.